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After the withdrawal of the United States from the Paris Agreement, people are wondering how this will impact the sustainability initiatives of U.S. companies. .
Josh Sawislak is the global director of resilience for the infrastructure services firm AECOM. In this role, he works across the entire enterprise of AECOM’s offerings in planning, design, construction, finance, operations, and development to help develop and leverage resilient strategies projects and clients to address issues such as sustainability, climate change, disaster preparedness, and enterprise risk management.
He served as a speaker at the first US-China Climate Leaders’ Summit in preparation for the global climate negotiations in Paris in 2015 (COP-21) and led AECOM’s delegation to Paris. He leads AECOM’s participation in the ARISE private sector partnership with the UN on disaster risk reduction and leads the urban resilience strategy theme for ARISE.
Prior to rejoining AECOM, he served in the Obama Administration, most recently as the Associate Director for Climate Preparedness at the White House Council on Environmental Quality, where he developed U.S. federal policy on climate adaptation and resilience and worked with foreign governments and international organization on multilateral and bilateral efforts.
Christopher P. Skroupa: When you are working with clients and getting them to invest in climate resilient efforts, what challenges are there? Do you find a focus on short-termism over long-term value to be typical of your interactions?
Josh Sawislak: I spend a lot of time talking to clients and other market stakeholders (investors, regulators, financial institutions) about the business case for investing in resilient infrastructure. Timeframe is one issue, but as the useful life of these assets tends to be 50-100 years, it is not the same as looking at technology or other shorter term assets. While many investors have a short-term vision, institutional investors and governments are able to look at the longer lifecycle. Insurers are even looking at multi-year products that will capture some of the resilience investments, but the market is just beginning to explore how to price this risk. Just as green investors are asking to better understand and quantify the sustainability aspects of a green bond, the market needs better metrics on how to price and value resilience investments. Other barriers may include the capacity to give certainty in outcomes and resilience benefits (including pay-outs on bonds) and the structure of local regulatory and governance arrangements.
Skroupa: In your expertise, what challenges are developing nations facing when committing to the Paris Agreement on climate change?
Sawislak: Money, institutional capacity, and governance are the three biggest challenges. For many of these countries, the commitments they are making under the Paris Agreement will lead to some of the largest projects in their nations. They need help ensuring or creating a governance framework that will support the partnerships, concessions, and procurement of these mega projects. They also need to ensure they have the expertise and experience to understand what is possible, what their assets or resources are worth, and how well their partner, concessionaire, or contractor is performing in construction and operations. Finally, they need to identify how to fund and finance these efforts, through P3s, concessions, DBFO, or more traditional delivery methods. AECOM has partnered with Baker & McKenzie and the Climate Policy Initiative (CPI) to provide a comprehensive, turnkey offering in this space under a consortium called GNI Plus.
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Skroupa: With the United States backing out of the Paris Agreement, what broader consequences do you see for the future?
Sawislak: It is interesting to note how much discussion has happened in states and cities in the U.S. around reinforcing commitments to the goals of Paris at the sub-national level. Some have said that President Trump’s action have been a catalyst for action that is far beyond what even the Clean Power Plan would have achieved. A great example of this is recent commitments by states including California, Hawaii, New York, Washington, Oregon, Virginia, and Vermont to the Paris goals. At the municipal level mayors from hundreds of U.S. cities—large and small—signed the Climate Mayors pledge to meet the goals of the Paris Agreement and the original U.S. targets. This was a major theme of the recent meeting of the U.S. Conference of Mayors.
As noted by Sec. Tillerson, the biggest risk for the U.S. is losing a seat at the table as decisions are made on how to reduce carbon and grow the economy at the same time. Following COP21 in Paris, the U.S. was a clear leader in this discussion and that position has been abandoned with the announcement to pull out — make no mistake, China has moved quickly to fill the void and is strongly pursuing the top spot on the global climate stage. The strong support for Paris by major U.S. companies, including most of the major energy, industrial, and tech companies, was based on a belief that carbon reduction and climate adaptation are critical to the world economy and a concern about global competitiveness with China and others in Asia and Europe taking our leadership role. If you look at the major risks identified by the World Economic Forum’s Global Risk Report, the highest impact and most probably are in the climate space. Another report showed that meeting the Paris commitments will generate over $19 trillion in global wealth, so I think business will drive this, but as mentioned earlier, it’s the developing nations that need help from the developed world and that was one of the major short term promises of the Paris Agreement. Without the U.S. that effort is much harder.
Skroupa: Do you foresee the withdrawal of the United States impacting the initiatives of companies attempting more sustainable practices towards company resiliency?
Sawislak: No, not at all. Companies are and were moving toward these goals before Paris and even before the Clean Power Plan was proposed by the Obama Administration. The reason is that it makes good business sense. Major oil companies are developing energy transformation strategies at the highest levels and see resilience planning as essential to long-term business success. They are particularly focusing on the changes in water availability as a key risk. Also other sectors are reconciling their role in contributing towards the resilience of a city and acknowledging the complex and interdependent systems that bind them together. Consumer facing companies see their customers demanding these programs and they in turn are demanding them of their suppliers and partners. Blackrock recently announced a new green bond index fund and the market is beginning to figure out how to assess and price climate and carbon risk. It could happen sooner with federal action, but I believe it’s inevitable because it just makes good business sense.
Christopher P. Skroupa is the founder and CEO of Skytop Strategies, a global organizer of conferences.
