Name: Impact Initiative 2024: Climate-Proofing The World: Adaptation And Resilience Strategies
Uploaded: 2024-10-09
Duration: 17 min 19 s
Description: Jainey Bavishi, Assistant Secretary of Commerce for Oceans and Atmosphere and Deputy Administrator, National Oceanic and Atmospheric Administration, Carla Peterman, Chief Sustainability Officer, PG&E, Sanjay Wagle, Co-founder and Managing Director, The Lightsmith Group Moderator: Molly Wood, Founder and CEO, Molly Wood Media; Co-chair, Fortune Impact Initiative

Jainey Bavishi, Assistant Secretary of Commerce for Oceans and Atmosphere and Deputy Administrator, National Oceanic and Atmospheric Administration, Carla Peterman, Chief Sustainability Officer, PG&E, Sanjay Wagle, Co-founder and Managing Director, The Lightsmith Group Moderator:  Molly Wood, Founder and CEO, Molly Wood Media; Co-chair, Fortune Impact Initiative

Impact Initiative 2024: Climate-Proofing The World: Adaptation And Resilience Strategies

Photography by Rebecca Greenfield/Fortune

Conferences

Jainey Bavishi, Carla Peterman, Sanjay Wagle, Moderator:  Molly Wood, Founder and CEO, Molly Wood Media; Co-chair, Fortune Impact Initiative

