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Enhancing Private Sector Engagement on Climate Change Adaptation - David Wei

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Interviewer:       Good morning, David.

David Wei:          Good morning.

Interviewer:       Could you tell us a little bit about you and BSR?

David Wei:          I’m David Wei. I’m the Climate Director at BSR, and I lead our climate practice which includes work on research, on collaboration and on consulting. And BSR, Business for Social Responsibility, is a global non-profit. We have 250 member companies, mostly very large companies. And we work with them at the leading edge of sustainability. So in essence, over the last 25 years, we have worked with them to bring new ideas and new actions into sustainability. And indeed, climate resilience is one of the things that we believe it is time that companies act on.

Interviewer:       Can you tell us briefly about what you’re going to talk about today in the talk?

David Wei:          I’m here at IDRC today for a brown bag lunch on a project that IDRC has very generously funded for us. It was a research project on how we can increase private sector investment into adaptation or into resilience to physical climate risks. And the project, of course, had a research component. We, for example, developed a framework on how to work with the private sector, to build resilience. We produced a scoping paper on the different means by which that finance is generated by the private sector and we carried out national policy assessments for six countries. But in the end, I think what I’m really here to speak about to IDRC, in part with a great deal of gratitude, is that this research work has had a great deal of impact, and the impact has been on two fronts.

First, the research has informed our engagements with our member companies and these are very large multi-nationals, and changing their direction a little bit, changes potentially a great deal on the ground. So we have worked with one of the largest food, beverage and agriculture companies, one of the four large U.S. telecom companies, one of the large investment banks. We now have work that is beginning with a large medical devices manufacturer, another engagement with a large PC and printer manufacturer. And in each case, what they’ve come to ask us to help them with is how to make their operations and their supply chains, and the communities that are embedded in there in which their supply chains are embedded, to make them resilient. And that gives us an opportunity to apply this research in a way that delivers impact to the communities along those supply chains. So, that’s the first part of the impact is that this research is delivering impact through our engagement with our member companies.

The second part and this is even to my surprise actually, is that this project was one of the very first that our organization carried out that was purely focused on climate resilience. We have done a great deal of work on mitigation or emissions reductions before, but very little on this side of the coin. And I think that in part, as a result of this work, our organization, BSR, has chosen climate resilience as one of the main themes for a new agenda, for a sustainable business. So our climate team is prioritizing it as one of three priorities through 2020 in our own strategy. And our organization produced a 25th anniversary port last October called the Future of Sustainable Business, and in it, we lay out a new agenda with three items, and the first of these is climate resilience. And by the same token, our CEO, Aron Cramer, sits on the advisory committee for the Global Climate Action Summit that California Governor Jerry Brown is hosting this September. And one of the items that we are raising of the agenda for the summit is climate resilience supply chains and what new corporate action can be generated to create resilience supply chains. So in this sense, I think, nearly to my surprise, work that is fundamentally research, has in fact yielded impact both through companies on the ground, but also indeed, will have a much longer and lasting impact because it has pivoted our direction as an organization.

Interviewer:       Let me take a step back and ask you why climate reliance? And why do you think it’s important for the private sector to be involved in climate resilience?

David Wei:          I think there are two ways to look at this. The first is that the private sector or businesses, they have no choice not to be involved anymore. It will not be possible for them to choose not to be involved and that is because climate change presents material risks to them as businesses. And I believe that recent extreme weather events in the last years, or even last year, Hurricane Harvey, for example, make this point very clear. And so in part, the time has come for business to grapple with the fact that indeed, physical climate impacts must be dealt with wand that they must be made resilient to them. And that a successful business in the future will be a climate resilient one.

The second reason, I think for businesses to be involved is that there is no way to build climate resilience globally without the private sector. The Adaptation Gap Report makes clear that the difference in funding between what is publicly provided and what is needed to build resilience to climate impacts is a full order of magnitude, maybe 10 times in terms of the difference. And so in that sense, if without being able to mobilize or shift private sector funding at scale, to be very honest, we may simply not become resilient in the future and that will be to the detriment of vulnerable communities across the globe.

