FOURTH SHARING & LEARNING SEMINAR Bridging The Gap: A …€¦ · The Seminar built on some key findings from the resulting research and engagement project and was an opportunity

FOURTH SHARING & LEARNING SEMINAR Bridging The Gap: A Role for Business

in Climate Change AdaptationMonday, 14 February 2011

Imperial Queen’s Park Hotel, Bangkok, Thailand

SYNTHESIS REPORT

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Bridging the gap: the role for business in climate change adaptation – this was the topic

of the fourth bi- monthly Knowledge Sharing & Learning Seminar of the Adaptation Knowledge Platform, organized in collaboration with CSR Asia and the CSR Asia Center at AIT. It brought together adaptation experts, development practitioners and business representatives.

The aim of the session was to convene a multi-stakeholder dialogue platform to discuss an issue that adaptation experts and practitioners as well as businesses and their stakeholders across the Asia Pacific region are still struggling with. Namely, how can the private sector best be engaged to effectively contribute to building resilience to the effects of a changing climate, and what are the barriers for more proactive business engagement.

This report provides a synthesis of the main discussion points and outcomes of the seminar as well as key findings from the study on “Harnessing the innovative capacity of the private sector for climate change adaptation” conducted by CSR Asia and funded by the Swedish International Development Cooperation Agency (Sida).

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The need for private investments to secure necessary resources for adaptation is now firmly on the agenda of most discussions about climate change and its effects on societies and economies. However, the necessary strategies to encourage such investments and establish sustainable co-financing opportunities between public and private actors remain vague.

In 2010, Sida involved CSR Asia, the leading provider of information, training, research and advisory services on sustainable business practices, CSR, and “business solutions to global challenge” in Asia. CSR Asia engaged with businesses and expert stakeholders across the region to learn more about barriers and opportunities to harnessing the innovative capacity of the private sector for climate change adaptation.

The Seminar built on some key findings from the resulting research and engagement project and was an opportunity to discuss some key topics identified in this context with a diverse multi- sector audience including representatives from the private sector:

The Seminar was opened by Young-Woo Park, Regional Director of the United Nations Environment Programme – Regional Office for Asia and the Pacific (UNEP-ROAP). He reflected on some of the key achievements of the Adaptation Knowledge Platform to date, as well as some of the key challenges still ahead. Among others a better engagement of all stakeholders, including the private sector.

Park discussed a potential disconnect between the availability of technologies for adaptation and their affordability, accessibility and local acceptance and relevance. He noted that local capacity for implementation and utilization was lacking and called for the provision of suitable financial, technical, capacity, and other resources to support vulnerable communities that meet local demand. He emphasized the importance of local empowerment and ownership to build adaptive capacity.

In closing he underlined the need for increased cross-sectoral learning and collaboration and the engagement of all stakeholders. Only by joining forces and aligning efforts can we achieve the tasks at

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hand to prepare the region and its people for the impacts of climate change.

The fourth learning and sharing seminar also marked the end of era: Anders Granlund, now the former Director of the Swedish Environmental Secretariat for Asia (SENSA), (and in the words of Park “both father and mother of the Adaptation Knowledge Platform”) joined the seminar on his last day in Bangkok before returning to the Sida headquarters in Stockholm.

Granlund has been instrumental in supporting CSR Asia’s research and engagement project on harnessing the innovative capacity of the private sector for climate change adaptation. In his opening remarks he emphasized the significance of a more proactive role for the private sector in climate change adaptation and expressed his appreciation of having business represented at this seminar. He underlined the significance of cross-sectoral collaboration and encouraged continuing efforts to include business as an important constituency in future efforts of the Adaptation Knowledge Platform.

Following the introductory remarks, the stage for discussions was set by presentations from Gernot Laganda, Regional Technical Advisor Climate Change Adaptation of the United Nations Development Program (UNDP), Richard Welford, CSR Asia Chairman, and Andreas Schild, Director General of the International Centre for Integrated Mountain Development (ICIMOD). The sessions were moderated by Leena Wokeck, Director of the CSR Asia Center at AIT.

