Climate in the Boardroom

Kevin: Hello everyone, this is Kevin Klowden, I’m the Managing Director of California Center Milken Institute, this breakout discussion will be focusing on Climate in the Boardroom, how businesses should respond. We have the pleasure of having not one but two different experts who can provide the perspective on how businesses should respond to climate change, issues of drought and what should be done both in a short and long term function. I would like to go ahead and turn the conversation to Matts Eriksson , Director of Climate Change and Water of Stockholm from International Water Institute. First and foremost, will be talking about taking climate change into adapting to drought. What are the key factors that businesses need to understand when they are making that adaptation both not only from a short term perspective but in terms of long terms prospects? Where should they be directing their energies?

Matts: Well, if you are part of a business entity, you often have a pretty strong economical agenda… business agenda that you need to make money on your business and as [00:28:06.00] that energy efficiency and water efficiency goes close to hand in hand then and there are actually money to be saved if you can improve your efficiency, that’s something that should be in the board room and we when discuss..if you use energy for your production system, how is it being used and where can you make improvements? This is something seriously involved with something called Swedish textile industry or initiative, where major Swedish textile companies are looking through their production change, most of them are based in Asia and see how improvements can be made and there’s a lot of money to be saved also, thank you.

Kevin: Next question we’d like to direct to Lindsay Bass whose Manager of Corporate Water Stewardship for World Wildlife Fund. We talked about the boarder room that is something specifically brought up in your presentation is that, how do business leaders think of the water scarcity, I mean how is how is coming to mind having a boardroom discussion? How is it brought up and what kind of reactions do they have?

Lindsay: Well, I think that’s right on head in terms of generally this is brought to their attention when it’s having an impact on the bottomline. And for some period of time that caused water to, you know, be a bit invisible in sustainability agenda because of price in most places in the world. However, what they were saying is water rise up because it’s be getting to become much more visible as water prices increase around the world to better reflect scarcity the different reality and paradigms that we’re dealing with around water right now, which is seeing with the impacts of climate change becoming more evident, more streams in the system, so CEO’s and Senior Leaders at multinational corporations around the world are seeing more of their operations [00:30:34.01] to critical drought which can have severe impacts on getting access to the raw materials needed to make their products as well as the opposite side out which is too much water so flooding impacts can be hugely distraction to business operations. You know, we’ve had recent flooding in the Southwest in Texas, a few years ago in Thailand that can be incredibly harmful to a number of business sectors, our industry was incredibly impact in the Thailand flooding, so with those types of impacts, risk is becoming a more relevant concern which CEOs are beginning to see water. Now the other element of that is this issue of assets, so, you know, companies maybe doing everything right within their operations but if they’re not paying attention to whether or not water is effectively managed, you know, where those operation resided? They can begin to deal with perfection issues, you know, they’re the ones that have water yet, you know, communities around them do not, then they may lose their special license to operate and then lost investments in leading the world could, you know, become stranded in the fact and also being able to secure water allocations for new plant locations, that can also be the challenge, so there’s a number of issues and we know how much riding in the boardroom is increasing and I think that was definitely in the positive year in the World Economic Forum progress report.

Kevin: Understood, one thing that need to be bring up in terms of the issue of the mitigating risk in taking steps to plan in advance. Matts is there anything that the companies could do from the infrastructure planning standpoint to help them hedge against the risks being created by the redistribution of water, water being too little or too much and, you know, what could we be doing right now to start addressing some of those concerns?

Matts: So, If I understand your concern some kind of the infrastructure investments or changes?

Kevin: What could businesses do, do they need to do infrastructure investments, do they need to get a work with a public sector or what could they do to both be socially responsible as well as protect their bottomline?

Matts: Well, I mean let me take one example from the Himalayas, I mean Himalayas is maybe have more hard power potential per capita than any other place on this planet. Their massive rivers with the potential of very, very high energy and very little of this is actually being tapped at the moment because of various difficulties to both political and technical sector but companies here are planning for is to how to… I mean there are a lot of plans in the pipeline that must be realized in the near future if that political setting is right as well, but in the light of climate change there a lot of new risks that these companies still need to take you to count before, one thing is for instance, the reduction of the residual glaziers in the high of the which so believing a lake behind this lake is in front of the glazier behind a very unstable Moraine Ridge and there’s quite a risk that this lake is bursting it’s unstable Moraine Dam and cause a lot of destruction downstream. If you want to put up a hydropower company or downstream, this might be something that is really tricky thing to take into account so that’s maybe an extreme example that you need to know than soft stream of your the new infrastructure putting into place. But even the magnitude of the water discharge which varies a lot more as climate is changing needs to be taken into account and it’s very tricky to make prognosis for how to build a new infrastructure. So this is a tricky problem that is coming to climate change and it’s causing your real problems to..in this case to hydropower sector so there’s a risk here, risk analysis has to be made in, it has to be turned into some real action. I don’t have a clear straight forward answer, this is like a problem called place that can analyze how difficult to move in a new climate.

Kevin: Thank you. To Lindsay, you work as a member of different corporate board, what kind of examples to have in terms of best practices or best efforts that are being taken right now by various corporations around the world?

