After The Storm: The Rising Risk Of Floods

Natural disasters and extreme weather events are on the rise. The impact of droughts, extreme temperatures, hurricanes and wildfires have all increased over the last 60 years. But it is floods that has taken the biggest toll on the world in recent times.

According to the UN Office for Disaster Risk Reduction (UNISDR), flooding accounted for 43 percent of all natural disasters between 1995 and 2015. In this period, there were over 3,000 flood disasters, affecting around 2.3 billion people.  In 2016 alone, flood peril caused $62 billion worth of damage worldwide.

In its The Human Cost of Weather Related Disasters report, UNISDR warns that the impact of flood disasters is becoming more severe, affecting ever wider areas while the population living in these vulnerable regions rapidly rises.

The likely rise in sea levels due to climate change will further exacerbate this threat. Scientists predict that there will be a 10cm-20cm rise in sea levels by 2050, doubling the frequency of coastal flooding across the tropics.

This is particularly a threat in lower and middle-income countries where socio-economic development has seen mass urbanization and deforestation. It is no surprise that of the 20 cities most vulnerable to flooding, 14 are in the developing world, five of which are in China and four in India. These countries are also vulnerable to weather-related flooding, especially in the summer months as rainy season and tropical storms like the annual Atlantic hurricanes hit, devastating communities. But the developed world can also be hit hard – in August 2016, floods in the U.S. cost $10-15 billion in economic damage, while the floods that hit northern Europe earlier that summer caused damage in excess of $5 billion.


In Depth

A serious flooding event impacts society on many levels, both in the short-term devastation it causes and the long-term recovery that follows. And the consequences of floods are often hard to predict.

“The ripple effects are tremendous,” says John Dickson, President of NFS Edge Insurance, Aon. “When you think about a flood impacting a community, it is not just property that is damaged – everyone is affected. Where are you going to get groceries for your family? How do delivery trucks or emergency vehicles get to the area when the roads are washed away?

“The impact of floods extends far beyond risk of loss to physical structure and threatens the infrastructure that enables the daily interaction of individuals and makes communities possible.”

This may mean long-term disruptions not only to a community’s transportation network but also its supplies of clean water, food, electricity, and communications. This in turn can lead to disease, malnourishment, and further long-term human consequences that can have an economic impact far beyond short-term supply chain and business interruption.

The Economic Cost

The financial impact of flooding also continues to grow. Beyond the initial damage to property, destruction of crops, or loss of livestock, the long-term economic costs can be wide-ranging and hard to predict.

Damage to public infrastructure affects a far greater proportion of the population than those directly inundated by the flood. Loss of livelihoods, reduction in purchasing power and loss of land value in flood zones can leave whole communities economically vulnerable.

Aon estimates that global natural disasters in 2016 combined to cause economic losses of $210 billion, an amount 21 percent above the 16-year average of $174 billion. Flood peril alone caused $62 billion worth of damage – on top of the $560 billion in economic losses caused by floods between 2006 and 2016. This makes flooding the most expensive type of natural disaster over the last decade.

It is of course the most densely populated areas that suffer the largest economic impact. The costliest weather event of 2016 was the summer floods along the Yangtze River basin in China, which caused damage of upwards of $28 billion. The floods threatened up to 80 million people.

On the other side of the globe, in the past 15 years we have seen the two costliest natural disasters in U.S. history during the Atlantic hurricane season. In 2012 Superstorm Sandy caused an estimated $65 billion in damage, while the cost of Hurricane Katrina in 2005 is believed to be greater than $100bn.

 The Humanitarian Cost

The greatest toll of a flood disaster on society is always any loss of life that might occur. As the world’s population grows and becomes increasingly centered in large cities, the potential for a humanitarian catastrophe grows.

The UNISDR estimates that between 1995 and 2015, 157,000 people died as a result of floods, and that death tolls from flooding rose in many parts of the world during this period. In 2007, floods killed 3,300 people in India and Bangladesh alone. In 2010, flooding killed 2,100 people in Pakistan and another 1,900 in China, while in 2013 some 6,500 people died due to floods in India.

While floods strike Asia and Africa more than other continents, they pose an increasing danger elsewhere. In South America, for example, 560,000 people were affected by floods on average each year between 1995 and 2004. By the following decade (2005-2014) that number had risen to 2.2 million people, nearly a four-fold increase.

Rapid urbanization in these regions has significantly increased surface run-offs, while recurrent flooding of agricultural land, particularly in Asia, has taken a heavy toll in terms of lost production, food shortages and undernourished people in rural areas.

In rural India, for example, children in households exposed to recurrent flooding have been found to be more stunted and underweight than those living in non-flooded villages. Children exposed to floods in their first year of life also suffered the highest levels of chronic malnutrition due to lost agricultural production and interrupted food supplies.

Managing The Risk

The nature of the flood peril is highly changeable, with flash floods, acute river and coastal flooding increasingly frequent.

But new data tools, analytics and modelling help us to improve our predictions and prepare for and mitigate these events. The highly flood-prone country of Cambodia is one region where these new tools have been put to good use.

By analyzing flood patterns along the Mekong River delta and combining them with a range of other key risk indicators from topography to population to soil saturation levels, sophisticated analytical tools have been able to help relief workers better predict where the worst of the flooding is going to be and provide a more effective response. Similarly, sophisticated analytics are also beginning to be used by insurers to get a more accurate understanding of the likely impact of flooding on businesses and individual properties, improving pricing and community resilience.

Even companies such as Facebook are forward-thinking how their platforms can use data collected from users to help communication during disasters. The social network recently introduced ‘disaster maps’ to help organizations better respond when such events occur

Ultimately, as the world’s population continues to grow and is increasingly centered in vulnerable urban areas, the risk and impact of flooding will inevitably rise. The number of people affected by river flooding around the world could almost triple over the next 15 years to 54 million because of climate change and population growth.

As Steve Bowen, Director & Meteorologist at Aon, points out: “The combination of more people, more vulnerable exposure and more intense weather events poses a unique challenge for the insurance industry and beyond.” And the ability to cope with the growing risks that each of these factors bring will be key, as “flooding, both coastal and inland will remain as one of the riskiest perils.” If these trends continue, Bowen further explains, it is increasingly likely that we will see further growth of catastrophe losses around the world on an economic and insured scale for all perils – not just flood.”


Talking Points

“The rapid growth of urban populations along the world’s coastlines – a result of natural population growth and economic migration – combined with the increasing threats from climate change, are set to expose more than a billion people to coastal flooding by 2060.” –Dr Alison Doig, Christian Aid

“Even small changes in mean sea level can significantly increase the frequencies with which critical thresholds are exceeded. For coastal communities that means they need to adapt in order to prevent flood events from happening much more often.” – Thomas Wahl, professor of coastal risks at the University of Central Florida

“Talk to any flood industry participant, be it policymakers, FEMA officials or insurance companies, and (regrettably) they will be able to recite one of the best-kept secrets in the country: flooding is the most catastrophic and costly natural disaster in the United States.” – Louis Hobson, CEO of Aon National Flood Services (NFS)  


Further Reading

Banks Failing to Respond to Climate Risks, New Reports Find

TOKYO, June 22, 2017 — A report released today by four NGOs – Rainforest Action Network, BankTrack, Sierra Club and Oil Change International – revealed that the world’s biggest banks, including Japan’s three megabanks, are failing to respond to climate risks through their continued financing of extreme fossil fuels.

The report,Banking on Climate Change, provides analysis of 37 banks from around the world that are fueling climate change by funding some of the most carbon-intensive, financially risky, and environmentally destructive sectors of the fossil fuel industry: coal mining, coal power, extreme oil (tar sands, Arctic, and ultra-deepwater oil), and liquefied natural gas (LNG) export. Japanese banks, including Mizuho, MUFG and SMFG, are among the guilty institutions. Banking on Climate Change gives the three Japanese megabanks an F grade (the lowest score possible) based on their lack of any meaningful commitment to address climate change risks in these sectors.

Of the three large Japanese banks, Mizuho is the only one to have increased its exposure to extreme fossil fuels after the Paris Climate Agreement, highlighting its disregard for the global goal to keep temperature rise to well below 2 degrees. In 2016 alone, Mizuho contributed over 2.9 billion USD to some of the largest and most carbon-intensive fossil fuel companies in the world. Half of those investments were related to coal power, the dirtiest and most carbon-polluting energy sources. In aggregate, Mizuho has increased its fossil fuel financing by 60% since 2014, despite the Paris Agreement and the global trend toward carbon reduction.