Gernot Laganda set the scene by presenting an overview of expected changes to the climate and discussing the associated expected risk patterns in public health, agriculture, forestry and water resources. He also discussed effects on coastal systems and ecosystem services.

He went on to raise the important question of the varying degrees of certainty of changes in climate, ranging from fairly certain effects such as rising temperatures and sea levels to other expected changes subject to significant variations, e.g. patterns of rainfall, storms, cyclones, heat waves, droughts, and floods and associated challenges for business planning horizons.

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The United Nations Framework Convention on Climate Change (UNFCCC)’s definition of climate change adaptation as “initiatives and measures to reduce vulnerability of natural and human systems against actual or expected climate change effects” was referenced and the link made to necessary measures to reduce negative effects and exploit positives ones in the context of UNDP’s focus on “development with a future vision of risk”.

Laganda explained the difference between incremental and transformational adaptation with the prior focusing on maintaining existing activities and building on existing technologies, and the latter dealing with major changes in enterprises, land use, and investment planning and discussed the scope for private sector adaptation options in the context of low emission, climate resilient development. Private sector entities commonly engage in adaptation decision-making from the vantage point of climate-proofing value chains and operations and safe-guarding their own interests. They also engage with the public sector or civil society initiatives to pursue common objectives through the provision of products or services in response to new market demands.

He emphasized that: Anticipatory and precautionary adaptation is more effective

and less costly than last-minute adaptation or retrofitting. In the face of climate change, public and private sector interests

move closer together. There is more potential for win-win situations in pursuing a low emission, climate-resilient development trajectory.

‘No-regrets’ climate change adaptation and mitigation measures make sense no matter how the climate will develop.

Climate change brings opportunities as well as threats. It pays off for private sector entities to study climate-related effects on markets and technologies.

Richard Welford, Chairman of CSR Asia, presented key findings from a study on harnessing the innovative capacity of the private sector for climate change adaptation. The objective of the CSR Asia study that will be published in May 2011 is to shed light on business

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perspectives on expected impacts, vulnerabilities, and adaptation needs and discuss barriers for more proactive business engagement - as well as potential incentives and response strategies. Findings are based on a series of business dialogues in Thailand, Viet Nam, Indonesia, the Philippines and Sri Lanka. It also includes many interviews with business representatives and expert stakeholders in Asia and beyond, and a variety of informal engagement activities over the past six months.

The starting point was the observation that whilst most large companies and well-known brands now recognize the strategic relevance of contributing to the global climate change mitigation agenda, the private sector’s engagement with adaptation remains limited.

As significant impacts on business operations, markets, and societies can be expected, the management of risks associated with changing climatic conditions and weather patterns are likely to become a key challenge for sustainable business strategies. However, many businesses are struggling to define what steps are needed to devise adaptive strategies and manage climate change effects. The demand for businesses to extend planning horizons to tackle the wider

Photo credit: Serena Fortuna

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repercussions of climate change and adaption needs of the communities within which they operate poses an even greater challenge.

Incentives to change “business as usual” are limited to date. Tangible frameworks for reference and planning are insufficient and uncertainty over the effects of climate change and what they will mean in terms of localized impacts persists. This is exacerbated by unclear policy directions and results in ambiguous response options, a lack of market incentives, and a weak business case for immediate action.

Smart policy options will be required to discourage business practices that inevitably discount the future. Useful mechanisms will include effective engagement with business in focused forums and international, national, and local policy and planning processes; regulatory opportunities through, for example, stock exchange requirements; legislation on planning and risk assessment; and the facilitation of market mechanisms like consumer behaviour through improved awareness. CSR Asia plans to launch a Climate Change Roundtable for business later in 2011.

There is also an urgent need for better information that is reliable and conducive to the planning needs of business, both in terms of availability as well as in terms of usability. There is also a need for improved and targeted awareness raising and capacity building efforts, for tangible demonstration projects, and for constructive cross-sectoral collaboration.

Finally there will be a need for much improved approaches to development partnerships and strategic community investment efforts to build resilience. A key aspect of successful adaptation strategies will need to focus on enhancing the capacity of vulnerable communities in a company’s sphere of influence to better cope with effects from climate change. This will include efforts to help reduce the underlying drivers of climate vulnerability through poverty alleviation, improved access to sustainable livelihoods and risk management skills, products, and services, as well as investments in protecting ecosystems.

