[House Hearing, 116 Congress]
[From the U.S. Government Publishing Office]


              CREATING A CLIMATE RESILIENT AMERICA: BUSI-
               NESS VIEWS ON THE COSTS OF THE CLIMATE  
               CRISIS

=======================================================================

                                HEARING

                               BEFORE THE

                        SELECT COMMITTEE ON THE
                             CLIMATE CRISIS
                        HOUSE OF REPRESENTATIVES

                     ONE HUNDRED SIXTEENTH CONGRESS

                             FIRST SESSION

                               __________

                              HEARING HELD
                             JULY 25, 2019

                               __________

                            Serial No. 116-7
                            
                            
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]                            


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   Printed for the use of the Select Committee on the Climate Crisis
   
   
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                    U.S. GOVERNMENT PUBLISHING OFFICE                    
37-917                      WASHINGTON : 2019                     
          
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                 SELECT COMMITTEE ON THE CLIMATE CRISIS
                     One Hundred Sixteenth Congress

                      KATHY CASTOR, Florida, Chair
BEN RAY LUJAN, New Mexico            GARRET GRAVES, Louisiana,
SUZANNE BONAMICI, Oregon               Ranking Member
JULIA BROWNLEY, California           MORGAN GRIFFITH, Virginia
JARED HUFFMAN, California            GARY PALMER, Alabama
A. DONALD McEACHIN, Virginia         BUDDY CARTER, Georgia
MIKE LEVIN, California               CAROL MILLER, West Virginia
SEAN CASTEN, Illinois                KELLY ARMSTRONG, North Dakota
JOE NEGUSE, Colorado

                              ----------                              

                Ana Unruh Cohen, Majority Staff Director
                  Marty Hall, Minority Staff Director
                        climatecrisis.house.gov
                            
                            
                            C O N T E N T S

                   STATEMENTS OF MEMBERS OF CONGRESS

                                                                   Page
Hon. Kathy Castor, a Representative in Congress from the State of 
  Florida, and Chair, Select Committee on the Climate Crisis:
    Opening Statement............................................     1
    Prepared Statement...........................................     2
Hon. Garrett Graves, a Representative in Congress from the State 
  of Louisiana, and Ranking Member, Select Committee on the 
  Climate Crisis:
    Opening Statement............................................     3

                               WITNESSES

Paula DiPerna, Special Advisor, CDP North America
    Oral Statement...............................................     5
    Prepared Statement...........................................     7
Garvin Jabusch, Chief Investment Officer, Green Alpha Advisors, 
  LLC
    Oral Statement...............................................    15
    Prepared Statement...........................................    17
Jay Walker, Executive Vice President, South Louisiana Bank
    Oral Statement...............................................    18
    Prepared Statement...........................................    20
Francis Bouchard, Group Head of Public Affairs and 
  Sustainability, Zurich Insurance Group
    Oral Statement...............................................    23
    Prepared Statement...........................................    25

                       SUBMISSION FOR THE RECORD

Letter from 52 organizations in support of H.R. 3623, the Climate 
  Risk Disclosure Act of 2019, submitted for the record by Mr. 
  Casten.........................................................    45

                                APPENDIX

Questions for the Record from Hon. Kathy Castor to Paula DiPerna.    55

 
 CREATING A CLIMATE RESILIENT AMERICA: BUSINESS VIEWS ON THE COSTS OF 
                           THE CLIMATE CRISIS

                              ----------                              


                        THURSDAY, JULY 25, 2019

                     U.S. House of Representatives,
                    Select Committee on the Climate Crisis,
                                                    Washington, DC.