Interviewer:       So, they have to be involved, yes, but do you think it’s their responsibility to actually be involved?

David Wei:          And that’s a great question, the question of responsibility. I think the lens that most people have taken up to now, honestly, is that because resilience to physical climate impacts is a public good, it ought to sit firmly with the public sector, and that indeed, the private sector need not play any role, then. But the truth is that this is not the case, I think looking at it from either the public sector or the private sector.

First, I think the social responsibility of business is broadening. There is a new role for business that is emerging. I know at BSR, we are investigating sort of what this new role is, at this expanding role for business in the social contract. So in this sense, we believe that the role of business is changing and it’s changing in a disruptive landscape. I think also, even looking at the private sector or business, looking at it for itself, in the past, businesses might have been able to look only at their own operations or their own infrastructure. They might have been able to say, our responsibility is our factory and its walls and what sits inside of those wall. And that is increasingly not the case, and it’s especially not the case with climate change. With climate impacts and global supply chains that are distributed everywhere, where there are low inventories and where there are ripple effects that scatter across the globe very quickly, something that happens can disrupt a business very, very quickly. Hurricane Harvey will disrupt distribution centres and will disrupt customers, and will affect businesses in many different ways. And so in this sense, to be very honest, we could also say that it’s in a business’ self-interest to build resilience along its supply chain and to do so, looking at that broadly, looking at it beyond the factory wall or beyond the fence line, because, and I know this is one of the most common examples, there’s no point in hardening your factory wall if the road is washed out and you cannot get your workers inside. And it’s a simple point but it makes the point that community resilience along with the supply chain is indeed increasingly integral to a resilient business which means to a successful one.

Interviewer:       And how do you think that companies in the private sector, in general, can actually work with the public sector to make sure that everything works well, if we can say that?

David Wei:          That’s a great question, and indeed, public-private partnerships have been a subject of great discussion over the last many years. I think here, what’s wonderful is that there are many initiatives from the public sector, where resilience plans are being developed. So I’ll give you an example. We do some work funded by the Rockefeller Foundation, it has to do with resilience in Asia. And the Rock Foundation has created a network of cities called the 100 Resilience Cities in which each city has a chief resilience officer, with a resilience strategy. And in our work with them, we are slowly coming to the point, where our interest now is to enable the connection between business and city, to jointly advance the implementation of those resilience strategies. There is certainly a lot of appetite for this on the city side, and we’re very interested in generating the appetite for this on the business side. So, I think the joint action, especially, and again, with resilience, often resilience is local, so joint action at the local level between, for example, a city or a particular district and business in that city or district is what will be necessary to create resilience in the end.

Interviewer:       What do you think is necessary even as funder, to incentivize the private sector, to work with the public sector in making sure that the communities are resilient?

David Wei:          Typically, the way that funders incentivize projects that build resilience has to do with working sort of with the next most risky bit of a project that is in a project pipeline. That’s sort of the traditional climate funder model. And I think that what our work is, whether or not there is a way to change business behaviour, meaning not merely, if you will, to unlock a project by having a funder come in and take that trench of risk that others, that is not commercially viable, but in fact, seeing if there is a way to work with businesses to change their own strategies, so that they internalize the idea of building climate resilience and implement it throughout their programs. This multiplies its impact, I mean throughout the potential reach of a company. But it also, I think, tries to harness different kinds of finance. So not merely the finance, project by project finance, but really, for example, a company’s capital expenditure, or its procurement, or finance that’s deployed in the management of its risks. So, in that sense, what we’re trying to explore is a broadened way of looking at how finance might be mobilized through companies to build climate resilience that is not merely on a project by project transactional basis.

Interviewer:       You mean we have to really see beyond the scope of a project [00:12:36].

David Wei:          Yeah, I guess that’s one way of looking at it, yes. I mean, obviously when you’re trying to mobilize and order of magnitude, more funding, broadening how you look at the subject is sort of the first step in doing that.

Interviewer:       And in doing that, do you see any challenges for you as a person, but also, for BSR as a whole to actually achieve what you’ve been describing so far?

