Insights Report – COP28 and Climate Adaptation

Beyond climate mitigation, how ready are we with our emergency responses and building resilience?

Insurance companies, real estate developers, and local government infrastructure developers especially play a big and critical role in climate change adaptation.

Welcome Address by Dr. Mahmoud El Burai, Senior Advisor Dubai Land Dept, RERA, Dubai Police

  • The frequency of disasters is increasing exponentially with a high social and economic cost.
  • Resilience training is of paramount importance and should be seen as a value rather than a cost.
  • Arise Network UAE has developed a resilience tool for the built environment, which has been piloted in a few buildings.
  • Dubai Police has created a resilience hub.
  • The government is committed to resilience and sustainability, along with the private sector, and academia. Our partners ADRES and UNDRR are developing capacity building in urban resilience.

Special Address by Anusha Seshadri, COP28 UAE Presidency Team, Senior Finance Specialist

  • The negotiated work stream of COP comprises all States coming together annually and negotiating and progressing the agenda on climate.
    • This year there are 160 items, but the big question is, have we reached the targeted USD100 billion in funds from the developed countries to assist the developing countries with the climate agenda? This has been an ongoing aim for the last decade.
    • Identifying ways to operationalize the loss and damage funding for countries facing disastrous effects of climate change -Increasing financing available for adaptation.
    • Exploring potential strategies, techniques, and measures that can be used by countries.
    • Finding innovative solutions through long-term negotiations at COP28.
    • Creating a sustainable pathway toward tackling climate change impacts.
  • The non-negotiated work stream involves various teams. From within the Finance Partnership side, we want to implement something that’s tangible and actionable, rather than another theoretical framework. How can we mobilize finance for climate action?
    • Exploring reforms and initiatives to catalyse climate financing in the global South.
    • Working on practical tools such as setting up vehicles to mobilize climate finance at scale.
    • Creating carbon markets within IFC framework with an aim for private finance coming into these spaces, not in bits and pieces but at a larger scale.
    • Innovative solutions for investing in areas of need across the globe.
    • Providing a platform that allows efficient and effective investments.
    • A secure system for private investment with trained professionals managing it.
  • If you are interested in getting involved with Cop, please reach out. On the non-negotiated side, we are working on numerous initiatives; additionally, there is a two-week event where you can physically showcase your initiatives and participate in panels and roundtables, etc.

Brief Address by Rania Hamad, External Relations Officer, UNDRR

  • The United Nations Office for Disaster Risk Reduction works closely with the private sector through its network and launched the Dubai Resilience Hub with Dubai Police, as the first one in the Middle East.
  • Adopting a strategic approach towards COP 28, focusing on loss and damage mitigation, climate adaptation, and private sector engagement.
  • Investing in IRR
  • Ensuring early warning systems are established and functioning properly.
  • Developing new strategies that tackle challenges related to disaster risk reduction.
  • Recognising that the gap needs to be filled quickly and efficiently for full implementation by 2027, we acknowledge contributions from private, government bodies and existing industries. However, cooperation on a larger scale is needed to have systems development completed and efficient upgrades.

Presentation by Marcia Toledo, Director, Adaptation & Resilience, High-Level Climate Champions

  • Every year, each COP presidency appoints a climate champion. And this year, the Cop28 presidency has appointed Her Excellency Razan al Mubarak. We work as a champions team in support of the objectives of these presidencies.
  • Our team supports the continuity and brings about mobilized action in a way that can be sustained long-term, while at the same time stressing the strategic direction and focus of each presidency.
  • We are not part of the presidency team, but we work in support of the main priorities that come from partnership engagement, rather than negotiating engagement, as we do not have a role to play in the negotiation process and are more an arm to help articulate or mobilize actors in support of climate objectives. In this case, following the Paris Agreement, those measures were increased to stimulate an ambitious cycle that will involve all players, businesses, financiers, cities, regions etc.
  • The topic that we’re going to go through today is mostly focused on climate adaptation. This includes many things, such as how to transform food or water systems, human settlement, and infrastructure systems, etc.
  • Having a people-centred focus is key, as it combines both the implementation of solutions and what it means to people at the end of the day. Ultimately, who will be resilient are people and nature.
  • The Race to Resilience is a campaign related to adaptation, resilience, and the level of system transformation.
  • We’re working with 36 partners and 2.9 billion people who have pledged for improving resilience.