    The committee met, pursuant to call, at 2:11 p.m., in Room 
2261, Rayburn House Office Building, Hon. Kathy Castor 
[chairwoman of the committee] presiding.
    Present: Representatives Castor, Bonamici, Brownley, 
Huffman, Levin, Casten, Graves, Griffith, Palmer, Carter, and 
Miller.
    Ms. Castor. Well, good afternoon, everyone. The committee 
will come to order.
    Welcome to the July 25, 2019, hearing of the House Select 
Committee on the Climate Crisis. Without objection, the chair 
is authorized to declare a recess at any time.
    Today, we will discuss the risks, costs, and opportunities 
that businesses, investors, and the economy face as a result of 
the climate crisis. I now recognize myself for 5 minutes to 
give an opening statement.
    Today, we are examining the escalating risks and costs of 
the climate crisis. When we look at these risks, we see some 
big numbers. And when businesses across America look at the 
growing risks, they also see huge peril ahead.
    In 2017 alone, insurance companies paid out a record $135 
billion in climate losses, with $100 billion just in the United 
States. The world's largest businesses estimate that they face 
nearly $1 trillion of climate-related risks. That is trillion 
with a T.
    The risks have gotten so large, the Federal Reserve is now 
interested. This fall, the Federal Reserve Bank of San 
Francisco is hosting its first conference on how the banking 
system will deal with climate change. The Fed has identified 
climate change as one of three forces transforming the economy 
this century, and experts there recognize the need to 
understand the financial implications of it to fulfill their 
obligation to foster financial stability.
    The numbers are eye-popping, but the costs come in real 
human terms. When a home or business floods, a cascade of 
financial implications follows. The value takes a hit. They may 
have to relocate and pay to live or work somewhere else. The 
insurance company has to cover their losses. The reinsurance 
company has to cover the insurance companies losses. And 
evidence shows that these losses will continue to grow.
    And when the disaster is large, we step in here in the 
Congress because we have an obligation to our fellow Americans 
when disasters strike. But experts say we should be investing 
more to avoid disasters in the first place.
    Rising heat projections highlight other serious risks. When 
we face brutal heat waves, it is too hot to work outside. 
People who work outside don't get paid for not working. And I 
want everyone to think back to just a few days ago with the 
massive, brutal heat wave that kept many of our neighbors 
inside and off the job. That is the type of heat that wilts 
crops. It is the type of heat that keeps us cooped up indoors 
instead of enjoying our summers. And when we face heat like 
that, businesses take a hit too. Many sectors of the economy 
are impacted, and the risks will grow.
    So thank you to our witnesses today for being here, for 
kicking off what needs to be an ongoing dialogue with members 
of this committee relating to the material risks of the climate 
crisis for businesses, insurers, and all Americans.
    Climate change is impacting our economy now, not 50 years 
from now. It is happening now. This is important because, for 
years, big businesses ignored the climate crisis. Some even 
actively promoted climate denial. Some still do, but 
increasingly, with the help of experts who measure growing 
economic risks, with the help of scientists and shareholder 
activists, businesses not only recognize the growing economic 
climb of the climate crisis, but they recognize that we can 
solve it and create new opportunities, create new industries, 
and grow jobs.
    Recognizing the risks, investors are getting out of fossil 
fuels. They are looking at opportunities to create the next 
wave of clean energy and clean transportation technology. They 
are building the clean energy economy because that must be the 
future.
    It is no longer business as usual. We need to go further. 
We need to make a 100 percent clean energy future our shared 
objective.
    As we heard in our second hearing, global carbon emissions 
need to reach net zero by 2050 to give us a chance of avoiding 
the most catastrophic impacts of climate change. The 
alternative isn't just unacceptable, it is dangerous and would 
be very costly to everyone.
    So I am looking forward to hearing from our witnesses about 
how Congress can highlight their work regarding the growing 
risks, shift the country to clean energy, and protect the 
places that we know and love.
    At this time, I will recognize Ranking Member Graves for an 
opening statement.
    [The statement of Ms. Castor follows:]

Opening Statement (As Prepared for Delivery), Rep. Kathy Castor (D-FL), 
           U.S. House Select Committee on the Climate Crisis

 Creating a Climate Resilient America: Business Views on the Costs of 
                   the Climate Crisis, July 25, 2019

