1. “Insert” then choose “Picture” – select your picture. Right click your picture and “Send to back”. The world’s leading sustainability consultancy The Challenge of Framing the Market for Climate Resilience The world’s leading sustainability consultancy Peter Rawlings Partner, ERM 27 May 2016

2. The world’s leading sustainability consultancy Body text What’s this layout for? This slide forms the base of the majority of slides – a text box with bullets are included ready for you to type into. 1.Introduction & Context 2.Current Market Trends 3.The Resilience Continuum 4.Market Opportunities 5.Q&A Presentation Agenda 2

3. The world’s leading sustainability consultancy Introduction & Context Environmental Resources Management (ERM) is a leading global provider of environmental, health, safety, risk, social and sustainability consulting services. Significant private sector focus for our work – 80-90% of our work is for private sector companies Climate change adaptation and resilience is a key focus area and we work across the value chain: planning; measuring; managing and informing. Resilience and adaptation projects across the world in both emerging and developed economies 150 offices in 40 countries > 5,000 professional staff Completed projects in > 160 countries

4. The world’s leading sustainability consultancy Body text What’s this layout for? This slide forms the base of the majority of slides – a text box with bullets are included ready for you to type into. Current Market Trends (Drivers and Barriers) 4

5. The world’s leading sustainability consultancy Resilience-drivers (1) 1. Incident-led Responding to disasters e.g. mining in Australia, offshore oil and gas, permafrost melting in Alaska Taking action after an event – but even this is sporadic! 2. Market Leadership Some companies taking a leadership stance and actively pursuing a resilience agenda – disclosure, risk management, opportunity creation etc. Business consortium are also pushing an agenda e.g. WBCSD

6. The world’s leading sustainability consultancy Resilience-drivers (2) 3. Finance/investment-led Some lenders and investors are driving greater disclosure on climate risks CDP is a result of a drive towards greater disclosure on climate change issues Lenders typically drive climate risk considerations at a project level 4. Discretionary Spend ‘Nice-to-have’ if funds allow Cyclic and at the whim of the market

7. The world’s leading sustainability consultancy Resilience-drivers (3) 5. “Silent Resilience” Actions may already be occurring, but are not seen as ‘Resilience’ Or are happening, but out of necessity and ‘under the radar’ Housing supports key basic needs and economic and social development Yet, housing in many cities is highly vulnerable Can’t always rely on government-led initiatives to fully address climate vulnerability Result is many resilience-driven coping strategies and innovations appearing out of necessity neighborhood consolidation Resistant structural improvements Self-made flood protection Natural ventilation techniques for collecting water community savings groups development of community risk maps; use of reusable housing materials Housing as an Example

8. The world’s leading sustainability consultancy Barriers (1) 1. Language and Understanding The swear–word called “climate change” Current versus future – frequent misunderstanding that we are looking at issues that are only 30-50+ years out 2. Perception Adaptation and resilience is about large-scale physical intervention! Need to move thinking towards range of resilience solutions and interventions – physical, natural, people etc. Expectation that it is Government’s responsibility

9. The world’s leading sustainability consultancy Barriers (2) 3. Uncertainty Climate-denial has had an impact Variation in approaches and methods, combined with scientific and modelling uncertainty Hide behind uncertainty to avoid action 4. Short-term business focus Quarterly earnings and other short-term metrics dominate Corporate risk and governance structures do not always consider climate risks 5. No Business Case Concerns over cost - wary of the cost-benefit The business case has not been made

10. The world’s leading sustainability consultancy The Resilience Continuum 10

11. The world’s leading sustainability consultancy The Resilience Continuum ReactiveTransformativeDenialProactive Discovery Barriers Market Leadership Investment-led Incident-led Discretionary Spend Silent Resilience (Driver is often for different reasons) Drivers Language & Understanding Perception Uncertainty Short-term focus No business case

12. The world’s leading sustainability consultancy The Resilience Continuum ReactiveTransformativeDenialProactive Discovery Proactive Develop and implement strategies Create value for customers, shareholders, employees Discovery Definitional confusion Difficult to move beyond learning Gaining buy-in from management a challenge Denial It’s not a real issue It doesn’t apply to us It is too far in the future! Transformative Typically high risk: only if current model at risk or game- changer in hand Reactive Protect the company Preserve “License to Operate” Environmental compliance Risk management

13. The world’s leading sustainability consultancy Influences Corporate Thinking Protect the business model. Keep up with competitors. Perfect the business model. Differentiate from competitors. Reinvent the business model. Separate from competitors. ReactiveTransformativeDenialProactive Discovery Proactive Develop and implement strategies Create value for customers, shareholders, employees Discovery Definitional confusion Difficult to move beyond learning Gaining buy-in from management a challenge Denial It’s not a real issue It doesn’t apply to us It is too far in the future! Transformative Typically high risk: only if current model at risk or game- changer in hand Reactive Protect the company Preserve “License to Operate” Environmental compliance Risk management

14. The world’s leading sustainability consultancy CAPTURE THE MARKET OPPORTUNITY Link resilience to business value Build out the shared learnings and insights Create private sector drivers Create and grow a vibrant resilience market REFRAMING “RESILIENCE” Find the language that works Create understanding – ‘here and now’ as much as the future Consistency in approaches Create the enabling framework to take advantage of the opportunities Framing the Market for Climate Resilience TransformativeDenialProactive Discovery Reactive

15. The world’s leading sustainability consultancy Market Opportunities 15

16. The world’s leading sustainability consultancy Realizing the Opportunity Address the “Enablers” Language Understanding Capacity and awareness Consistency ….but these do not address the persistent barriers: Short-term mindset and the absence of a clear business case Present 4 ideas to help realize the market opportunity…..

17. The world’s leading sustainability consultancy Contents What’s this layout for? Formatting for contents slide – this slide has slightly different spacing between lines to emphasise topics 1. An Inter-connected Market for Resilience Market for Private Sector Resilience Research & Development Consulting & Advisory Capacity Building Corporate Benefits Solution enablers Solutions providers 17 Need to build out a viable and inter- connected market Overcome the barriers Research & Development Consulting & Advisory Capacity Building Corporate Benefits Solution enablers Solutions providers Market for Private Sector Resilience Arguably that is not fully present today

18. The world’s leading sustainability consultancy Contents What’s this layout for? Formatting for contents slide – this slide has slightly different spacing between lines to emphasise topics Advising private sector actors in climate risks Building out models and approaches Linking science, engineering and economics Building capacity to build and maintain solutions Stakeholder capacity to understand needs Role of communities Contracting solutions Alternative models of delivery Outsourcing needs and opportunities Private sector gains from climate resilience approaches Reputation, competitive advantage, risk management, market opportunities etc. Leading by example Commercialization of solutions – physical, natural, people etc. Viable and practical from a business perspective Technology considerations Big data – basis for decision making Solutions and innovations Alignment with private sector needs Geographical variations and similarities Build Out the Cycle Market for Private Sector Resilience Research & Development Consulting & Advisory Capacity Building Corporate Benefits Solution enablers Solutions providers 18

19. The world’s leading sustainability consultancy 2. Capture and Scale the ‘Silent Resilience’ Understand, define and quantify what is already out there Understand why is it ‘silent’ and how can that be changed to mainstream ideas and innovations Harness the existing innovation and link with private sector entrepreneurialism – could be a powerful tool Linkage to other benefits and drivers could further accelerate update e.g. solar panels as a resilience solution….

20. The world’s leading sustainability consultancy 3. Build Out Vertical Thinking Think and view resilience at all levels – it is not just the ‘large’ solutions Consider up and down value and supply chains Build out the inter-connected economy – engages all levels e.g. farmer knows of problem, but who is seeking solution? Cost & Time Scale of Solution Crop resistance Large-scale irrigation Regional flood protection Irrigation nozzles Drainage ditch design Mulching fields

21. The world’s leading sustainability consultancy Looking Beyond the Fence The majority of resilience thinking in the private sector is ‘internal’ i.e. within corporate or project boundaries Beyond the boundaries may be where the best opportunities lie - leverage thinking from other sectors e.g. health sector Apply this thinking to resilience Securing workforce Supporting communities Enhancing brand and reputation Protecting market place

22. The world’s leading sustainability consultancy Summary Address ‘enablers’ and pursue opportunity drivers: 1.An Inter-connected Market for Resilience 2.Capture and Scale the ‘Silent Resilience’ 3.Build Out Vertical Thinking 4.Looking Beyond the Fence CAPTURE THE MARKET OPPORTUNITY Link resilience to business value Build out the shared learnings and insights Create private sector drivers Create and grow a vibrant resilience market

23. The world’s leading sustainability consultancy Peter Rawlings ERM, Partner Tel: +1 202 412 7594 peter.rawlings@erm.com Thank You Q&A