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Andreas Schild, Director General of ICIMOD, discussed opportunities for collaboration between the private sector and a regional inter-governmental organization committed to knowledge development and learning on climate change and adaptation needs.

He argued that climate change adaptation needs the full commitment of the private sector because:

Climate change is a global phenomenon, which touches all segments of society

Sustainable ecosystem services of the Himalayas are a prerequisite for sustainable growth in Asia

Closing knowledge gaps is in the interest of the private sector

He illustrated his argument by reference to the example of a hydro electricity development in Kosi where hydro-power enterprises had suffered from a situation of glacier melting and struggled with insufficient information to support strategic decision making. Trans-boundary cooperation and information exchange were key to solving business challenges in this context and major investors from Norway and India worked together with ICIMOD to enhance data generation and monitoring capacity in the area. Schild invited strategic partnerships with the private sector and outlined efforts at ICIMOD to increase strategic and co-beneficial engagement with business. Aims will include customizing global climate change scenarios to the local needs of the Himalaya-Hindukush region, co-sponsoring of regional knowledge development and capacity building events catering to business needs, and engagement in the ICIMOD Foundation, not only by providing resources, but also through long-term cooperation on adaptive strategies to the global challenge of climate change and towards improved partnerships for sustainable development.

The introductory presentations were followed by three contributions from three quite different businesses on three cases of business engagement with climate change adaptation in Vietnam, Indonesia, and the Philippines respectively.

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Rob Hulme, Country Head of Bayer CropScience, Viet Nam (BCSV), talked about his company’s response to significant impacts of climate change in Viet Nam and the rationale for business engagement with impacts on markets and food security as a resulting challenge. As climate change exacerbates stress from population growth and declining land availability, sustainable agriculture is key to securing a sustainable future.

The BCSV is one of three business groups under Bayer Vietnam Limited (BVL), based in Ho Chi Minh City since 1994. BCSV pursues a strategic engagement with climate change adaptation closely linked to its core business. One of the key drivers of BCSV’s interest in developing a company adaptation strategy is due to 70% of its current business being currently located in the Mekong sub-region. Agricultural production and export oriented cash crops such as rubber, coffee and rice are central to Viet Nam’s economy – and potentially threatened by the fact that Viet Nam is considered a “hot-spot” for expected climate change impacts such as sea level rise, extreme drought, saline intrusion and variable flooding.

BCSV’s approach is driven by strategic engagement with key channel stakeholders, from wholesalers, retailers, and farmers. It engages with Government agencies such as the Ministry of Agriculture and Rural Development (MARD), the Plant Protection Department (PPD), the Extension Service, the Cu Long Rice Research Institute and Can Tho University (CTU) in collaborative efforts to identify needs. In addition to plant breeding initiatives to develop hybrid rice varieties that is able with withstand stresses such as extended flood conditions and salinity, BCSV also focuses on developing integrated crop protection programs for Viet Namese rice farmers.

The Much More Rice (MMR) program combines timely applications of seed treatments, fungicides and insecticides with a range of cultural practices that reduce inputs and improve rice yield and quality, and ultimately profitability for the farmer. As a result, the MMR program is being broadly recognised and adopted by farmers, and is a good example of how industry can contribute to sustainable agriculture in Viet Nam.

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Bayer is also engaged in a variety of other activities which can contribute to sustainable development and reducing climate risks. These include the development of bed nets and insecticides to reduce the spread of vector borne diseases, the development of polycarbonate greenhouses which are able to withstand extreme weather events, and various initiatives to further reduce the carbon footprint of its manufacturing operations in Viet Nam. BCSV is frequently involved in a variety of meetings and events on climate change adaptation.

Such efforts help BSCV and BVL understand government plans and objectives for Viet Nam and the potential role the company can play in supporting national adaptation efforts and contributing to ongoing initiatives with common objectives. For example, the company has recently engaged in the CLUES Project (Climate Change affecting Land Use in the Mekong Delta: Adaption of Rice based cropping systems) as a key industry sponsor. Funding for CLUES comes from the Australian Government via ACIAR (Australian Centre for International Agricultural Research), administered by IRRI (International Rice Research Institute) with key contribution from MARD and the CTU.