    Today we're examining the escalating risks and costs of the climate 
crisis. When we look at these risks, we see some big numbers. And when 
businesses across America look at the growing risks, they also see huge 
peril ahead.
    In 2017 alone, insurance companies paid out a record $135 billion 
in climate losses, with $100 billion just in the United States. The 
world's largest businesses estimate that they face nearly a trillion 
dollars of climate-related risks. That's trillion with a ``t.''
    The risks have gotten so large, the Federal Reserve is now 
interested. This fall the Federal Reserve Bank of San Francisco is 
hosting its first conference on how the banking system will deal with 
climate change. The Fed has identified climate change as one of three 
forces transforming the economy this century and experts there 
recognize the need to understand the financial implications of it to 
fulfill their obligation to foster financial stability.
    The numbers are eye-popping, but the costs come in real human 
terms.
    When a home or business floods, a cascade of financial implications 
follows. The value takes a hit. They may have to relocate and pay to 
live or work somewhere else. The insurance company has to cover their 
losses. The reinsurance company has to cover the insurance company's 
losses. Evidence shows those losses continue to grow.
    And when the disaster is large, we step in here in Congress because 
we have an obligation to help our fellow Americans when disasters 
strike. But experts say that we should be investing more to avoid 
disasters in the first place.
    Rising heat projections highlight other serious risks. When we face 
brutal heat waves, it's too hot to work outside. People who work 
outside don't get paid for work they can't do. I want everyone to think 
back to just a few days ago when many of us were sweltering in hot, 
muggy heat waves. That's the type of heat that wilts crops. It's the 
type of heat that keeps us cooped up indoors instead of enjoying our 
summers. When we face heat like that, businesses take a hit, too. Many 
sectors of the economy are impacted and the risks will grow.
    So thank you to our witnesses today for kicking off what needs to 
be an ongoing dialogue with members of this committee relating to the 
material risks of the climate crisis for businesses, insurers and all 
Americans. Climate change is impacting our economy now, not 50 years 
down the road. Now.
    This is important because for years, big businesses ignored the 
climate crisis. Some even actively promoted climate denial. Some still 
do. But increasingly--with the help of experts who measure growing 
economic risks, with the help of scientists, and shareholder 
activists--businesses not only recognize the growing economic harm of 
the climate crisis but they recognize that we can solve it and create 
new opportunities, industries and jobs in doing so.
    Recognizing the risks, investors are getting out of fossil fuels. 
They're looking at opportunities to create the next wave of clean 
energy and clean transportation technology. They're building the clean 
energy economy because that must be the future.
    It's no longer business as usual. We need to go further. We need to 
make a 100% clean energy future our shared objective. As we heard in 
our second hearing, global carbon emissions need to reach net-zero by 
2050 to give us a chance of avoiding the most catastrophic impacts of 
climate change. The alternative isn't just unacceptable, it's dangerous 
and very costly to everyone.
    So I'm looking forward to hearing from our witnesses about how 
Congress can highlight their work regarding the growing risks, shift 
the country to clean energy and protect the places we know and love.

