WTW to support climate resilience in Fiji and Papua New Guinea

27 June 2021 Consultancy.com.au 3 min. read

An innovative risk financing project devised by Willis Towers Watson is set to launch in Fiji and Papua New Guinea – aimed at reducing the impact of climate change on coastal communities.

Global broking and business advisory Willis Towers Watson (WTW) has launched the project to support coastal communities in Papua New Guinea and Fiji vulnerable to the effects of climate change. To be implemented in collaboration with the WWF Pacific, local communities, government, and private enterprise, the project seeks to develop innovate risk financing mechanisms that will provide shock-responsive funds at a local level.

“Ocean-related risk means that coastal communities are especially vulnerable to the effects of climate change, with rising land and ocean temperatures, sea-level rise, flooding, coastal erosion, and an increase in extreme weather events threatening lives and livelihoods,” said Rowan Douglas, head of Willis Towers Watson’s Climate and Resilience Hub.

WTW to support climate resilience in Fiji and Papua New Guinea

The project is a part of the $10 million Global Environment Facility’s (GEF) Challenge Program for Adaptation Innovation, with WTW’s novel concept declared one of nine winning proposals at the 2019 United Nations Climate Change Conference in Madrid. Since its establishment in 1992, the GEF has provided over $20 billion in direct grants with an additional $100-plus billion in co-financing for more than 5,000 projects worldwide.

“We intend to deploy the analytical tools and products of the insurance industry and broader financial sector to foster effective climate risk management. Raising awareness of the risks from climate change, and building capacity around solutions, are critical foundations of the economic empowerment required to underpin effective and sustainable adaptation strategies,” WTW Climate Hub senior director Simon Young said at the time of the successful bid.

With the majority of coastal communities throughout the Pacific highly reliant on the ocean and coastlines for economic well-being, the project will broadly focus on risk ownership and responsibility in communities, including public and private risk-sharing opportunities, with support for communities to shift from an ad hoc after-the-fact response to major climate events to a more formalised response based on forecasting and financial preparedness.

The latter says WTW – which itself recently committed to a net zero emissions target of before 2050 – will serve to “get funds quickly and efficiently in the hands of those that need it to smooth shocks, reduce disruptions, manage natural resources, and respond to impacts,” whereas the current informal response model is often “disjointed, delayed, and ineffective when it comes to reducing disruption and short- and long-term impacts on communities.”

Another element of the project will be in exploring incentives for ecosystem management and adaption in insurance product design, tying community-level financial resilience to physical risk reduction which mitigates the impact of extreme climate events, described as a significant co-benefit. “For communities of low-lying atolls and the coastal areas of Melanesian islands, adaptation to climate change is an essential priority,” said Douglas.

He continued; “The project will build the enabling environment for greater financial resilience through community engagement on community priorities, risk understanding, and financial and risk management literacy. This engagement will inform the design of bespoke insurance products and programmes to support community-led resilience.”