Hulme however also remarked that while BCSV supports a collaborative approach, better coordination of actors and initiatives will be needed to align efforts, avoid inefficiency and duplication, and improve strategic partnerships between the government, the private sector, and other actors.

Yann Brault, Sustainable Development Director of Danone Aqua and Coordinator of Danone Ecosystem Asia Pacific introduced Danone Aqua’s partnership approach to community investment and focus on integrated water management in Indonesia.

Danone Aqua pursues a strategic approach to community investment to help build local resilience to the impacts of climate change and contributes to local capacity building for environmental protection and resource management. The emphasis is on economic empowerment and local relevance and buy-in as a key entry point for successful engagement and the basis of successful change processes.

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Effective community engagement and investments in local communities should be tailored to local needs and have relevant impacts, but they are also of central strategic relevance to business success: the trust built by proactive engagement and the collaborative achievement of positive impacts for local communities is an essential licence to operate, especially for an international company.

Building trust and a brand that is more meaningful than just being associated with selling water and linked to social equity and resource responsibility makes business sense for Danone Aqua. In order to achieve this, engagement needs to go beyond sponsoring community projects and communicating those through PR efforts. Real change will be needed in the way the company does business for and with communities in its sphere of influence, and with a strategic view to challenges resulting from climate change for the company as well as for communities, even if they are not identical.

90 % of water resources in Java are used by farmers and farmers are direct neighbours of Aqua plants as these are usually located in rural areas. Climate change related effects on precipitation patterns represent a higher risk to communities surrounding Danone Aqua rather than for the company itself as the groundwater sources tapped for bottling are not immediately affected by changing precipitation patterns. Nevertheless the fact that water is a key resource for the company results in stakeholder demands for engagement and the company is committed to help communities deal with a variety of water risks, combined with community support on other issues, including access to financial services.

Danone Aqua is also seeking engagement with government on policy development and enforcement for sustainable water resource management. This is not

Photo credit:Lekha Ratnayake

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without challenges as mandates as well as budgets are not always clearly allocated between relevant government departments.

The collaboration with local NGOs is also not without challenges, however the company is committed to investing is such partnership models and continuous learning to build partnerships that can achieve the social impacts desired as well as resulting in business benefits from mitigated community conflicts over water as well as enhanced brand value and credibility.

Thomas Mahl, Business Development Manager at Munich Re in Singapore, introduced climate change as an issue of strategic relevance for his company that directly affects its core business. The reinsurer has over 35 years’ experience of researching the factors and can do a lot to help the adaptation and mitigation of climate change. We apply this knowledge to our product development, risk management and investment strategies.

Climate change related risks are monitored and evaluated through internal risk management instruments. This is to ensure solid financial reinsurance capacity as company statistics are showing an increase in the frequency and intensity of extreme weather events resulting in a general trend of increasing losses. Munich Re’s natural catastrophe database shows that weather related catastrophes have tripled since 1980. Mahl explained that climate change risks are frequently underestimated as risk management and mitigation systems are based on past experiences without reflecting the expected future dynamics. It is important to consider the inter-connections between risk mitigation and risk financing. As government budgets often do not have the capacity to cope with increasing systemic risks, higher private sector involvement will be required to insure climate risks and reinsure portfolios of local insurers. They will otherwise be unable to cover risks associated with natural disasters.

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A key focus area for Munich Re is the reinsurance of small and micro insurance providers and to ensure access to services (and enable rapid disbursement of funds in the event of a catastrophe) to poor and vulnerable groups, particularly in the area of protection against effects from extreme weather. Mahl reflected on the link between the lack of trust in insurance companies, as well as the public reliance on government support after natural catastrophes due to the low insurance penetration (as little as two percent in some of the climate hot-spots countries in Asia).

He illustrated Munich Re’s efforts in this context by reference to a novel approach launched in the Philippines in 2010 through a public private partnership between Munich RE, the German Agency for International Cooperation (GIZ) and the Philippine cooperative insurance company Coop Life Insurance & Mutual Benefits Services (CLIMBS). They developed a micro-insurance product against extreme weather events to protect the loan portfolios of cooperatives and ensure immediate passing on of benefits to end customers in low-income households.