    Mr. Graves. Thank you, Madam Chair.
    I want to thank all the witnesses for being here today. I 
appreciate you joining us, and those in the audience as well.
    Madam Chair, as you know, we can look across the United 
States, and through the Corps of Engineers water resource 
program, we have about $100 billion in project authorizations. 
Many of these are the projects that are designed to improve the 
resilience of this Nation. This is a key issue that we must 
aggressively address, that we address. And let's be clear, the 
status quo what we have done historically for decades is 
absolutely inappropriate, it doesn't properly prioritize. It is 
not the process that corresponds to the urgency that we are 
facing.
    As you all know, we can reduce, as we have had witness 
after witness testify before this committee, we could cut all 
emissions from the United States today, every bit of emissions, 
and we are going to continue to see changes in our weather, we 
are going to continue to see seas rise. Especially when you 
recognize the fact that climate change is a global issue, you 
recognize the fact that the United States has actually reduced 
emissions by approximately 1 billion tons. And during that same 
period of time, China has increased their emissions by 4 
billion tons. There is momentum built up in the environment, in 
the climate. If we do not have truly a global approach to this, 
then no matter how aggressive the efforts are in the United 
States, it will not change the trajectory that we are on. We 
also need to recognize the importance or the urgency of 
resiliency, because even if we cut all emissions from around 
the globe, we would continue to have momentum and continue to 
have change in our environment.
    One of the reasons that we have sought to try to break this 
backlog of Corps of Engineers and other resiliency projects is 
because of the need to ensure our communities are adapting, to 
ensure our coastal communities are safe. As we have discussed 
in this committee before, you can take the coastal counties, 
parishes, and boroughs around the United States, they only 
constitute 10 percent, just 10 percent of the actual land area, 
yet over 40 percent of the population lives there. We cannot 
allow for this slow and expensive process to continue to thwart 
our efforts to become the more resilient Nation that we should 
be, that continues to thwart our ability to adapt to the 
changes that we are seeing.
    Just recently, we offered an amendment to the 
appropriations bill for Energy and Water trying to facilitate 
this process of reevaluating the Corps of Engineers' efforts, 
and how in the world we got to $100 billion backlog while 
Presidents from Clinton forward have requested less than $2 
billion in construction funds. And we were thwarted in that 
effort to try to change, to try to move this mission up and 
make it a priority by this very Congress. The same people that 
are sitting here talking about how we need to adapt, we need to 
be resilient, effectively or affirming, affirming this both 
slow and expensive process that has prevented our Nation from 
making the proactive investments that we need to make.
    I do want to highlight that within the last 2 years, we 
have been able to make some progress, and that we have made 
some of the most substantial investments in resiliency that we 
have ever made in the United States. We have changed the 
definition of resilience or actually allowed for the definition 
of resilience to actually be established whenever we have 
disasters, to come back and actually build smarter, not build 
back the same way. Build higher, build stronger, providing for 
more adaptation, providing for more flexibility under our 
Disaster Recovery and Reform Act, under our Stafford Act 
amendments that we did in October of last year.
    So, Madam Chair, one, look, I agree 100 percent that we 
have got to be a resilient Nation, but we have to have the 
tools, we have to have the processes in place that recognize 
the urgency of the challenges that we are facing today.
    My home State of Louisiana, we have lost 2,000 square miles 
of our coast. The reason Arkansas doesn't evacuate when 
hurricanes come is because they have a buffer. It is called 
Louisiana. Our buffer is gone. Our buffer is gone. And that is 
why in 2005, when you saw Hurricane Katrina hit our coast, it 
became a quick wakeup call for many people, recognizing that 
the loss of our coast is not a habitat problem for birds and 
fish. It is an economic problem. It is a historic preservation 
problem. It is a problem for economic development. It is a 
problem for homes and businesses, one of the most pervasive 
problems you can possibly explain or experience. James 
Carville, a New Orleans resident, described it as a war. And 
you know what? He is right.
    So, Madam Chair, I look forward to working with you to 
ensure that we can develop a government response or perhaps 
proactive approach to resiliency that our Nation deserves.
    I yield back.
    Ms. Castor. Thank you very much.
    Without objection, members who wish to enter opening 
statements into the record have 5 business days to do so.
    Now I want to welcome our witnesses. Paula DiPerna is a 
special advisor at CDP. Through CDP, more than 500 U.S. 
companies disclose information about their environmental 
performance. Ms. DiPerna previously served as a vice president 
for the Chicago Climate Exchange and led the Joyce Foundation.
    Garvin Jabusch is the chief investment officer and co-
founder of Green Alpha Advisors, a financial services firm 
focused on sustainable, fossil-free investment strategies. 
Prior to Green Alpha Advisors, Mr. Jabusch served in many roles 
in the financial industry, including as vice president of 
strategic services at Morgan Stanley.
    Jay Walker is the executive vice president of commercial 
lending at South Louisiana Bank. Mr. Walker is also the 
president of the Morganza Action Coalition, which advocates for 
the authorization and funding of the Morganza-to-the-Gulf 
Hurricane Protection System.
    Francis Bouchard is the head of sustainability at Zurich 
Insurance Group, one of the world's 100 largest companies. 
Zurich has run a global flood insurance program since 2013.
    Without objection, the witnesses' written statements will 
be made a part of the record.
    With that, Ms. DiPerna, you are now recognized to give a 5-
minute presentation.

