A Powerful New Roadmap for Tackling Climate Change’s Financial Risks

Growing up in Delhi, Amit Prothi saw firsthand that water in the taps was the wellspring of his mother’s joy, a force that fueled their lives.

The water supply was unreliable, often flowing for just a few hours a day, if at all, due to distribution inefficiencies. Many families, including Prothi’s, installed pumps and rooftop storage tanks to catch the precious trickle when it appeared.

“At 6 a.m., we would wake up to turn on the water pump, hoping to fill our tanks with enough water for drinking, cooking, bathing, and toilets for the day. My mother’s mood hinged on whether water flowed that morning. If she was happy, it meant water had come; if not, it hadn’t,” Prothi recalled.

“As a child, I realized that access to something as basic as clean water shaped her entire day.”

Infrastructure Loss = 14 Percent Global GDP

An urban planning expert who previously served as Associate Director at 100 Resilient Cities pioneered by The Rockefeller Foundation, Prothi is now the Director General of the Coalition for Disaster Resilient Infrastructure (CDRI), based in Delhi.

Launched at the UN Climate Summit in September 2019, CDRI is a global partnership dedicated to bolstering the resilience of infrastructure systems against climate and disaster risks in support of sustainable development.

With 39 member countries and seven member organizations, it connects both developed and developing countries and fosters knowledge exchanges.

Amit Prothi (right) at AsiaXChange 2023.

The urgency of CDRI’s work has intensified with the accelerating rate of climate change. CDRI estimates the cost of the losses to infrastructure due to climate change and disasters related to natural hazards — including power facilities, ports and airports, roads, telecommunications, and buildings — at $700-$850 billion dollars a year.

This equals roughly 14 percent of the global gross domestic product growth in a year. “That number tends to capture people’s attention,” Prothi said.

In other words, infrastructure resilience directly influences the world’s overall financial stability.

A Climate Guide for the Financial Sector

Most financial institutions are not yet factoring these climate change infrastructure threats into their risk models. Many wonder how.

CDRI set out to change that.

This month, with support from The Rockefeller Foundation, CDRI launched a powerful playbook to equip financial institutions with the tools to both assess and tackle infrastructure risks driven by climate change.

Though initial consultations for the playbook were in India, it applies to financial institutions across developing countries. It provides step-by-step guidance for evaluating climate risks associated with infrastructure assets, and then integrating them into decision-making.

It makes use of the Global Infrastructure Risk Model and Resilience Index (GIRI), developed by a consortium of scientific and technical organizations under the management of CDRI and the United Nations Development Program, publicly available and launched in 2023 to help guide risk metrics as well as potential benefits of investing in resilience.

CDRI’s Amit Prothi (center) talks with other participants at a Bellagio convening in March 2024.

The playbook “fills a critical gap in the market…the gap between theory and application,” said Deepak Kumar of the Union Bank of India. It equips financial institutions “with the necessary knowledge and tools to future-proof their businesses against the evolving climate landscape.”

The private sector highlighted the need for a climate financial risk guide during AsiaXchange 2023 hosted by The Rockefeller Foundation’s Asia Regional Office.

“This is a perfect example of why convening and listening to unusual actors is so crucial,” said Deepali Khanna, Vice President, Asia Regional Office, The Rockefeller Foundation. “Amit picked up on the financial community’s struggle with modeling climate physical risk and ran with it. Just a few months later, his team developed the playbook idea.”

The elements of the playbook were subsequently discussed at The Rockefeller Foundation’s Bellagio Center, where CDRI also called for a resilience certification program to ensure infrastructure is being built or reinforced to withstand climate change shocks.

The Bellagio discussions “highlighted the critical role that CDRI can play in mobilizing knowledge, partnerships, and financing to tackle the enormous and growing challenges faced by developing countries due to infrastructure being built or operated without adequate actions to strengthen its resilience,” said participant Ede Ijjasz-Vasquez, the former Regional Director for Africa in the World Bank’s Sustainable Development Practice Group.

“The diversity of participants brought contrasting views that rapidly converged toward transformational paths,” he said.

“The draft playbook sparked a fruitful conversation,” Prothi noted. “Ninety percent of the money right now is going to mitigation, and that’s critical, but we have to give more focus to adaptation. Centering adaptation will lead to innovation, and in many cases, costs will more than pay for themselves over the long-term.”

A Convening is the Midpoint, Not the End

“With a well-curated conversation, you can unpack problems and repackage solutions,” Prothi said. “And when time is of the essence, convenings in person can be very effective.”

This is especially true for complex problems, where a good convening can break down silos. “Take water resources in an urban area, for instance. You need an engineer, a social scientist, an urban planner, the water provider, a financier,” Prothi explained. “You don’t need a lecture; you need engagement.”

But even after a great convening, follow-up is critical, he added. “A convening is the midpoint in the process, not the end.”

Prothi said he believes the playbook will prove an essential reference guide. “With changing weather patterns leading to unprecedented destructive events, our infrastructure frequently falls short. Investors and regulators are pressing the financial sector to tackle these risks,” he said. “The playbook is designed to equip them with the tools they need to navigate these challenges.”