I feel like we should probably open by taking a tiny bit of issue with the title of the session that we're on right now, which I'll take responsibility for. Um I think I, I think we're seeing this week, right? We're seeing at this exact moment in real time that climate proofing is, is not a promise that anybody can make. We are also seeing in real time over these last weeks just in the United States that adaptation of resilience is no longer optional. Um It has however, been a very small part of the conversation and more importantly, a very small part of the funding environment. So let's start by kind of trying to quantify what's been missing. Um And Sanjay, I'm going to start with you. I know you've done some research on this. Yeah, sure. Um So, you know, the background is I've spent the last 20 years focused on investing in renewable energy and clean technologies and about five years ago, shifted to investing in climate adaptation. And I was prompted by realization that climate adaptation is a now thing, not a future thing. And I think it's apparent to everyone now that the impacts of climate change are playing out all around us all the time, disrupting every sector, whether it's um disrupting shipping on the Rhine River or through the Panama Canal from droughts or worsening storms and wildfires, disrupting electric utilities. Uh everything is getting disrupted. Um But the realization was also that um there's a lot of spending happening now, whether they call it climate adaptation or not, businesses, communities are already spending by our count tens of billions of dollars in the US alone every year dealing with these disruptions and they may not call it climate adaptation. The challenge is to find smart ways to adapt um that go beyond just minimizing the damage but actually delivering real value to customers, perhaps even growing revenues. And so that's what we look for. What are the solutions? And we found companies in about 20 different areas of technology that have solutions for the disruptions affecting different sectors. It totaled about $300 billion of spending and that's growing a lot faster than the base spending because that's just driven by physics by the disruptions coming from climate change. Carla, I feel like adaptation and resilience must be simultaneous, must be a hugely reactive part of your business. And I wonder if it has become increasingly proactive, how are you approaching that? As is it a separate line item and, and planning mechanism for you? Yeah. So as Molly mentioned, I'm with Pacific Gas and Electric and we serve electricity and gas to one in 20 Americans and we've been impacted by climate change. And so for years, we've been working on investing in clean infrastructure to help mitigate climate change. But now we're also having to adapt. And as wildfire was mentioned, wildfire has been an acute climate threat that we've experienced. And what we've been able to see is that through a series of measures, we reduce wildfire risk by 94% in our system. However, there is so much, you know, climate threat that we need to be making investments that not only address one aspect of climate change, but multiple ones. And the more time you have to plan the better. So to address our wildfire risk, for example, we really leaned into tree trimming vegetation management, but you have to do that every year. So we made a commitment a couple of years ago to underground, uh, the power lines in our highest wildfire risk areas because not only does that address wildfire risk, but it also addresses reliability. So getting more bang for your buck will allow you to address the immediate issues, but also really plan for long term resilience. And then Jamie, how does this, how do you think about this as you incorporate this into your work at NOAA and the, you know, the department at large? Yeah, sure. So, um, you know, I I helped to run the agency whose airplanes hur hurricane Hunter airplanes are currently flying into Milton to help forecast that storm. By the way, we did the same thing for Helene and the forecast was exactly right. But we still saw the devastating images of the destruction in Western North Carolina as well as the loss of 200 lives, probably even more. Um What does this tell us? You know, Asheville was previously known as a climate safe haven. Um But now we know everywhere it rains, it can also flood. Um And we need to say, take a very different approach to thinking about how we prepare for these impacts. Um You know, I'm gonna invoke Sanjay's partner here. Um uh But at the beginning of the summer, we didn't know what was going to happen with the presidential election. We didn't know what was gonna happen with inflation rates. We didn't know how many gold medals vile was going to win, but Noah predicted that it was going to be an incredibly hot summer. And Noah also predicted that it was going to be an incredibly active hurricane season and both of those things have been true. So there's, you know, we often talk about uncertainty when it comes to adaptation, but there is actually more certainty here than there is uncertainty and it's just time to act, you know, let's dig into that a little bit. Sanjay. Your organization produced some, some research, some attempts to quantify the investment opportunity with in a paper called the unavoidable opportunity. Pointing to this kind of certainty. Talk about that a little bit. Yeah. And um the unavoidable opportunity was the idea that adaptation is something we will have to do. And, you know, just stepping back to Jamie's point, as an investor or as business executives, there's really very few things we know for certain about the future, but we know that the earth will be at least as warm as it is today. And we'll have at least as many severe disruptions to different sectors as we're having today. Probably more the unavoidable opportunity paper was based on the IP C's fifth assessment report showing that no matter how aggressive our decarbonization path is over the next 15 years, we should expect just about the same level of warning warming, meaning that level of warming is pretty much locked in no matter what we do and we're going to have to adapt to that warmer world. Um And so it goes on to outline what the opportunities are for addressing that in smart ways and the opportunities for investing, give us some examples if you would. Yeah. So we were talking about this in the green room that everything is getting disrupted and everything is going to need solutions. And so our latest investment was actually in health care in Brazil because climate change is causing booming mosquito populations throughout Latin America, warmer winters, more standing water and there's now 10 million cases of dengue fever so far this year in Brazil compared to a few 100,000 in a typical year. It's a real crisis and it's not just Dengue fever, it's Zika, it's malaria, it's other mosquito borne diseases and waterborne illnesses. And so we invested in a at home health services company that does vaccinations and lab tests at the home and their business is booming. They were already growing 40% a year. They're now growing even faster because there is a shortage of not enough people in Brazil are vaccinated for Dengue fever. And this is one of the ways to increase the capacity of the health sector to deal with yet another climate disruption. Um We could spend a little time at the end of the panel probably talking about the the future that we all imagine, right, the more time you spend, I think studying the IPCC reports, right? It's not, it's not hidden information. The more you start to realize how different the future we may live in is going to look. Um Carla on that note though, I wanna ask you, how do you plan for the disruptions that we are certain climate change is going to bring on top of the increased need for electricity as a result of A I and data centers, the increased need to electrify everything. It's like you're having to adapt to lots, lots of things all at once. Well, I think the good news is when we look at what the energy system needs to look like to address dangerous climate change. It's actually it's the better cheaper system for customers. It is cleaner, cleaner in terms of air quality, it's lower cost because electricity as a dominant fuel is a more efficient fuel, it's lower cost, but we just have to get there, we have to get to 2040. And so as we think about that, we think about what are some of the milestones. And for us, we're really focused on electric transportation because we see the opportunity for not only decarbonizing the transportation sector, which is challenging, but also that those s can provide a grid resource. As we're focused on having a really good grid and having reliable power, those vehicles can provide power to the grid be really mobile batteries at times that have not been driven. And so about a month ago, we were able to support the city of Oakland in electrifying its school bus fleet. It's the first fully electric school bus fleet in the nation and over 70 vehicles and these vehicles are not only electric but they're