Karl Schultz is co-founder of the Higher Ground Foundation, a not-for-profit company dedicated to creating a market for climate adaption investment in developing countries. Higher Ground Foundation’s vision is a voluntary market for climate adaption projects, where projects earn climate vulnerability reduction ‘credits’ that can be bought and sold, similar to the voluntary carbon market’s verified emission reductions (VERs). The concept is attracting global interest, with a number of partnerships forming with development agencies, NGOs, scientific bodies and private companies. Schultz has started several businesses, including Climate Mitigation Works and Energy Edge, and co-founded Green Gas International, a clean energy technology and investment company now with over 450 employees around the world. Prior to that, he managed domestic and international climate programs at the U.S. Environmental Protection Agency.
Submitted by: Higher Ground Foundation
The Need for Adaptation Investment in Developing Countries
Climate adaptation finance is critical for many reasons. While everyone will be impacted by climate change, it will be the poor in developing countries most vulnerable to changes. With a lack of financial and technical resources, they will struggle to protect themselves from a growing number of threats, including more frequent and intense storms, droughts, sea level rise and the migration of vector-borne diseases. The estimated costs of adaptation extend to hundreds of billions per year. As a result, the international community has set a target of US$100 billion annually to fund both mitigation and adaptation.
Sadly, many believe that this sum is inadequate and that it is unlikely governments will provide all or most of this. While some good debate is under way, the world’s vulnerable await a coherent plan to finance and deploy the needed projects on the ground.
In response to these challenges, Higher Ground Foundation is developing a voluntary market for climate adaptation credits to serve as a finance platform for climate adaptation projects in the developing world, to facilitate global target setting and private, large-scale climate adaptation finance.
The concept of a vulnerability reduction credit (VRC) emerged through Karl’s work in the field of climate mitigation policy and carbon markets, during an investigation of approaches to finance climate adaptation projects. Disappointed with the lack of viable mechanisms available, he formulated an approach that aimed to take the best features from the carbon credit mechanisms and apply it for climate vulnerability reduction. The outcome of this effort was distilled in a paper published by Climate Policy, and later developed further by the Higher Ground team. The key aspects of VRCs include clear and concise measurement of the impacts of adaptation efforts, with a sustainability incentive as credits are issued only after verified monitoring of the vulnerability reduction over the life of projects.
Higher Ground is building the foundations for this mechanism in collaboration with many agencies and companies, including a partnership with the Indian NGO SAMUHA and the UK Met Office’s Hadley Climate Centre. Higher Ground is also articulating demand for VRC with a variety of leading global companies in the food, retail engineering, insurance and financial sectors.
Many companies are starting to awake to the potential threats (and opportunities) the impacts of climate change pose to their operations, particularly along their supply chains, as well as to the wider sustainability and CSR Goals. VRCs can be a critical tool for business by increasing the ability of companies to progress their corporate responsibility policies, help to monitor and evaluate the climate related vulnerabilities in business assets and operations, and help provide the ability to manage climate risk exposure to their supply chains in developing countries.
Further down the line, there is the potential for businesses to enter the VRC market for project development, asset protection and financing. Due to the increasingly severe effects of climate change over time, as VRCs develop as a currency, the market could grow in tandem with trillions of dollars in investment needed for climate adaptation.
How to be involved
The Higher Ground Foundation is partnering with a variety of groups to demonstrate the VRC concept with real, on the ground projects. There are clear opportunities for investors, project developers, and consultants to participate in the vulnerability reduction value chain, and HGF is keen to explore this with different parties.
On October 22, Higher Ground will be holding a webinar to address the urgencies and opportunities for business that climate adaptation holds. Thomas Kerr, Director of Climate Change and Green Growth Initiatives at the World Economic Forum, will moderate a panel including experts from the Indian NGO SAMUHA, the UK Department for International Development, URS, and Higher Ground. For further details and to join this webinar, visit Climate adaptation - urgencies and opportunities for business.