Climate Adaptation Finance Update: Insurance Industry Adopts Development Goals
UN Photo/Logan Abassi
story highlights

ICLEI World Congress 2018 launched the Insurance Industry Development Goals for Cities to help achieve SDG 11.

The World Bank and GFDRR issued a report, finding that global average losses from disasters could be cut by US$173 billion.

Kenya received a US$200 million IDA credit for DRM.

The IDB provided the Bahamas with a US$100 million contingent loan to strengthen the country’s natural disaster risk financing plan.

5 July 2018: The month of June 2018 saw international financial institutions, governments and non-State actors highlight the growing need for disaster risk reduction (DRR) and enhanced resilience to reduce climate change impacts on affected populations. The insurance industry adopted a set of development goals for cities.

The World Bank reported opportunities in post-recovery reconstruction planning. Governments took action to improve institutional frameworks, disaster risk financing plans and procurement processes.

Insurance Industry Adopts Development Goals for Cities to Help Achieve SDG 11

During the ICLEI – Local Governments for Sustainability World Congress 2018, on 22 June in Montréal, Canada, ICLEI, together with the UN Environment Programme (UNEP, or UN Environment) Finance Initiative (UNEP-FI) and UN Environment’s Principles for Sustainable Insurance Initiative, launched the Insurance Industry Development Goals for Cities. The ten goals serve as a global action framework for the insurance industry to help achieve SDG 11 (sustainable cities and communities). The goals focus on, inter alia, building climate and disaster-resilient communities and economies, and on helping develop climate and DRM strategies and plans.

Overall, the goals consider the insurance industry’s risk management, insurance and investment activities in the context of key urban challenges and opportunities. They cover natural disasters, health and pollution, social and financial inclusion, protecting natural and cultural heritage sites, resilient infrastructure, sustainable energy and resource efficiency, and nature-based solutions. The goals also include enabling factors, including: data, risk analytics and technology; risk management, insurance and financial literacy; climate and DRM; and sustainable insurance roadmaps for cities. [Insurance Industry Development Goals for Cities]

World Bank, GFDRR Explain How to Reduce Disaster Losses by a Third

The World Bank and the Global Facility for Disaster Reduction and Recovery (GFDRR) released a report titled, ‘Building Back Better: Achieving Resilience Through Stronger, Faster and More Inclusive Post-disaster Reconstruction,’ assessing socioeconomic resilience and the impact of natural disasters on people’s well-being in 149 countries. That impact, the report concludes, could be reduced by as much as 31%, potentially cutting global average losses from US$555 billion to US$382 billion per year.

The report finds that, in small island States, better post-disaster recovery and reconstruction can reduce annual losses by an average of 59%. In ten countries with a high level of risk (Antigua and Barbuda, Dominica, Guatemala, Trinidad and Tobago, Zimbabwe, Myanmar, Belize, Vanuatu, Peru and Angola), better reconstruction can reduce overall losses from natural disasters by more than 60%. The report seeks to share experiences and comparative analyses to provide lessons that can be replicated elsewhere to contribute to a more resilient future. [Building Back Better: Achieving Resilience Through Stronger, Faster and More Inclusive Post-disaster Reconstruction] [World Bank Press Release]

World Bank Approves US$200 Million Credit for Climate and DRR in Kenya

The World Bank approved a US$200 million International Development Association (IDA) credit to assist Kenya in managing the impacts of climate change and disaster risks. The Disaster Risk Management (DRM) Development Policy Financing with Catastrophe Deferred Drawdown Option (Cat DDO) will provide Kenya with rapid access to funding in the event of a disaster or public health emergency, while supporting reforms.

Cat DDO will support Kenya’s DRM efforts with a comprehensive programme of policy reforms to improve institutional and planning frameworks, including in Kenyan cities. Implemented by the National Treasury and Ministry of Planning, the project aims to strengthen resilience to disaster risks and minimize the burden of economic recovery. [World Bank Press Release]

IDB Provides US$100 Million Loan to Strengthen Bahamas’ Disaster Risk Financing Plan

The Bahamas will enhance its natural disaster risk financing plan and build resilience of its public finances to the impacts of climate change with a US$100 million contingent loan from the Inter-American Development Bank (IDB). The IDB financing, with a maturity period of 25 years, is aimed at structuring financial coverage that will allow the Bahamas to pay for any extraordinary public expenses in a timely manner in cases of emergencies caused by severe or catastrophic natural disasters.

Procuring entities should be permitted to forego routine procurement procedures in favor of faster, more flexible procedures, according to participants of a CDB workshop on procurement in disaster situations.

Besides supporting the government’s immediate response capacity and protecting its fiscal balance, the operation seeks to enhance the country’s comprehensive DRM by fostering improvements in five main policy areas: DRM governance, risk identification, risk reduction, preparation for emergency and response, and financial protection and risk transfer. [IDB Press Release]

World Bank Partners with CDB to Improve Procurement in Disaster Situations

The Caribbean Development Bank (CDB) and the World Bank announced partnerships with governments in the Caribbean to harness public procurement to improve disaster preparedness and response. During a workshop on procurement in emergency situations, held at the CDB from 4-5 June 2018, the two organizations highlighted that public procurement frameworks and systems do not give sufficient attention to procurement in the context of disasters.

Issues affecting the procurement process during and after natural disasters in the region, include: insufficient analysis of key needs in the event of a disaster, and market ability to meet those needs; lack of appropriate considerations in procurement legal and regulatory frameworks for disaster scenarios; absence of rapid contracting mechanisms to facilitate more timely recovery responses and value for money; and insufficiently robust contract management.

The first step towards addressing the need for procuring entities to have flexibility in how they procure goods, works and services required for disaster response is sharing global best practices in emergency procurement. The next step is to identify practices that could be considered for adoption in the Caribbean context. One conclusion from the workshop was that procuring entities should be permitted to forego routine procurement procedures in favor of faster, more flexible procedures, while ensuring that maintaining accountability and transparency remains a priority. [CDB Press Release]

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The SDG Knowledge Hub publishes monthly climate finance updates, which largely focus on multilateral financing and cover, inter alia, mitigation and adaptation project financing news and lessons, institutional events and news, and latest developments in carbon markets and pricing. Past IISD climate finance updates can be found under the tags: Finance Update: Climate Change; and Finance Update: Sustainable Energy.


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