bidirectional. So they're able to plug into the grid and provide power to our system um at times of day when the power is needed and the sun is plentiful. And so we're doing this also in a community that can benefit from the air quality benefits. And in one of our communities which is historically disadvantaged. And so finding those opportunities that really also are proof points in making the system more affordable and accessible to some of our lower serve populations is really key. We are going to geek out later about decentralizing power generation and this whole I'm calling it, bring your own power and it's my obsession and I will stay off of it for the moment. Jamie. Um Anytime anyone says bidirectional charging, I just get like way too excited. Um How Jamie that, you know, I think there's probably a tendency when people hear Noah and they think about adaptation resilience, they just think sea walls. Um and I know that it is so much more than that talk about the investments that the agency is making and also just thinking about this in a, in a much different way from sort of moment to moment protection if you will. Yeah, absolutely. So, you know, before I came to Noah, I was actually the chief resilience officer for New York City and we would beat ourselves over the head trying to figure out how to attract private sector investment into the sea walls we were building and I think we were asking the wrong question, right? I think that it's about strategically finding opportunities to bring different capacities together and really leverage each other's investments. So some of the investments we're making right now with Inflation Reduction Act and bipartisan infrastructure law dollars are things like, you know, $10 million into a climate, climate ready workforce program because we're trying to understand what resilience jobs actually look like and, and share that learning widely um $60 million into ocean based accelerators so that we can help entrepreneurs and small businesses commercialize climate resilience solutions that are built off of marine and ocean data. Um I'm gonna tell you the demand for these programs is off the charts. We have another program, $575 million into a climate resilience regional challenge. A one time program we received over $16 billion in eligible applications. Um And so, you know, and I think the the we're putting so we're certainly investing into different kinds of solutions into different kinds of learning that we'll be sharing. Um But the, the demand is huge and um certainly not, not one that we can meet with the limited dollars we have even in this moment of, you know, unprecedented funding. Uh Sunday that gets us back to you and that private sector funding and try to cat trying to catalyze that funding and also the good ideas that come out of it. The start up talk a little bit about Lights Smith uh for people who don't know and how this has been part of your investment strategy for a long time. Yeah, so uh Lights Smith is manages a growth equity fund. We're a private investment firm based in New York. Uh We manage a growth equity fund. We invest in growth stage technology companies pretty standard growth equity, the new part was investing in climate adaptation. And just at the time, five years ago, institutional investors were starting to get familiar with investing in climate mitigation, renewable energy efficiency, electric vehicles, et cetera. Um But nobody knew what we meant by climate adaptation. And um it required, there isn't a track record of investing in this strategy. Um And so it required um or it was very helpful to have um some junior capital um from some uh philanthropies foundations um and uh other investors um to take a first loss position and um show that the perceived risks were not uh were bearable and that helped mobilize um other traditional institutional investors. Uh No, of course, there's a, a bit of a track record. Um And a bit more definition to the space. Can you help us put some dollars behind this? Like how big is your fund? You're, you're still there aren't that many peers investing in adapt and adaptation and resilience solutions that I know of. Um But talk about the, maybe the comparison, the comparative size of these two markets, how much money has gone into decarbonization versus how much money has gone into adaptation and how big we think that market could be. Yeah, I mean, I I think um um climate policy initiative does a global landscape of climate finance? They track about $600 billion a year being invested into climate finance globally in all categories. From venture up to big projects. And about 5% of that is for climate adaptation and some of that is dual purpose, it's both climate adaptation and climate mitigation. So it's a really small part of the whole um Carla when you make these investments, uh it seems that there's a little bit of a you have climate impacting clean infrastructure, right? We're in the middle of an energy transition, building renewable energy assets that themselves may end up in addition to the existing assets vulnerable to the effects of climate change. I mean, how much of this is a hamster on a wheel? Well, it's definitely top of mind and one of the things that we did last year earlier this year actually was submit to our regulator, a climate vulnerability assessment. So we assessed our assets from a 10 to 50 year time horizon to see what the vulnerability is to a range of climate risk. And we have exposure to everything, subsidence, drought, flooding, heat, wildfire. And so that's allowed us to better understand which of our assets are more at risk than others. And another part of that assessment was to meet with our communities to understand what is their adaptive capacity to respond to any disruption in power because dealing with one climate risk may be more feasible for one community than another. So now that we're armed with that information that does help us to prioritize where we spend customer dollars and where we need to have some partnerships. Um And we're also providing that information to our communities as well. And so what's key is making sure then that the next infrastructure one puts in the ground is resilient and on the right time horizon. So yes, there is a lot of focus and need to grow infrastructure. We're seeing that need in order to uh increase electrification, but it's not going to be productive if we're so quickly building it based on old standards. And so, for example, when we had to replace some transmission towers on one of our coastlines, the standard was to do it to a certain depth. But when we looked at what sea level rise will look like in 50 years, I said, let's make it longer and deeper now. So that's actually going to be able to last the entire time for which it was intended to be built. And then Jamie, as you look at this part of the climate solution, that what do you think we need, whether that's, you know, specific dollar amounts or political will or innovations or anything else you can think of? I think we need partnerships. Um And I think, you know, um a a absolutely innovation is gonna be needed whether it's building materials or, you know, different methods of um uh growing our food or um uh health care innovations. I mean, like, i it's these challenges are gonna cut across all sectors and I think Carlo is getting to that Um, so, you know, whether it's businesses looking at their own operations or seeing a market opportunity. Um, I think both exist and, but both things are required and, and, and um both things are necessary. I think of those, you know, you know, those like headphone, like fans that like people wear now they look like headphones but they're jack fans that you wear on your neck. I, I don't know if they work, I don't have one but you know, those are things that didn't exist any, it exists a couple years ago and now we see them around. That is an adaptation, right? That is some entrepreneur realized that that was an adaptation. I think we're gonna see a lot more like that and a lot more that's gonna be absolutely critical to our quality of life and let's face it, our survival. I mean, I keep telling this to people like bring me the start up that is reimagining the fashion timing supply chain, like stop filling Uniqlo with sweaters in September in most places at this point, Molly. I see a public, private partnership opportunity between the fashion industry and Noah's seasonal and subs seasonal forecasts. You got a difference, fix it, fix it. Uh And before I go, I'm just gonna make one comment and then I'll let our panel go, which is I I do want to address the elephant in the room, which is that for the longest time, nobody talked about adaptation and resilience because there was a sense that if we did talk about it, we were giving up on mitigation or giving up on decarbonization. And I just want to point out that Al Gore in an inconvenient truth said that adaptation was a kind of surrender. And by 2013 said that in fact, it was a moral imperative. And so there is a, a justice part of this that we can never ignore. Thank you so much. I appreciate you.