Economic Crisis & Climate Change

March 2009 Volume VI Number 4

Contents:

I. Presentation

“Economic Crisis and Climate Policy” hosted by Swiss Re, New York City, February 12, 2009

II. Key Findings

III. Presenters:

Adrienne Atwell; Senior Vice President, Swiss Reinsurance America Corporation
Emily Soong; Associate, Deutsche Asset Management
Rohit Aggarwala; Director of the New York City’s Mayor’s Office of Long-Term Planning and Sustainability

IV. Questions for the Panel

V. Next Events

April 16: Peer Learning Luncheon panel on “Greener Infrastructure and Design: Costs, Benefits, Opportunities in New York

Details to follow. Registration at http://www.wnsf.org

May 21: WNSF’s first West Coast Summit in Santa Clara

Details to follow. Registration at http://www.wnsf.org

VI. News

VII. WNSF Concept

I. NETWORK PRESENTATION

The luncheon focused on the near term issue of the economic downturn, along with the impact of long-term climate changes–and vice versa. Over the next 20 years, both public and private sectors are likely to increase their spending on climate adaptation. According to Mark Way, Director of Sustainable Development, Swiss Re Americas, the UN predicts that up to $100 b will be spent by 2030 for the world to adjust to climate changes and invest in sustainable development. Various aspects of the combined crisis were discussed by Adrienne Atwell, Sustainability Manager of Swiss Re, Emily Soong, associate at Deutsche Asset Management, and Rohit Aggarwala, Director of the New York City Mayor’s Office of Long-term Planning and Sustainability

II. KEY FINDINGS

  • With a growing imperative to adapt to climate changes, the UK Prime Minister has estimated that up to 25 million new “green” jobs around the world could be created by 2050 with the appropriate supportive policies in place
  • The public and private sectors will need to work together in order to adapt to and plan for environmental disasters.
  • Because NYC has 950,000 buildings, the city could become a key center of design for energy efficient construction and green renovations, according to the NYC Mayor’s Office.
  • The federal government’s new economic stimulus plan is estimated to include approximately $70 billion for “green” spending, with the bulk aimed at increasing climate science research, energy efficiency and renewable energy development.

III. Adrienne Atwell, Sustainability Manager, Swiss Re

Ms. Atwell discussed the risks involved with climate change, particularly involving climate-related natural disasters and other weather-related emergencies. Moving financial decisions to the emergency-response planning stage will better enable governments to cope with the effects of climate change and meet the needs of affected populations. In order to meet the demands of adaptation, public and private sectors will need to work together to plan for and anticipate natural disasters, as well as solutions to them.

Two examples of effective public-private partnerships related to climate adaptation were described: A Hurricane Relief Program in the Caribbean, and a Drought Program in Africa. The Caribbean Catastrophe Risk Insurance Facility (CCRIF) provides relief funding when storm winds reach a specified speed which then cause damage requiring funding aid. The African project involves an NGO and three African nations in preparation for potential drought. In this program, Swiss Re will pay $2 m if both precipitation and crop production fall below a certain level. This program helps the countries recover after a drought that has impaired crop production. These are just two of Swiss Re’s answers to climate and environmental risks

IV. Emily Soong, Associate, Deutsche Asset Management

Filling in at the last minute for Roelfien Kuijpers, Global Head of DB Advisors, Ms. Soong discussed her group’s climate change research and its investment implications. As of Dec. 2008, Deutsche Asset Management, (DeAM), managed roughly $655 billion across a number of asset classes including Real Estate and Alternatives. DWS Investments, the mutual fund arm of Deutsche Asset Management, manages approximately $4 billion in publicly listed climate change-related equities, in sectors ranging from agribusiness to new resources.

As one of the primary climate change research centers in the firm, DB Climate Change Advisors attempts to provide strategic insight and direction to all corners of the organization. Its primary role is to provide thought and market leadership on the climate change market to the investment community.

DB Climate Change Advisors has found that including climate change sectors in an investment portfolio through proper asset allocation can improve the risk/return profile for investors, while giving them exposure to an emerging low-carbon economy.

DB Climate Change Advisors believes that investment in the clean energy sector will continue to rise. Investment in the clean energy space increased from $148 billion in 2007 to $155 billion in 2008, representing a 4.4% increase. Venture capital and private equity investment continues to drive growth – there was approximately $13 billion of VC/PE clean energy in 2008, compared with $9.8 billion in 2007, according to New Energy Finance. Some sectors attracting the most PE/VC investment include the solar, wind, biofuels, and energy efficiency sector.

Although the global arena is now facing an overall economic downturn, approximately 69% of business owners claimed that they still plan to maintain their current level of investment in environmental causes in 2009. Deutsche Bank continues to be optimistic about the clean energy investment market. While the climate change investment market represents a long-term business opportunity, it also provides the investment community a venue to address the implications of its investments.

