“The impact [of climate change] is here. It has been for quite some time. It’s impossible to ignore.”
That’s how Tjada D’Oyen McKenna, CEO of Mercy Corps, explained why resilience against climate risk matters so much in this moment. It was a sentiment echoed by the other experts at McKinsey’s COP26 session on the features of adaptation for a changing world. Climate change is here, the panelists agreed, and the world can’t future-protect the planet and communities with mitigation efforts alone.
As institutions around the world look at how to accelerate the deployment of resilience and adaptation measures, several guests shared ideas on what it will take to make that happen. Excerpts from their remarks, edited for clarity, are presented below. A replay of today’s session can be found here. Please visit our COP26 agenda page to register for upcoming sessions.
Highlights from today
The central role of equity: “The vulnerable have the least amount of resilience and are more drawn into [risk]. We have over 155 million people suffering from food insecurity today. For small farmers who rely on their farm for food and income, a drought or severe flood not only impacts that family’s ability to eat, it also dramatically affects their income—which can mean that some of their children won’t be able to go to school for that season. In some societies that can mean an increased pressure to marry off a child too early. ... We cannot successfully or sustainably work with communities unless we are looking at the climate impacts that are there, and [helping] them build sustainable solutions, like investing in small-scale insurance products for farmers.”
—Tjada D’Oyen McKenna, CEO, Mercy Corps
Transforming economies through investment: “There’s technology to assess climate risks and impacts; we have ways of understanding fire, flood, storm, inundation risk, supply-chain risk, and healthcare risk today—and those can be scaled out. They can be oriented [toward] the future, so we’re driving looking forward, as opposed to driving by looking in the rearview mirror.... The exciting thing for someone that’s involved in private-sector investment in climate finance is, in the last nine months, $30 billion has been raised in the private equity sector alone to focus on climate, most of that on mitigation and low-carbon trends. But strategies that are focused on the adaptation and resilience are now accelerating. ... I think there’s optimism as well as enormous recognition that this is a crisis and it is upon us.”
—Jay Koh, managing director and co-founder, The Lightsmith Group
Seeing resilience as an input, not an output: “When it comes to resilience, what you’re trying to measure is actually a capacity to survive, adapt, and thrive. You’re not measuring greenhouse gas emissions; you’re not measuring energy; you’re not measuring an output. You’re actually measuring an input—an ability to do something. The majority of us live in cities, so the people who are managing the systems that keep us safe, that keep our roads open, our water switched on—we need to enhance the capacity of the folks who are managing these systems. … If you don’t know that you, as a city leader, are actually an asset owner and can leverage that balance sheet and do incredible things to manage your risks, then you’re at a disadvantage. And you’re at an even bigger disadvantage because you probably don’t have the infrastructure you need to deal with the people who are moving to your city in six months or one year.”
—Lauren Sorkin, executive director of the Resilient Cities Network
Sustainability, inclusion, and future risk: “As stakeholders make any capital deployment, any investment decisions, we need to balance adaptation, mitigation, and sustainability with inclusion. Getting that four-part system to work together is not trivial or easy. A lot of this has to do with forward-looking capital deployment, and some of it has to do with how we transform existing systems. But in a world where we are deploying entirely new capital, I think there is an enormous opportunity to factor in climate risks and ensure future systems are not just designed for the climate of today, but actually designed for the climate of the future.”
—Mekala Krishnan, McKinsey partner
At a glance
McKinsey analysis finds that regardless of whether warming is limited to 1.5°C or reaches 2.0°C above preindustrial levels by 2050, severe hazard occurrence is likely to increase, and a much larger proportion of the global population could be exposed compared with today.
ICYMI: Delivering on investment in nature
“The importance of nature to solving the climate crisis is well known,” said Robin Smale, a McKinsey partner and director and co-founder of Vivid Economics, based in London. Yet delivering on nature investment faces its own crisis. During McKinsey’s Saturday COP26 session, Robin and a panel of experts discussed the role voluntary carbon markets (VCMs) can play in mobilizing capital for the climate and what it will take to scale investment in nature. He reflects on the session here.
McKinsey’s research finds that institutional investors can help accelerate the development of voluntary carbon markets by investing directly and scaling the supply of high-quality compensation and neutralization projects, such as natural climate solutions.
Learn more about adaptation and resilience, as well as nature conservation, and how they can play a role on the path to net zero with these McKinsey articles: