This week global advisory and insurer, Willis Towers Watson (NASDAQ: WLTW), launched in tandem with governments including the UK and Jamaica, the Global Commission on Adaptation and the World Economic Forum, a private-sector led Coalition for Climate Resilient Investment.
The definition of climate-resilient infrastructure investment will need more explaining or at least more fine-tuning, before specialised investment vehicles start to launch. By the end of 2019, however, the Coalition will have developed case studies to build the business case and identify the critical enabling environments for climate-resilient infrastructure investment.
If LPs build up their interest, the private sector funds will come
The theme of decarbonisation and energy transition is increasingly in an institutional investor’s remit.
The Coalition is reported to be the first of its kind because it a financial-sector led initiative that brings together over 30 organisations across the investment value chain to address climate resilience challenges.
The Coalition will be chaired by Willis Towers Watson CEO, John Haley.
Andrew Steer, President, and CEO of the World Resources Institute, and Commissioner of the Global Commission on Adaptation, said making infrastructure resilient to climate change has been regarded for too long as a burden and a cost.
“In reality, it’s a high return investment, yielding on average a 4-to-1 return,” said Steer.
“It also saves lives, reduces risks, and encourages further investment. This dynamic new coalition will help make climate risks visible, leading to better decisions and smarter investments for the future,” he said.
Physical risk pricing
By COP26 in 2020 analytical tools including a physical risk pricing framework and methodology to prioritise national resilient investment needs, will be developed, alongside a range of instruments to prevent capital flight from the most vulnerable regions, such as a technology transfer programmes, technical assistance facilities and/or blended finance facilities, according to Willis Towers Watson.
Innovative capital market instruments such as Resilience Bonds will be structured, and the pricing framework will be implemented across resilient infrastructure investment funds. Six country pilot projects will trial these innovations, protecting economies and citizens’ lives from growing climate impacts.
Climate change innovation fund
Also launched this week is the Ayrton Fund, a £1bn aid package that will give British scientists and innovators access to funding to develop and test new technology targeted at tackling climate change in developing countries.
Energy efficiency and energy transition technologies that address transport and energy pollution in developing countries will by far make the quickest and biggest impact. Should these technologies reach critical mass, local venture funds may even fund future rounds of investment.
International Development Secretary Alok Sharma said, “Climate Change will hit the poorest communities hardest and fastest. The UK’s pioneering work through the Ayrton Fund will find innovative ways to develop clean energy solutions for homes, which will transform the lives of the most vulnerable.”
Business and Energy Secretary Andrea Leadsom said that the UK is leading the world in tackling climate change – cutting emissions further than any other G20 country, becoming “the first major economy to legislate to end our contribution to global warming and being nominated to host crucial UN climate talks next year.”
“Having successfully decarbonised while growing our economy, we’re proud to work with the poorest countries, who suffer most from the impacts of climate change, to develop and deploy wind, solar and battery technology to help drive the clean energy transition,” said Leadsom.
Prime Minister Boris Johnson launched the initiative at the UN General Assembly.