In light of these findings, Rainforest Action Network, 350.org Japan, Friends of the Earth Japan, and Japan Center for Sustainable Environment and Society published the 2016 ESG Performance Report of Mizuho Financial Group as an independent review of Mizuho’s financial practices. In addition to Mizuho’s significant international exposure to extreme fossil fuels, the report finds that Mizuho is the top financier of Japanese fossil fuel and nuclear related companies and provides significant financing to companies driving tropical deforestation in Southeast Asia. Between 2011 and 2016, Mizuho provided over 38 billion USD in loans and underwriting to fossil fuel related companies in Japan, far exceeding its peers Mitsubishi UFJ Financial Group (MUFG) and Sumitomo Mitsui Financial Group (SMFG). In the same period, Mizuho contributed over 4 billion USD (adjusted) in loans and underwriting to companies threatening rainforests in Southeast Asia, and nearly 8 billion USD to nuclear-related companies in Japan.

Mizuho is well behind its peers in adopting strong Environmental, Social, and Governance (ESG) policies with respect to addressing climate change, deforestation and human rights, and has failed to adequately disclose the material risks of its investments to shareholders. The inadequacy of Mizuho’s social and environmental safeguard policies has the financial group currently involved in major ESG controversies worldwide. These include the Dakota Access Pipeline in the United States, a project that has been condemned by UN officials due to its abuse of Indigenous rights; palm oil company Indofood, which has been linked to use of child labor in Indonesia; and the Cirebon-coal fired power plant in Indonesia which faces community opposition due to health and livelihood impacts. Without sector-specific ESG policies, Mizuho risks becoming embroiled in more corporate scandals, misplaced capital allocation into carbon-intensive industries that may become stranded assets, rainforest destruction or corporate liability for financing human rights abuses, any of which can impact shareholder value.

At a press conference held at the press club of the Bank of Japan, Toyo Kawakami, Japan Director at Rainforest Action Network said, “Fossil fuel burning and tropical deforestation are the leading drivers of climate change, and Mizuho is funding both with billions of dollars. Shareholders need to hold Mizuho accountable for its reckless financial practices.”

“Mizuho’s increasing financing of fossil fuels is contrary to the global goal set out in the Paris Climate Agreement. Mizuho should make full disclosure of climate related financial risks as part of its lending and investment policy and commit to decarbonization of its portfolio in line with the 1.5-2 degree temperature goal. Continued financing of projects like the Dakota Access Pipeline will make Mizuho an international target for divestment based on human rights and climate concerns,” said Shin Furuno, Japan Divestment Campaigner from350.org Japan.

“Mizuho is currently financing several major coal-fired power plants in Indonesia, which have only brought misery to the local communities. Mizuho needs to take cues from its peers and quit coal for good,” said Ayumi Fukakusa from Friends of the Earth Japan.

To download the Banking on Climate Change report: www.ran.org/bankingonclimatechange

To download the ESG Performance Report of Mizuho: www.ran.org/mizuho_riskyinvestment

About the Organizations:

Rainforest Action Network has a 30+ year history challenging power and systemic injustice to preserve forests, protect the climate and uphold human rights through frontline partnerships and strategic campaigns. For more information, please visit:www.ran.org

350.org Japan was established in April 2015 as the Japan office of 350.org, a global environmental organization. 350.org Japan is working to spread fossil fuel divestment in Japan, mainly through the My Bank My Future campaign. 350.org Japan is creating a people-driven movement to demand banks adopt sustainable investment policies that keep global warming well below 1.5-2℃ — a target codified in the Paris Agreement. 350.org’s global network extends to more than 180 countries. For more information please visit: http://350.org/ja

Friends of the Earth Japan tackles problems such as climate change and energy, forests and biodiversity, development finance and environment, Fukushima support and nuclear phase-out, and more. As a member of Friends of the Earth International, it have been active in Japan since 1980. Its ultimate goal is to create a world in which all people may live peacefully and equitably. For more information, please visit: www.foejapan.org/

Final Report: Recommendations of the Task Force on Climate-related Financial Disclosures (June 2017)

TCFD Recommendations Report Launch

The Task Force released its final Recommendations report and supplemental materials on Thursday, June 29, 2017.

The Task Force previously released its draft Recommendations Report in December 2016. The draft report was made available for a 60-day public consultation period. The public consultation period closed on February 12, 2017. A summary of the public consultation findings is available here.

Statement of Support and Supportive Companies

The final Recommendations report of the TCFD received support from over 100 businesses spanning numerous industries globally, which collectively signed our statement of support. The statement and full list of companies can be found here.