    STATEMENTS OF PAULA DIPERNA, SPECIAL ADVISOR, CDP NORTH 
AMERICA; GARVIN JABUSCH, CHIEF INVESTMENT OFFICER, GREEN ALPHA 
  ADVISORS, LLC; JAY WALKER, EXECUTIVE VICE PRESIDENT, SOUTH 
  LOUISIANA BANK; AND FRANCIS BOUCHARD, GROUP HEAD OF PUBLIC 
       AFFAIRS AND SUSTAINABILITY, ZURICH INSURANCE GROUP

                   STATEMENT OF PAULA DIPERNA

    Ms. DiPerna. Thank you very much.
    Thank you for the opportunity to testify and for your 
service to our country. I also want to thank Chairman Castor, 
especially for her leadership of the committee; Ranking Member 
Graves for that very insightful statement; and Speaker Pelosi 
for convening the committee. I know well her commitment to 
addressing climate change dating back at least to 2007 when she 
led a vanguard effort to create a zero emissions target for 
these very buildings in the House.
    Now we come together again, and perhaps we feel a bit like 
the rabbit in Alice in Wonderland, running around with a clock 
and being late, late, late for a very important date, a date we 
all have with our destiny to recognize the climate change 
challenge for what it is, the greatest impetus in a generation 
to create jobs, retool, reset, and modernize our economy and 
protect our people.
    A few words on CDP which operates as a public good. 
Launched in 2003 as the Carbon Disclosure Project, we pioneered 
the idea of specific environmental disclosure to shareholders. 
Today, as you have just heard, we have roughly 650 companies in 
the U.S. and Canada disclosing to us voluntarily, 70 percent of 
the S&P 500, and about 500 signatory investors representing 
most of the world's financial service sector who use CDP as a 
reference on corporate environmental performance and investment 
decisions.
    Our annual request is global, qualitative, and 
quantitative, aligned with the recommendations of the Task 
Force on Climate-Related Disclosure, and to an extent, we model 
ourselves on the SEC EDGAR system for 10-K filings. In fact, we 
are a standardized, one-stop shopping information platform on 
the doability and the desirability of addressing climate 
change, and we are unique in the world.
    A word about me. My CV is in the record, but suffice it to 
say that I am proud to say I have seen climate change from 360 
degrees, from coral reefs to carbon markets, literally.
    On the subject of today's hearing, climate resilience and 
business views, this month, CDP issued a comprehensive report 
on the two things that the chairwoman just referenced: risks 
and opportunities.
    On risks, of the world's 500 largest companies, 215 
companies representing $17 trillion in market cap did reference 
near term financial risks from climate change at nearly $1 
trillion, with over half of those risks reported as likely, 
very likely, or virtually certain to materialize in 5 years or 
earlier. Of those 215 companies, 81 are based here in the 
United States.
    On the opportunities side, on the other hand, the 
opportunities seem to outsize the risks, with 225 of the 
world's 500 biggest companies reporting potential upsides, 
totaling nearly $2 trillion. Of these 225, 89 are based in the 
United States. And I can answer questions about the forces 
involved in those numbers.
    Notably, on the opportunities side, companies headquartered 
in the United States among the largest 500 reported less than 
half the potential opportunities than their EU counterparts. 
And it is possible that the policy framework evolving in the 
EU, which is consistent with the Paris Agreement, that global 
regime that you referenced, Mr. Graves, supports an opportunity 
viewpoint by offering reasonable regulatory certainty conducive 
to investment.
    As to how risks are expressed by companies themselves, the 
following are just a few examples, with additional examples in 
my written testimony and in our repository. Harris Corporation, 
Jacksonville, Florida close to 7,000 employees see risks for 
their data centers, reduction in operational efficiency and 
increased component failure rates as increases in average 
temperatures and associated humidity will affect baseline 
design parameters, end of quote.
    Conagra, with headquarters in Chicago, in our forest 
disclosure said, quote, our paper suppliers are impacted by 
U.S. flooding caused by extreme weather and exacerbated by 
climate change, and forest fires exacerbated by drought that 
have appeared with increasing frequency over the past few 
years.
    Yum! Brands based in Louisville, Kentucky, with 38,000 
employees and operating 48,000 restaurants in the world, 145 
companies they say, says, quote, climate change influences 
could negatively impact production, including extreme weather 
events, changes in precipitation and temperature, forest fires, 
loss of ecosystem services, reduce crop yields, and thus, 
availability of certified sustainable material, which is 
already limited.
    Eli Lilly based in Indianapolis said, quote, changing 
precipitation patterns, droughts, flooding, and tropical 
cyclones could potentially damage our manufacturing research 
and development. Our principle active ingredient manufacturing 
occurs in our U.S., Ireland, and Puerto Rico sites. Puerto 
Rico, where we employ 1,400 people, was devastated by Hurricane 
Maria.
    I will stop here just to bring back later our reference to 
Matchmaker, which has a tremendous listing of climate resilient 
projects, 108 costed projects just in the States represented by 
this committee, ranging from the Embarcadero Seawall in Saint 
Louis to $23 million in Gretna, Louisiana.
    I will be very happy to answer any questions. Thank you.
    [The statement of Ms. DiPerna follows:]

