What the U.S. Can Learn from the U.K. About Climate Risk
As the United States welcomes a new presidential administration, and the District of Columbia becomes what I refer to as the “Red Fed,” I find myself examining U.S. regulations and policies seeking business-friendly opportunities for revamped regulation.
I have studied the European Union’s Water Framework Directive that requires compliance by EU ascension states, and it promises exciting prospects for helping Eastern Europe’s emerging economies prioritize water efficiency as their development quickens. I also perused France’s new law under Article 173 of its “energy transition for green growth” regulation, which requires investors to report on how climate change considerations are incorporated into their portfolios.
Both hold promise as excellent examples for the U.S. In particular, I will be watching the application of Article 173 with interest.
In the meantime, the most intriguing regulation to me is the United Kingdom’s Adaptation Reporting Power (ARP). It sprang from country’s Climate Change Act of 2008, and the subsequent National Adaptation Program in 2013 reinforced it.
The ARP enables the U.K. government to require organizations (known as “reporting authorities”) that provide public services to prepare climate change adaptation reports detailing how they assess and act on the risks and opportunities from climate change. Therefore, it provides an opportunity to gather evidence on climate risk, organizational capacity and activities to build resilience.
Interestingly, early evaluations of the law note: “The ARP was a catalyst for many organizations to begin formally considering their climate change risks and adaptation responses, including at the Board and Management levels” (see the Government Report for the Adaptation Reporting Power).
Having been involved with creating laws when I worked for the city of Chicago and helped promulgate air, stormwater and invasive species ordinances, I remain a super fan of performance-based regulation versus prescriptive law. I believe it is the lack of a prescription that galvanizes conversations at senior levels. If the law had mandated what industry must do, a smart functionary within the company would have complied. Without that parenting, the functionary creates a variety of crazy ideas across company verticals discussed in the C-suite. How exciting!
In the case of ARP, the U.K. government has categorized its adaptation activity into seven “themes.” Among them: agriculture, forestry, water, energy and transportation infrastructure, for which industry leaders are asked to report.
In a first tranche or ARP rollout, reporting was mandatory for the identified corporations. It now is voluntary. While the report’s form is dictated by statutory guidance (and, smartly, includes sections related to the company’s assessed risk and opportunities from climate change and a related action plan in an Adaptation Report), the specifics of what and how industry must respond is left to the market. This inspires healthy competition to derive solutions that mitigate more risk and seize more opportunity.
Early results of ARP, detailed in the government report Adapting to Climate Change: Ensuring Progress in Key Sectors 2013 Strategy for exercising the Adaptation Reporting Power, suggest it is helping to developing capacity to understand climate risk issues in key infrastructure sectors. Notably, it also helped the U.K. government identify specific areas of research opportunity to share with the scientific community.
The government will review the law every five years, primarily to ensure that the voluntary reporting protocol is producing results and a shift to mandatory reporting is not required.
As the U.S. transitions to a new era of federal governance, the U.K. ARP should top our list for the infrastructure and agricultural agendas.
This post originally appeared on Triple Pundit.
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December 15, 2016
