Engaging the private sector in climate change adaptation: Early evidence from the Pilot Program on Climate Resilience

Trabachi's picture

Chiara Trabachi is an analyst at Climate Policy Initiative (CPI)and is currently enrolled in Ca’ Foscari University of Venice’s PhD program on the Science and Management of Climate Change. The original version of this blog was published recently on the website of CPI.

Investment in projects that help countries adapt to climate change attracted around USD 20-24 billion in 2012, according to CPI’s recently published Global Landscape of Climate Finance 2013. However, due to data gaps and limited understanding of private sector adaptation efforts, the Landscape 2013 only tracks public adaptation finance.

This knowledge gap is symptomatic of a broader problem. Private actors lack understanding and awareness about climate-related risks and opportunities, even if climate change can directly affect their assets and revenues. Knowledge, technical, financial, and risk barriers hinder their engagement.

The public sector can play a role in helping to overcome these obstacles. To better understand how public resources can be deployed to engage private actors in building countries’ climate resilience, a forthcoming San Giorgio Group case study explores approaches taken on-the-ground by the Pilot Program for Climate Resilience (PPCR) in the Nepalese agricultural sector.

The Nepalese project is the first of 11 private sector projects in the PPCR portfolio to attract the engagement and interest of private sector participants, such as agribusiness companies, in contributing toward the country’s adaptation efforts. Processors of rice, maize, and sugarcane – among the most vulnerable crops – have committed to train farmers on how to avert climate-related losses and to increase productivity, through knowledge and training tools provided with the support of PPCR’s funds. The overarching goal of the Nepalese project is to build models that make climate-resilience a long-term business for the private companies involved, thereby creating the conditions for their eng agement beyond the project’s life. This is essential for scaling-up resources and achieving transformational results. Getting private actors on board in activities that reduce countries’ vulnerabilities to climate risks in other pilot countries – mainly least developed ones – is proving more difficult.

Obstacles to progress for PPCR private sector interventions in countries such as Mozambique, Niger, and Zambia were among the topics discussed at the PPCR meeting held in Washington last week.

The experience of the International Finance Corporation (IFC), the organization in charge of PPCR private sector projects, shows that unfavorable investment climates and underdeveloped private sectors are limiting the opportunities for engagement. Further, major barriers to private actors’ involvement also include the mismatch between possible returns on climate investments and investors’ time horizons. Lack of data, the inability of local actors to comply with IFC’s social, environmental and financial standards, and governments’ limited support to private activities, can represent further impediments.

Nevertheless, exploring ways to engage the private sector and learning from these experiences is part of the game in pilot initiatives. To experiment further, possibly encouraging Multilateral Development Banks (MDBs) to look for opportunities beyond their comfort zone, the PPCR established a USD 70 million private sector competitive reserve in November 2012. Through the MDBs, PPCR pilot countries submitted 11 project proposals for activities in nine countries. The six projects selected at the PPCR meeting last week, for an investment of about USD 41 million in concessional loan resources, range from the energy and infrastructure to the agriculture and forestry sectors in Haiti, Jamaica, Mozambique, Saint Lucia, and Tajikistan.

The delays and under-achievements of some PPCR private sector projects are not a reason to reduce efforts for engaging the private sector. In the end, resilience in an ever warming world will depend on decisions and actions taken by millions of private individuals and companies. Those decisions and actions will depend on how quickly we can learn to engage them effectively. Chiara Trabachi is an analyst at Climate Policy Initiative and is currently enrolled in Ca’ Foscari University of Venice’s PhD program on the Science and Management of Climate Change.

Author's Full Bio:

Chiara Trabachi is an analyst at Climate Policy Initiative and is currently enrolled in Ca’ Foscari University of Venice’s PhD program on the Science and Management of Climate Change. Her research to date has focused on international climate finance and adaptation finance. Before joining CPI, Chiara worked for three years as business strategy consultant at the The European House-Ambrosetti, where she was mainly involved in Corporate Social Responsibility projects, and in the assessment of European policies and countries’ competitiveness strategies. Prior to that, she worked for international companies and institutions – both in Italy and abroad – including KPMG and Datamonitor. Chiara holds a Master’s Degree in Business Administration from the Catholic University of Milan. Climate Policy Initiative is a team of analysts and advisors who work to improve the most important energy and land use policies in the world.

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Comments

 I read the blog post with

Dbours's picture

 I read the blog post with interest, but to me it feels a bit one-sided.  In the Netherlands we have a proverb - and it comes from shipping as a lot of our proverbs do "De beste stuurlui staan aan wal" translating into "The best helmsmen stand on shore", meaning "The watchers always know better than the doers".

I do see the PPCR as possibly being a catalyst for change towards some of these barriers identified, especially the ones on unfavorable investment climates from a government’s side and underdeveloped private sectors.  The comment on return on investment and time horizons is a comment not unique in any way to the PPCR, but a general issue towards climate change and why climate investments are at times difficult to secure… See the current COP19 discussions in Warshaw as a reminder on that.

And I’ll end with two quotes to that;

I don't think we're yet evolved to the point where we're clever enough to handle a complex a situation as climate change. We're very active animals. We like to think: ‘Ah yes, this will be a good policy’, but it's almost never that simple.” … “The inertia of humans is so huge that you can't really do anything meaningful.”

James Lovelock, scientist, environmentalist and futurologist, 2010. In: HICKMAN, L., 2010. James Lovelock on the value of skeptics and why Copenhagen was doomed. [online]. The Guardian, 29 March 2010. Available from: http://www.theguardian.com/environment/blog/2010/mar/29/james-lovelock

Such a statement in itself should not be an invitation not to take action, it should call us to fight inertia! It should invite us to prove differently and to experiment in order to come up with answers to not so simple questions! To me, that is where the PPCR is positioning itself.

And:

This agenda of sustainability and corporate responsibility [Dennis: which includes climate change through energy efficiency, GHG emissions, carbon footprint, climate legislation and the organization’s ‘social license to operate’] is not only central to business strategy but will increasingly become a critical driver of business growth ... I believe that how well and how quickly businesses respond to this agenda will determine which companies succeed and which will fail.”

Patrick Cescau, CEO of Unilever in PWC 2011, p. 1.
In: PWC, 2011. The sustainability agenda: Industry perspectives. New York, NY: Pricewaterhouse Coopers (PWC).

Those companies who want to sustain themselves in the long run will match their ROI-perspective to market challenges and take a longer-term perspective.</strong>

With kind regards, Dennis Bours
SEA Change CoP Team Leader

Dbours@pactworld.org
http://www.seachangecop.org/

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