 Written Statement of Paula DiPerna, Special Advisor, CDP, 25 July 2019

    Thank you for the opportunity to testify before you today, and I 
congratulate the vision of Speaker Pelosi and Chairwoman Castor to 
convene the Select Committee. I've had first-hand experience with the 
Speaker's commitment to addressing climate change, dating back to 2007 
when she led a vanguard effort to create a zero emissions target for 
the House office buildings, and to do so, the U.S. House of 
Representatives became a member of the also vanguard Chicago Climate 
Exchange at the time, where I as Executive Vice President.
    Now, nearly a decade later, we come together again to address the 
complexities of climate change, surely one of the most vexing 
operational, socio-economic and policy issues before us, inescapable 
across all sectors and all constituencies. No doubt the disclosure 
repository of CDP, launched originally in 2003 as the Carbon Disclosure 
Project, and the first international system to gather environmental 
performance disclosure, contains information relevant to not only each 
state represented here on the Committee, but all 50 states, and I thank 
you for your service to the nation.
    CDP disclosure is both qualitative and quantitative, and we send 
our standardized annual request for disclosure to most of the publicly 
trading companies in the world, covering climate change, water and 
forests issues. No other system like ours exists elsewhere. We make all 
our information available to the public, operate as a public good and 
to an extent model ourselves on the SEC EDGAR system for 10K filings. 
Our annual request is signed by roughly 550 institutional investors, 
asset owners and wealth managers--our signatories--who represent most 
of the financial services sector of the world. They use our disclosure 
as a reference on corporate environmental performance, strategic 
advantages and vulnerabilities, and a gauge for making investment 
decisions.
    On climate change, today, roughly 650 companies in the U.S. or 
about 70% of the S&P 500 in the U.S. disclose to us and through us to 
our signatories, providing data on environmental performance, plans and 
imperatives.
    CDP disclosure also information companies need to benchmark to 
their peers. Our system offers years of anecdotal and analytical 
information establishing both the do-ability and desirability of 
addressing climate change, expressed by companies themselves, and 
information about the cascade effects up and down the line to workers 
and average Americans who see climate change impacts up close.
    In fact, perhaps there is no longer any such thing as a purely 
environmental problem. All environmental problems are now squarely 
socio-economic, and the climate crisis is absolutely inextricable from 
the socio-economics at work. For example, we've all heard of the recent 
research in the Federal Reserve's 2018 Report on the Economic Well-
Being of U.S. Households that roughly 40% of adults would struggle to 
cover an unexpected expense of $400, either by borrowing, selling 
something or not covering it at all.
    So, obviously, if a house is even modestly damaged by flooding, the 
family would be unable to replace essentials, such as furniture, or the 
washing machine in the basement. Climate change related extreme weather 
events compound the precariousness of cash-strapped families.
    Climate change is, in sum, a here and now issue that will hurt the 
poor and disenfranchised most of all.
    A word about me: My cv is part of my written testimony but suffice 
it to say here that I have seen the climate change issue from 360 
degrees, from coral reefs to carbon markets, literally. And I know well 
the proud U.S. tradition of concern about climate change. In fact, I 
recently spoke with Dr. Warren Washington, a pioneer of climate 
modeling science, a long-standing researcher at the National Center on 
Atmospheric Research and recipient of National Medal of Science, who 
told me of his work advising six consecutive U.S. Presidents up until 
President Obama, all of whom had shown concern about the possibility of 