V. Rohit Aggarwala, Director of the New York City Mayor’s Office of Long-term Planning and Sustainability

Mr. Aggarwala gave insight and information on New York City’s reaction to the challenges of economic crisis and climate change. NYC was the first city in the US to have local projections on what climate change means and the how these changes contribute to the risk of decreasing and weakening the economy. These projections, a first for NYC, allow companies to actually plan ahead, with the facts. In order to promote sustainable development, all levels of the government must be involved and work together on this multi-faceted issue. The Mayor’s Office understands the importance of pricing carbon emissions and understanding climate risks, in order to be responsible stewards of public money. Since the local government cannot go into debt, the Mayor’s Office is stressing the essentialness of the private sector in helping finance environmental investments.

VI. QUESTIONS FOR THE PANEL

Q: What are the opportunities to diversify and bolster the local city economy through green investments?
Rohit: One idea has been to use the multitude of rooftops in Manhattan for solar energy. With 950,000 buildings in NYC, we should use them as our competitive advantage by becoming the center for design of green buildings and buildings with increased energy efficiency. As NYC redesigns and renovates the buildings, infrastructure investments will be increased. The city will need $30-50 billion over the years in order to create the 2nd Ave subway and green energy grids.

Q: What are some international policies and their contribution to the current economic downturn that need to be made?
Emily: In terms of investment needs, to reduce emissions by 50%, we will need $45 trillion world-wide by 2050, according to the IEA. Stimulus packages are being implemented in Europe, the UK, and China to help implement and boost a new low-carbon economy.

Q: Since gas prices have recently gone down, what does that do to people’s choice to invest in renewable energy?
Emily: As energy prices come down, people will still be investing because of regulatory support. Subsidies and mandates will provide a “softer landing” for the renewable energy sector. The prediction is that people will still realize the necessity of investing.

Q: Is there a chance that NYC cabs may shift to being electric powered cars, in the coming years?
Rohit: The options of plug-in and electric cars are still being considered by the government in terms of their feasibility. The number of hybrid cabs is increasing, even as fuel prices drop. The city debated the idea of giving free parking to citizens driving hybrid cars, but decided not to do this, since it was predicted that this may encourage personal driving in the city.

Q: How do we convince the public that they should not drive more because gas prices have gone down?
Rohit: One option would be a higher gas tax. The problem is that other parts of the country do not necessarily see the long term benefits of driving less. There needs to be a rethinking of the way federal funding for transportation is allocated. Right now funds are allocated based on vehicle miles traveled. This system needs to be changed, but it must be done in a way that does not make rural/less dense states feel disadvantaged.

Q: There are several problems with the implementation of the public-private alliance, what are some of the ways we can unclog this quagmire?
Rohit: There are clear problems with the current relationship between the public-private spheres. For starters, there need to be a clear revenue stream that matches the investments made. It is important to remember that often times, when the public sphere is concerned, it is the public and not the bureaucracy that holds things up. Also, the private sector must bring more to the table than just financing.

Q: We are clearly experiencing earth changes, not just climate changes. How do we finance what’s coming? Do we need a new form of economy, and can there possibly be a win-win situation? Will we perhaps follow Ecuador’s credit system based on nature’s production of wealth?
Rohit: We are entering a new era of corporate social responsibility. We need to look at new opportunities. Of course, there needs to be investment for there to be return. Governments must be interested in helping the people. It is not possible to overemphasize the importance of flexibility and creativity. We must find a new way of aligning interests and regulation.

VI. NEWS

WNSF and Chinese partners launch project and competition in Beijing WNSF Executive Director Ann Goodman is appointed advisor to Green Spaces competition for social entrepreneurs in NYC

VII. THE WOMEN’S NETWORK FOR A SUSTAINABLE FUTURE

WNSF provides a forum for business and professional women to congregate, reflect, and act on the converging issues of corporate social responsibility and sustainable development. Through meetings and simple electronic support tools, the Network aims to facilitate the exchange of experiences and best practices on these vital workplace issues. By creating a new network of executive women, the Network seeks to improve responsible practices in workplaces; sensitize corporate culture more generally to issues of sustainability and social responsibility; and encourage a public commitment locally, nationally, and internationally to sustainability principles.

For more information, please contact:

http://www.wnsf.org
info@wnsf.org

BOARD OF DIRECTORS: CHAIR: Kathy Robb, Esq., Partner and Head of Environmental Practice, Hunton & Williams; Marlys Appleton, VP, Alternative Investments and Sustainability, AIG; Dianne Dillon Ridgley, Director, Interface Inc. Board; Shelly Esque, VP, Intel Corporation; Karen Flanders, Director of Sustainability, Coca-Cola Co.; Joanne Fox-Przeworski, Director, Bard Center for Environmental Policy, Bard College; Ann Goodman, Executive Director, WNSF; Sarah Howell, Director, Corporate Communications, BP; Michele Kahane, Special Projects Director, Center for Corporate Citizenship, Boston College; Clair Krizov, Executive Director of Environmental and Social Responsibility, AT&T; Joyce La Valle, Senior Vice President, Interface Inc.

The Women’s Network for a Sustainable Future is a 501c3 organization. This issue of Net Notes was compiled by Kat Barnes

Copyright 2008 Women’s Network for a Susustainable Future

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