Fireside Chat & Workshop with Francis Bouchard, Managing Director, Climate & Sustainability, Marsh McLennan. Moderated by Hala Bou Al Awan, Lawyer, Media, Founder HBA Consultancy

How can solutions be less reactive?

  • From the insurance context, it’s the way it’s been from the beginning. An event happens, a contract is fulfilled, and somebody is reimbursed. It is the way even government spends its money.
  • About 90% of government and humanitarian funding for disaster-related expenses is post-event. It is about recovery.
  • It is primarily a rich countries game. The OECD average for Insurance is about 9.4% penetration. Within the GCC, it’s about 1.9% and UAE is 3.2%. Interestingly, Luxembourg is 34%,
  • This system has traditionally worked with idiosyncratic risks, and losses play out across the whole system once it becomes systemic.
  • With climate change, we’re all facing the same exposure; the ability of the insurance sector to pool, share, and spread risk; as well as incentivize certain risk reduction behaviours becomes challenging. The traditional role of the insurance sector, in the climate context is being fundamentally challenged.
  • Typically, we have a 12-month contract that is both regulated and highly competitive, making the pricing a challenge, and insurance people compete against each other every day. Therefore, the traditional method of waiting for an event to happen and paying out a claim will not work in this climate context.
  • There is a disclosure framework ‘Task Force for Financial Disclosure’ and ‘Climate Financial Disclosures’. If we don’t start to see more focus on reducing risk, then our ability to finance the risk is going to be further challenged.
  • It is difficult to quantify and give a return for something that might happen ten years from now. There are studies that use a 5:1 ratio, i.e., for USD 1 invested, you save USD5. The US government uses 6 to 1. The National Institute for Business Building Science (NIBS) in the US shows a range between 4:1 for a retrofit to 12:1, meaning you can save USD12 for every single dollar spent by following building codes. The proof and economic argument are available. The challenge is convincing the financial sector to get behind this.
  • We should never lose sight of the human dimension of what we’re talking about here too. Anything we can do to prevent some of the suffering caused by disasters, we should be doing as well.

 Where do you see the private sector’s role in achieving the agenda?

  • Risk has become so complex and interdependent that the role of the business sector is really to start understanding the ecosystem surrounding their profitability. Where are their exposures, and what are they doing to strengthen that ecosystem? Who are they working with? This game of climate resilience is an ultimate team sport because no single company will be able to resolve the climate risk issue on its own.
  • We don’t have ten, fifteen, or twenty years because the solution takes three to ten years to implement. Working in a collaborative fashion is the most effective way to do it.

The ambitious goal is to mobilize 3000 insurance companies, capture 50% of the insurance sector, and launch or continue 50 projects. How are you going to achieve that?

  • Can we get enough money to finance the right technologies and then deliver those locally to move the reductions that need to be done on a global level?
  • Zurich Insurance is collaborating with NGOs and academia, specifically focusing on flood resilience, and building tools to help communities become more resilient against floods. They are currently active in nine countries and looking to expand further. All these tools are made available publicly on the website – not something being hoarded – so there is a wealth of knowledge and data available about natural catastrophes that can be collected and utilized for helping communities become more resilient.
  • Insurance Development Forum is expanding since COP27, with some of its risk modelling tools. They have about 20 projects around the world focusing more on sovereign types of pooling mechanisms. But they’re going back to those projects and looking at adaptation now.
  • They’re looking at crisis finance. Is there a way to move the post-crisis humanitarian relief numbers down, from 90% to 50% by 2030?
  • Groundbreaking new dialogue between the EU and the insurance sector on what role it plays in adaptation in the United States. The insurance industry has taken the lead in passing a law that creates a framework for how the federal government spends its money on resilience, bringing social justice into the equation.
  • And now we hope to bring more incentives for private sector investment. The insurance industry is starting to step up in different markets with different approaches, all of which reflect local reality and local needs.

Where do you see the role of real estate developers or local government infrastructure developers in being proactive toward this goal? 

  • Cross industries collaborations are crucial. This is an opportunity for sectors to jointly formulate tools and carry out pilot projects. How can businesses work together to reduce risk? What are the nature-based, infrastructure, technology, land use, or planning solutions? And how long do we have?