Our Mission

The Task Force on Climate-related Financial Disclosures (TCFD) will develop voluntary, consistent climate-related financial risk disclosures for use by companies in providing information to investors, lenders, insurers, and other stakeholders.

The Task Force will consider the physical, liability and transition risks associated with climate change and what constitutes effective financial disclosures across industries.

The work and recommendations of the Task Force will help firms understand what financial markets want from disclosure in order to measure and respond to climate change risks, and encourage firms to align their disclosures with investors’ needs.

Learn more about the Task Force

Task Force publishes recommendations on climate-related financial disclosures

The Financial Stability Board (FSB) has welcomed the publication of the recommendations for effective disclosure of climate-related financial risks published today by the industry-led Task Force on Climate-related Financial Disclosures (TCFD).

The Task Force, chaired by Michael R. Bloomberg, was established by the FSB in December 2015 to develop a set of voluntary, consistent disclosure recommendations for use by companies in providing information to investors, lenders and insurance underwriters about their climate-related financial risks. The 32 industry members of the Task Force, who are drawn from a wide range of industries and countries from around the globe, finalised the recommendations after extensive public engagement and consultation, including public consultation on a draft of the recommendations in December 2016.

The TCFD developed four recommendations on climate-related financial disclosures that are applicable to organisations across sectors and jurisdictions. The recommendations are structured around four thematic areas:

  • Governance: The organisation’s governance around climate-related risks and opportunities.
  • Strategy: The actual and potential impacts of climate-related risks and opportunities on the organisation’s businesses, strategy, and financial planning.
  • Risk Management: The processes used by the organisation to identify, assess and manage climate-related risks.
  • Metrics and Targets: The metrics and targets used to assess and manage relevant climate-related risks and opportunities.

Speaking about the work of the Task Force, FSB Chair Mark Carney said “The Task Force’s recommendations have been developed by the market for the market. They set out the disclosures that a wide range of users and preparers of financial filings have said are essential to understanding a company’s climate-related risks and opportunities. Widespread adoption will provide investors, banks and insurers with that information, helping minimise the risk that market adjustments to climate change will be incomplete, late and potentially destabilising.”

Speaking about the final recommendations, Michael R. Bloomberg said “Climate change presents global markets with risks and opportunities that cannot be ignored, which is why a framework around climate-related disclosures is so important. The Task Force brings that framework to the table, helping investors evaluate the potential risks and rewards of a transition to a lower carbon economy. We’re pleased to see so many businesses and investors around the world support the recommendations of the TCFD and hope others will be encouraged to join our initiative.

More than 100 firms, with market capitalisations of over $3.3 trillion and financial firms responsible for assets of more than $24 trillion, have provided statements of support to welcome the recommended disclosures and encourage take-up of the TCFD recommendations.

Notes to editors

More information on the work of the Task Force and its membership, as well as companies’ statements of support, are available the TCFD website. In developing the recommendations, the Task Force received over 500 public consultation responses and held 18 outreach events with over 1,250 participants,as it sought feedback.

For more details on the publication of the report please contact Vero Henze at the TCFD Secretariat at: vhenze@bloomberg.net.

The FSB has been established to coordinate at the international level the work of national financial authorities and international standard setting bodies and to develop and promote the implementation of effective regulatory, supervisory and other financial sector policies in the interest of financial stability. It brings together national authorities responsible for financial stability in 24 countries and jurisdictions, international financial institutions, sector-specific international groupings of regulators and supervisors, and committees of central bank experts. The FSB also conducts outreach with 65 other jurisdictions through its six regional consultative groups.

The FSB is chaired by Mark Carney, Governor of the Bank of England. Its Secretariat is located in Basel, Switzerland, and hosted by the Bank for International Settlements.

Disaster alley: Climate change, conflict and risk

This report looks at climate change and conflict issues through the lens of sensible risk-management to draw new conclusions about the challenge faced in Australia. These climate change risks are either not understood or wilfully ignored across the public and private sectors, with very few exceptions, and include climate-driven humanitarian crises, forced migration, political instability and conflict. The Australian government must ensure Australian Defence Force and emergency services preparedness, mission and operational resilience, and capacity for humanitarian aid and disaster relief, across the full range of projected climate change scenarios.