climate change. He mentioned especially President George H.W. Bush, who 
not only helped set up the nation's first dedicated climate change 
research programs, but who also signed the U.S. on to the original 
Framework Convention on Climate Change in 1992--I witnessed his pen 
crossing the paper, I should add.
    This Convention, of course, provided the legal underpinning for the 
2015 Paris agreement, currently the world's blueprint, which the U.S. 
Administration has now rejected, breaking ranks with our own history of 
thoughtful action, and leaving us alone on earth to stand outside the 
global consensus that climate change must be addressed, but also 
dampening the incentives that could help us reap at scale the 
extraordinary opportunities that are at hand as we redesign, retool, 
rebuild and refit almost all our critical infrastructure, generating 
jobs and helping the U.S. regain dominance of 21st century 
technological innovation and manufacturing. In fact, I sometimes feel 
like the rabbit in Alice in Wonderland, running around with a clock and 
running late, late, late for a very important date. A date we all have 
with our destiny to take leadership on the climate change question and 
recognize it for what it is--the greatest impetus in a generation to 
create jobs, re-set and modernize our economy and protect our people.
    On the specific issue of today's hearing, climate resilience and 
business views, it is crystal clear that climate change has two basic 
faces: Risks and Opportunities. This month, CDP issued a comprehensive 
global disclosure report on both.
    On RISKS: Of the world's 500 largest companies, 215 companies 
representing US$16.95 trillion in market cap reported estimated 
financial risks from climate change at US$970 billion), nearly a 
trillion dollars, with over half of those risks reported as likely/ 
very likely / or virtually certain to materialize in five years or 
earlier. Of these 215, 81 are based in the U.S.
    The main drivers of this potential financial impact were:
          1) Increased operating costs (due to higher compliance costs, 
        increased insurance premiums etc.) at US$179 billion;
          2) The write-off of assets or their early retirements because 
        of potential damage to them / being in high-risk locations at 
        US$170 billion;
          3) Reduced demand for goods and / services due to a shift in 
        consumer preferences totaling US$102 billion; and
          4) Changes in policy leading to write-offs, asset impairment 
        and early retirement of existing asset sets totaling US$73 
        billion.
    On OPPORTUNITIES: On the other hand, opportunities derived from 
addressing climate change outsize the risks, with 225 of the world's 
500 biggest companies reporting potential upside financial impacts 
totaling over US$2.1 trillion dollars, driven by potential increase in 
revenue due to demand for low emissions products and services, and 
meeting shifting consumer preferences. Of these 225, 89 are based in 
the US.
    The main drivers of these opportunities were:
          1) Increased revenue (through demand for low emissions 
        products and services)--US$970 billion;
          2) Better competitive position to reflect shifting consumer 
        preferences--US$487 billion;
          3) Increased revenue through new solutions to adaptation 
        needs--US$236 billion;
          4) Increased capital availability (as more investors favor 
        low-emissions producers--US$198 billion.
    In terms of opportunities, it is interesting to note that companies 
headquartered in the U.S. in the G500 group report less than half the 
potential opportunities as their counterparts headquartered in the EU. 
As we know, the EU is evolving a clear policy framework consistent with 
the Paris agreement, and it could be that this coherence supports a 
business opportunity viewpoint by offering reasonable regulatory 
certainty, conducive to investment.
    As to how these risks and opportunities are expressed by companies 
themselves, I will provide you some examples from a range of state and 
