Current disaster-risk levels are alarming. The cost of damage to commercial and residential buildings worldwide is averaging $314 billion each year. At the same time, a new United Nations report shows that annual investments in disaster-risk reduction of $6 billion can result in savings of up to $360 billion.
Hundreds of business executives, aware of the dramatic costs — and potential benefits — at stake, are now preparing to attend a UN conference on disaster-risk reduction in Sendai, Japan.
The Tohoku region of Japan, where the meeting will take place, is a vivid reminder of how a disaster’s economic impact reverberates far beyond its epicenter. Devastated four years ago by the Great East Japan Earthquake and tsunami, Japan’s automobile production was cut by nearly half. The financial damage did not stop at the country’s borders; as a direct result of the slowdown in Japan, automobile production dropped by some 20 percent in Thailand, 50 percent in China and 70 percent in India.
The risks inherent in globalized production carry great rewards for those who know how to manage them properly. That is why major businesses are engaging with UN experts to improve global strategies for disaster-risk management and reduction.
This level of business engagement bodes well for pioneering a new planet-friendly and people-sensitive approach to global prosperity. Indeed, the disaster-risk reduction conference in Sendai is the first in a series of major international gatherings this year. Beyond Sendai, world leaders will convene in Addis Ababa in July to discuss financing for development, in New York in September to adopt a new development agenda and in Paris in December to reach a meaningful climate-change agreement. Taken together, these meetings promise to generate transformative action that can set the world on a safer, more prosperous, and more sustainable path.
Sustainability starts in Sendai for three major reasons. First, by its very nature, disaster-risk reduction requires forward planning. Second, investment in this area advances both sustainable development and climate action. And, third, helping those who are most vulnerable to disasters is the ideal starting point for the effort to aid all people by establishing universal targets for development and climate change.
Over the last 12 months, thousands of lives were saved in India, the Philippines, and elsewhere by improved weather forecasting, early-warning systems, and evacuation plans. Advances in risk reduction that safeguard development gains and business investments must match this progress in disaster preparedness and we must make wise choices that create greater opportunities in the future.
For example, experts estimate that 60 percent of the land that will be urbanized by 2030 has not yet been developed. Enterprises that factor disaster risk into their construction plans will avert the much higher costs of retrofitting later. More broadly, over the next 15 years, the world will make major investments in urban infrastructure, energy and agriculture. If this spending is directed toward low-carbon goods, technologies, and services, we will be on our way to creating more resilient societies.
More and more industries appreciate this. At the Climate Summit that I convened last September at the UN in New York, financial institutions, commercial and national banks, insurance companies, and pension funds vowed to mobilize more than $200 billion by the end of this year for action to address climate change.
They envisioned a host of new initiatives, including issuing so-called green bonds and shifting assets to clean-energy portfolios. In a particularly important move, the insurance industry, representing $30 trillion in assets and investments, committed to creating a Climate Risk Investment Framework for industry-wide adoption by the end of the year.
It is time to stop addressing development and humanitarian emergencies separately. Disaster-risk reduction lies at the nexus of development assistance, which seeks to advance better living conditions, and humanitarian aid, which begins after a disaster hits.
Courtesy: Project Syndicate