Lindsay: Well, there’s a lot really great examples and I think projects out there that can serve as inspiration for others that are wanting to get engagement space and having some difficulties taking the initial steps. We do a lot of work with the Coca-Cola Company and certainly there’s a lot of great examples coming out of Coke around water stewardship. Just last week, we were in the Indian Valley up in the Sierra Headquarters in Utah and we’ll looking at some meadow high up high meadow high uphill restoration work that company is investing in conjunction with the forest service and that meadow restoration is an investment in natural capital and protecting and increasing the headwater areas ability to soak up and retain more water that could then be released through the drier months of the year and historically these areas where degraded by overpricing and poor man practices and that holding capacity of those headwaters had decrease significantly and in investing in this areas the company along with government agencies is really building the natural capital of these headwaters which feed the bay area, many things within the bay area. Building that camp the national capital so that the storage capacity is for crater and that’s, you know, not only a benefit to taking advantage of natural forest ecosystems and that storage ecosystems service but it also a really smart climate adaptive strategy because if you store water in a dam you get a tremendous of evaporation on the top, you store it in the landscape and these big alpine meadows that’s one of the stored in the ground and can be fully released, so as we see what climate impacts decreasing our ability to really leverage landscape or things like that can be powerful, so that just one example but I think it’s a really powerful one and something that more and more companies are looking at and wanting to invest in the top of source water protection that can help them secure, you know, their own allocations and also the water allocations of others in that watershed.

Kevin: Great, if you happen to be very heavily involved in the water industry attention in California has to support or mineral water distributors in the country or the level of the world. If your company that is dealing with the possession that you’re moving water around perhaps in places that has… from places that has less water to places with more water. How do you address those kind of issues, it sounds like Coca-Cola is closely taking some significance steps to be involved in watershed protection and restoration, what other steps can you take from a positive perception standpoint to address people’s concern?

Lindsay: Well, I think in these days of, you know, transparency of disclosure is huge, helping communities or the society understand how you are since you are in grade four, so I think it’s job number one and so that means that your first order business is get your own on order and make sure that you are really utilizing every drop and being smart on how you use that water because it’s such a precious resource. The next fact is to, you know, be really engaged and be a positive force in a watershed that are under scarcity and stress and find ways to leverage the power of your business and your voice in that watershed for better water governance, improved water quality, help each protect this important water related areas like the source water areas also wetlands can be incredibly valuable natural fresh water ecosystems to protect. And then, sustainable water balance so it’s an internal action but we, like they say can be a “clean fish in the dirty pond” so you’ve got to pay attention on what your neighbors are doing as well, you have to step outside in that comfort zone and engage with other state holders in the business that you operate and be a positive force there.

Kevin: Great, thank you, now Matts one more question, how does decision making process get particularly affected for mentors and officials, when the context that they are offering keeps on changing, it’s one thing to be dealing with some of the long term issues but how this one make adaptation especially going back to the risk issue and being can do since like you’re doing those deadly thing correctly but you can’t even say in California when there’s a prediction of an El Niño phenomenon bringing scarcity of water but no one how you get people thinking on the right way so to speak and what should we need getting a various [00:42:41.22] and others to be thinking about as the situation keeps on changing?

Mats: Thank you, I think I’m in the decision making process are really spot on, I think it is really getting tricky and the reason I say this is that when it comes to decision making in changing environment you often have a certain agenda that impacts your decision making and that’s the political and economical agenda, almost regardless on this level you’re taking decisions, you’re working in environment where you have, you know, maybe if you’re a Manager of a project or a business entity, you have a budget to comply to, then you have certain range of political rules, and these process are a little bit slower maybe than sometimes the change is taking place, so I’m not [00:43:49.06] in the poll where the reach on a growing a lot of them, the vegetables that is produced to cut new market and they’re facing severe drought for 70 years but the government respond to this was to build flood mitigation infrastructure cause It could also be a flooded area and this was of course kind of completely control productive so the thing is that to adjust the quick chances is not always very easy and I think there’s a need to look into the governance systems on the political side so that it match the more bottom up needs in the bottom up approaches on all kind a changes on how we trying to deal with. So this is what is coming back to the something I mention in my introduction is that the true capacity to adapt to the changes is to be strength and become more flexible so a flexible governance system is very much needed. I keep point hear cities so to top down policy approaches need to be connected to the bottom of needs, thanks.

Kevin: Certainly, now we got a two minutes left so we’re going to ask each of you if you could think of one specific example or further example that you think is particularly relevant that people should look to at going forward and if you were just include in action taking either a government or business side. Lindsay if you could go ahead.

Lindsay: Okay, I’m having a hard time picking one but I’d say that one example that we’re seeing a lot of pick up around in California specifically is business interest and the alliance for water stewardship in an international standard. The first international standard of its kind and to fight level standard that really does allow companies a framework and approach, understand how they can begin to organize their plans around water and plan out a very cohesive, comprehensive approach to water stewardship, you know, it’s been said it by a global community of experts, so interest from major plans and sites in California around that standard and beginning to really test that approach, utilize that approach is getting a lot of attraction and the outcomes that we’re seeing from that, just this greater awareness within the corporate sector around their responsibility and the opportunities that are available to them by engaging the [00:47:00.05] have just been tremendous. So we are really hopeful to see more of up taken of connotation of that standard in a state. And then the other thing that I would like to comment on is part organization that we work hard with series has launched an initial California called Connecting the Drought and what is exciting about this is that, it is a policy platform that brings the corporate place together to move and influence the political realm in California in a way that is also beneficial to the public interest and so I think watching that forum and what they will be able to accomplish by leveraging with the private sector is really going to be exciting and so look to that as well as we move forward in the months to come.

Kevin: Great and Matts.
Matts: So a general comment on a global level I think contribute to build resilient communities regardless where they are and which level I think, if we really need to face the climate change that are taking different shapes, different part of the world is to have resilient communities which can deal with both floods and droughts actually and they can often occurred in the same area at a different times. It’s a long range of the things that can be used to continue to this resilience but I won’t go in to that, thank you.

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