David Wei:          Yeah, I certainly see some challenges in mobilizing companies to build climate resilience. I think one of them, you’ve already mentioned, which is the idea that it is a public good and that therefore it sits firmly outside the role of the private sector or of business. And of course, I disagree with that. I think there are other different challenges. Even businesses, for example, who are very interested in building their own resilience, they work with data and often this data is not sufficiently granular for them. They need data or tools carried to them in a way that they can work with internally, that will enable them to use this information to build the resilience throughout their programs or using their programs. So I think that’s one other challenge. I think there is also a sense that resilience is very new up the agenda. And of course, at BSR, we are committed to raising it off the agenda. But as with anything new, I mean, whereas emissions reductions for a company are pretty mainstream now. It’s hard to find a large company that doesn’t have a set of climate emissions reductions targets, but it is exceedingly rare to find a large company with a clear strategy to build climate resilience. And so in that sense, we are at the tip of the iceberg. At least we think we’re at the tip of the iceberg. And so moving something up the agenda will always require education, will require capacity building, will require, in essence, the willingness to speak to it and to its importance, to socialize a new subject onto the business agenda and that itself will take a great deal of effort.

Interviewer:       At the end, I just wanted to ask you how do you think that what you work on with the private sector because it’s still a bit high level, so how do you think that can trickle down to the communities and build community resilience at the same time?

David Wei:          That’s a great question because that is sort of the $64,000 question, isn’t it, right? I mean, the question is really, and I just want to add one more. In a way there are two. Businesses have business continuity plans, right? I mean, that’s management 101 for them. The real question is: How will a business invest where there is risk rather than [00:15:41 flee?]. And how will it do it in a manner that is beyond its fence line that builds the resilience of the community as opposed to of its own infrastructure? Those are the two important questions that have to be answered. I think here, in part, companies will learn that in fact, community resilience will bolster their own resilience, that indeed these subjects are not mutually exclusive, that they have an interest, a genuine interest, that a sustainable business has a genuine interest in community resilience. The actual means by which community resilience will be built, really has to do with the different programs that a company is already operating through its supply chain, so different companies operate different ones. For example, a coffee maker will operate nurseries and provide loans to coffee farmers. There will be programs to empower women in factories. BSR, actually interesting, although it’s not climate related, one of the pieces of work that we are proudest of is called the Her Project which trains women factory workers throughout Southeast Asia. And so really, getting to the community level will be about the programs that companies deploy. They are already deploying them. There are some subjects, like women’s empowerment, like human rights, which have been on the corporate agenda for a very long and for which are being acted on by companies. And in the end, if we are to reach communities on this new subject, on climate resilience, we’ll have to make use of those programs to reach the communities to do so.

Interviewer:       Thank you very much. That was really, really interesting. And before we finish, do you have any final words that you would have or words of wisdom you would like to share with us?

David Wei:          Words of wisdom, that’s very funny. I think I do want to say this. In the climate community, resilience has kind of always been, if you will, sort of the ugly sibling to mitigation or emissions reductions. It has been treated with a lower priority, typically. And, for example, this is manifested when the Paris Agreement was negotiated in 2015. There was a great effort to place a global goal on resilience in Article 7, to stand alongside the global goal on mitigation in Article 4. And indeed, I think conceptually, resilience and mitigation are simply two sides of the same coin. We will need both to have, frankly, the world that we want to live in. We will have to hold temperatures to the Paris Agreement goal of below 2 degrees Celsius and strive to do more than that. And we will also have to really deal and wrestle with the impacts that are already upon us, and that will intensify in coming decades and coming years.

I think the main thing I want to say is that many people debate whether or not it is time for resilience to be on the business agenda. And BSR, for us, we believe that now in fact is the time. That there is a clear opportunity to have businesses build climate resilience, that the subject is now mature enough and that there is sufficient information and interest to actually make that happen, and that the potential impact on the ground will be significant and indeed, that that potential impact is necessary to have the just and sustainable world that we want to live in. That might not have been true 10 years ago, but I think that it is true now and it is why we are devoting our own organization to the subject.

Interviewer:       Thank you very much. It was really nice to discuss with you. And yeah, that’s all for us.

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