Recommendations made include:

  • Establish a top-level climate and conflict task-force in Australia to urgently examine the existential risks of climate change and develop risk-management techniques and policy-making methodologies appropriate to the challenge.
  • Build international processes that specifically recognise and formulate the practical steps necessary for a coordinated, global climate emergency response based on a sound, existential risk-management approach.
  • Launch an emergency-scale initiative to decarbonise the Australian economy no later than 2030 and build the capacity to draw down carbon dioxide from the atmosphere while protecting food-growing capacity.
  • Build more resilient communities in the most vulnerable nations by high-level financial commitments and development assistance; build a flexible capacity to support communities in likely hotspots of instability and conflict.
  • Ensure all levels of government and civil society organisations are prepared for the impacts of projected climate change. Ensure Australian Defence Force preparedness, their mission and operational resilience, and their capacity for humanitarian aid and disaster relief, is adequate across the full range of projected climate change scenarios.
  • Establish a national leadership group outside conventional politics, drawn from across society, charged with implementing the national climate emergency program.

The Asia–Pacific region, including Australia, is considered to be “Disaster Alley” where some of the worst impacts will be experienced. Building more resilient communities in the most vulnerable nations by high-level financial commitments and development assistance can help protect peoples in climate hotspots and zones of potential instability and conflict. The report posits that Australia’s political, bureaucratic and corporate leaders are abrogating their fiduciary responsibilities to safeguard the people and their future well-being, and contends that they are ill-prepared for the real risks of climate change at home and in the wider region.

Download here: https://docs.wixstatic.com/ugd/148cb0_1d614b99bd734626a0deba96f8d843d4.pdf

Source(s):  National Centre for Climate Restoration (Breakthrough)

ExxonMobil Investors Demand Extra Reporting on Climate Change Impact

Source: Iulia Gheorghiu, Morning ConsultExxon Mobil Corp. shareholders passed a landmark resolution on Wednesday that requires the company to more rigorously assess the impact of global climate change policies on its business starting from next year.

Growing demands from investors to address the effect of climate change on oil prices could herald an industry trend, analysts say, even as the Trump administration prepares to roll back environmental regulations.

Ahead of their annual shareholders’ meeting, the oil company advised against passing the proposal, which calls for more in-depth stress tests of climate change effects, arguing climate risk information was already being sufficiently tested and reported.

But 62 percent of ExxonMobil’s shareholders voted in favor of the measure, up from 38.1 percent who voted to support similar climate risk reporting last year, after a prolonged campaign to get energy companies to take climate change more seriously.

Another climate-related resolution, asking ExxonMobil to disclose its actions to lower methane emissions beyond regulatory requirements, did not gain majority support.

The New York Common Retirement Fund submitted the measure, which asks ExxonMobil to conduct and share stress tests about how their business could be affected by climate change risk and the surge of fossil-free technology. ExxonMobil’s board argued that disclosure is already covered by their “Outlook for Energy” projections and other publications, but said it would reconsider its stance against additional disclosure in light of the shareholder request.

“Climate change is one of the greatest long-term risks we face in our portfolio and has direct impact on the core business of ExxonMobil,” New York State Comptroller Thomas DiNapoli said in a statement. “The burden is now on ExxonMobil to respond swiftly and demonstrate that it takes shareholder concerns about climate risk seriously,”

In the weeks leading up to the shareholder meeting and in their proxy statement to investors, ExxonMobil noted the “importance of assessing the resiliency of the Company’s resource portfolio” but urged investors to vote against additional disclosures.

ExxonMobil shareholders’ support for disclosing the impact of climate change comes on the heels of a similar move by shareholders from Occidental Petroleum, who passed the reporting measure by 67 percent on May 12.

“We look forward to continuing our shareholder engagement on the topic and providing additional disclosure about the Company’s assessment and management of climate-related risks and opportunities,” Eugene Batchelder, board chairman of Occidental Petroleum, said in a written statement Wednesday.

Analysts pointed to Occidental and ExxonMobil’s moves as the start of a trend in climate change risk disclosure. That comes even as the Trump administration is preparing to withdraw the United States from the Paris climate agreement, according to media reports on Wednesday. (ExxonMobil has supported staying in the agreement.)

“This vote is a huge step forward for the world’s biggest oil and gas major, the industry and beyond,” Tarek Soliman, a senior analyst at the Carbon Disclosure Project, said in a press statement. The organization provides transparency around carbon emissions on a global scale.

ExxonMobil CEO Darren Woods said the company’s investment in new technology and innovations would be the best path toward meeting energy needs while helping to mitigate the effects of climate change.

“We remain confident that it will enable us to deliver value far into the future,” Woods said at the end of the shareholders’ meeting.