WRI'S ROLE IN SUPPORTING TCFD SCENARIO ANALYSIS OCT 31, 2017: TCFD & BOE CONFERENCE ON CLIMATE SCENARIOS, FINANCIAL RISK AND STRATEGIC PLANNING

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1 WRI'S ROLE IN SUPPORTING TCFD SCENARIO ANALYSIS OCT 31, 2017: TCFD & BOE CONFERENCE ON CLIMATE SCENARIOS, FINANCIAL RISK AND STRATEGIC PLANNING LEONARDO MARTINEZ-DIAZ, GLOBAL DIRECTOR, SUSTAINABLE FINANCE CENTER, WRI

2 WHO WE ARE A non-profit global research organization that turns big ideas into action at the nexus of environment, economic opportunity and human well-being WRI has: 6 program areas (climate, energy, water, food, forests, sustainable cities) 4 cross-cutting centers (finance, economics, business, and governance) 7 country offices and 50+ active country engagements 2

3 WHY WRI? Sectoral Expertise We provide thought leadership around sustainable management of natural resources Tool Development We build user-friendly tools to inform public and private decision-making Data Curation & Analysis We organize and curate data sets into big data platforms Transparent, open, and freely available 3

4 WRI TOOLS & TCFD SCENARIO ANALYSIS Scenario Planning Steps 1. Ensure governance is in place 2. Assess materiality of climaterelated risks 3. Identify & define a range of scenarios 4. Evaluate business impacts 5. Identify potential responses 6. Document & disclose Task Force on Climate-related Financial Disclosures, Final Report: Recommendations of the Task Force on Climaterelated Financial Disclosures, June

5 AQUEDUCT WATER RISK ATLAS What is Aqueduct? High-resolution global water risk mapping tool Built-in scenarios for projections Forthcoming Aqueduct Food tool will provide assessments of water risk to crops and food security What Issues Does Aqueduct Address? Visualize areas susceptible to future water related conflicts within communities Determine the impact of water risk on a company's supply chain, e.g. anticipate facility closings resultant from water shortages Identify corporate-level portfolio risk due to water stress What Does Aqueduct Do? Maps geospatial water risk exposure both currently and from future projections Projections to 2020, 2030 and 2040 based on multiple climate and socioeconomic scenarios What is Currently Available? Available on Bloomberg terminal Current version with 2010 baseline data Updated version to launch in early 2018 Aqueduct Food to launch in

6 AQUEDUCT APPLICATION: OWENS CORNING DEMO 6

7 AQUEDUCT FOOD APPLICATION: 2030 WATER STRESS ON IRRIGATED RICE GROWTH IN INDIA 7

8 RESOURCE WATCH (RW) Many more! FORESTS & OTHER ECOSYSTEMS WATER BIODIVERSITY CLIMATE FOOD ENERGY CITIES COMMERCE DISASTER SOCIETY RW is an interactive platform integrating over 200 datasets from WRI and external sources Data can be overlaid to visualize unique problems Accessible API allows downloads of data 8

9 EMISSIONS SCENARIOS PORTAL (ESP) What is ESP? Online platform that helps visualize, analyze, and compare a range of global, regional, and national GHG pathways under different scenarios Aggregation of existing climate models What Does ESP Do? Provide projected emissions and compositions of energy consumptions from different models and scenarios Provide sectoral level projections Offer customized dashboards and visualizations What Issues Does ESP Address? Helps non-experts interpret existing scenarios Improves the transparency of scenario assumptions Reduces transaction costs for companies just beginning their scenario analysis journey Coming Soon Projected launch end

10 ESP DASHBOARD 10

11 NATIONAL ENERGY POLICY SIMULATOR What is the Policy Simulator? A system dynamics computer model for policy simulation Allows the user to control up to 58 different policies that affect energy use and emissions What Issues Does it Address? Informs policymakers about which climate and energy policies will reduce GHG emissions most effectively and at the lowest cost Enables companies and investors to analyze climate and energy policy scenarios What Does the Policy Simulator Do? Provide annual outputs from 2015 to 2030, including: Direct cash flow impacts on consumers, industries, and government The composition and output of the electricity sector What is Currently Available? Simulators for China, Indonesia, Mexico and the United States WRI partnered on Indonesia and Mexico, and is expected to work on additional countries 11

12 NATIONAL ENERGY POLICY SIMULATOR Powered by Energy Innovation, currently available for US, China, Indonesia, and Mexico 12

13 SCIENCE-BASED TARGETS (SBT) What are SBTs? GHG emissions reductions targets aligned with latest climate science Defines how much companies need to cut emissions to prevent dangerous climate change What Issues Do SBTs Address? Helps companies preempt policy changes and regulatory risks Informs strategies to increase efficiency to be more competitive Guides companies to take steps to attract new investors What Do SBTs Do? Companies commit to develop targets, within 2 years Must meet strict criteria for approval May use 3 different approaches all tied to RCP 2.6 What is Currently Available? Over 300 companies committed to set sciencebased targets, including 20 financial institutions 72 targets have been approved by the SBT initiative Framework for the financial sector under development 13

14 NEXT FRONTIERS OF TCFD IMPLEMENTATION Provide, organize, curate robust and integrated environmental resource data sets Develop user-friendly, transparent, open source scenario analysis resources Build capacity to comparatively assess and interpret results of scenario analysis disclosures TCFD Implementation 14