The second part of the seminar opened the floor to questions from the audience and included group discussions on key areas for

more proactive business engagement with climate change adaptation.

The aim of the dialogue was to discuss needs, opportunities, and challenges for the role of the private sector in climate change adaptation, current barriers for business engagement, gaps and mismatches in expectations and perceptions, and to identify opportunities for partnerships and increased cross-sector collaboration.

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Some key points raised include:

Lack of information / the right kind of information: Business needs a clearer

understanding of investment requirements and associated business opportunities – both for large and small businesses.

There is a need for improved availability of information in formats that is useable as a basis for corporate decision making needs.

The need for improved availability of reliable climate science data and scenarios comprehensible to users who are not climate science experts.

Better communication of climate change risks to the private sector, including making the connection to the availability of natural resources, especially for sectors where such links are less immediately apparent.

Meeting sector specific information needs.

Improved knowledge on location specific impacts.

Need for improved knowledge sharing and capacity building

Demand for case studies on successful business strategies for climate change adaptation and demonstration projects from which to learn in support

of effective own investment strategies.

Improved business to business knowledge and experience sharing.

Improve awareness and build capacity within business to deal with sustainability challenges in general and climate change adaptation in particular.

Capacity gaps and incentives within businesses:

Need for comprehensive corporate climate strategies as a starting point for engagement, including responsible business strategies to deal with operational impacts.

Linking CSR programs and community engagement to core business strategies, including supply chain strategies, to ensure long-term commitments.

Better understanding of strategic approaches to CSR to make the case for responsible business strategies that make business sense whilst building adaptive capacity.

Improved tools and resources for issues and priority mapping needed to support investment decision making processes of business.

Improved engagement with small and medium enterprises (SMEs) and collaborative efforts to build adaptive capacity for

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SMEs that are essential for local livelihoods and less resilient than big businesses.

Clearer focus on business opportunities needed.

Financial incentives needed to change “business as usual”.

Public demand of business responsibility and accountability should be regulated more effectively and enforcement of existing regulation improved.

Need for dialogue and improved collaboration and partnerships:

Building trust between public, private, and third (civil society) sectors through improved communication and partnership between private sector and non-profit sector would lead to meet effectiveness of engagement of of private sector in climate change adaptation.

Open up regional and UN mechanisms to private sector participation as a step towards encouraging business contributions.

Existing collaboration efforts need to become more strategic rather than being limited to business sponsorship of NGO activities to ensure more sustainable engagement efforts.

Better coordination of efforts (across and within sectors) to avoid duplication and inefficiency.

Both business and NGOs need to devise strategies for collaboration that enable better cross-sectoral understanding and appreciation for different priorities, forms of operation and expectations regarding timelines for implementation.

Improved multi-stakeholder processes, cross-sectoral dialogue, and communications are key.

Clearer points of reference for common challenges needed.

Better alignment of growth agendas with development agendas, especially where these potentially conflict over resource availability and sustainable resource use and management

Awareness raising on gender issues needed as women tend to be more vulnerable through their key roles in agriculture, forestry, and water resources management.

The role of women as producers and consumers needs to be better understood and empowerment of women should be enhanced.

Improved focus and resilience building efforts on localized effects needed to ensure sustainable impacts at the local level.

Public awareness and consumer pressure are critical as a driver for private sector engagement in climate change adaptation.

SecretariatAdaptationKnowledgePlatform

AIT-UNEP Regional Resource Centre for Asia & the PacificOutreach Building, P.O. Box 4, Klong Luang

Pathumthani 12120, ThailandTel: +662 524 5386

Email: [email protected]: http://www.climateadapt.asia

April 2011Photo credits

Cover: AIT-UNEP RRC.AP/Roopa RakshitBack: Shirley Kai

The final report of the current research and engagement work by the CSR Asia Center in AIT on the role of the private sector in climate change adaptation will be made available on the CSR Asia website: www.csr-asia.com. For more details, please contact the CSR Asia Center at Asian Institute of Technology ([email protected]).