By Stefan Pellech, Intellecap
Intellecap, publisher of Beyond Profit, partnered with the Rockefeller Foundation and the Asian Cities Climate Change Resilience Network (ACCCRN) to explore opportunities for the private sector in building resilience of the urban poor against the impacts of climate change. Our work focused on understanding the specific vulnerabilities of the poor in four cities – Surat and Gorakhpur in India, Semarang in Indonesia and Chiang Rai in Thailand – and identifying potential business responses to these.
Resilience-building businesses provide products and services that improve infrastructure, access to scarce resources and basic services such as healthcare, finance, availability of information that aids in disaster preparedness and livelihood promotion to enhance income or improve cash flow predictability. The nine key sectors within which opportunities exist, are micro-insurance, affordable healthcare, waste management and sanitation, water management, affordable housing, off-grid renewable energy, microfinance, information and communication technology and livelihood promotion.
As climate-linked vulnerabilities are largely localized, business responses will require local innovation, reducing their ability to be replicated rapidly. Given the context specificity, social enterprises and community owned companies are likely to take the lead.
Low awareness of both issues and opportunities in building urban resilience has so far limited private sector involvement. As urban impacts of climate change are entangled with poverty and urbanization, it is hard to measure the extent of the changing climate and its projected impacts on the urban poor further inhibiting accurate product design. Funding for businesses in this field is also limited, as few existing funds focus on adaptation and resilience and, of these, most offer concessional debt and grants rather than equity.
Although private capital already funds bankable businesses across the key sectors identified, the challenge is to increase their focus on more vulnerable geographies and populations. Measures include creating a champion or nodal body to coordinate activities across stakeholders and market makers to support market development, bringing stakeholders together and fostering partnerships. Organizations will need to contribute guarantee funds, concessional debt, angel investments and venture capital with longer-term exit horizons to drive innovation, and social entrepreneurs will also require additional capacity building to successfully operate.
Photo credit: Flickr user Focx Photography