company types.
    CALIFORNIA RESOURCES CORPORATION, a company engaged in hydrocarbon 
exploration, sees ``Risks in changes in precipitation patterns and 
extreme variability in weather patterns leading to increased operating 
costs (e.g., inadequate water supply for hydroelectric plants or to 
cool nuclear and fossil fuel plants)'' and also says this impact could 
be worsened because ``Due to the severe drought in California over the 
last several years, water districts and the state government are 
implementing regulations and policies that may restrict groundwater 
extraction and water usage and increase the cost of water.''
    EQUINIX, INC., which operates data centers in 52 metropolitan areas 
in 24 countries, says ``The physical impacts of climate change, 
including extreme weather conditions such as heat waves, could 
materially increase our costs of operation due to, for example, an 
increase in our energy use in order to maintain the temperature and 
internal environment of our data centers necessary for our 
operations.''
    PG&E CORPORATION: As we all know, PG&E, which has 23,000 employees, 
has been forced into bankruptcy by the losses and potential claims 
against it related to the recent cataclysmic forest fires in Paradise, 
California whose devastation was compounded by drought and other 
factors. The bankruptcy affected not only the company, its customers 
and shareholders, but was also a blow to the transition to renewable 
energy since, PG&E had been a leading supplier of renewables and had 
itself recognized climate change risk. It has said ``PG&E faces the 
risk of increased electricity demand and loads from its customers due 
to more extreme and prolonged hot weather events. Higher temperatures, 
including warmer daytime maximums and nighttime minimums, for prolonged 
periods, may also mean that certain electrical assets may fail, become 
less efficient or less reliable, and may need to be modified or 
replaced. Higher electrical loads increase stress and management of 
electricity on the transmission system. There is also the risk of 
increased PG&E customer outages during extreme heat wave events'' as 
well as ``. . . the risk of higher inundation and flooding potential at 
coastal and low elevation facilities due to sea level rise when 
combined with high tides, storm runoff, and storm surges. There is the 
risk of levee erosion or failure, putting assets at risk. PG&E also 
faces the risk of damage to substations and other gas and electric 
infrastructure.''
    Other utilities have also been negatively affected by the PG&E 
situation. After the fires, Standard and Poor's ratings stated ``we 
lowered our credit rating on Edison International and its subsidiary 
Southern California Edison . . . and placed all of our ratings on the 
companies on CreditWatch with negative implications'' which ``reflects 
the increased likelihood that Edison will continue to experience 
catastrophic wildfires due to climate change.'' S&P similarly 
downgraded San Diego Gas and Electric Company, for the same reasons. 
Subsequently, Fitch Ratings also revised its rating outlook for Edison 
International, from stable to negative adding ``Given the unprecedented 
size of recent wildfires, future multi-notch downgrades cannot be ruled 
out.''
    These credit ratings changes may seem far from the American people, 
but in fact they reflect a drain on financial stability and borrowing 
power of key employers and infrastructure providers, and can cut into 
the value of pension fund holdings, 401Ks, etc. causing indirect 
hardship and heartbreak for ordinary Americans beyond even those who 
suffer loss of life and property.
    SEMPRA ENERGY is a North American energy infrastructure company 
based in San Diego, California that has said, ``damages from the 2007 
wildfires exceeded SDG&E's [Sempra parent company] liability insurance 
coverage, ultimately leading to a $351 million charge in 2017.''
    WELLS FARGO with approximately 265,000 employees, says ``Change in 
precipitation extremes and droughts can impact our customers. For 
example, droughts can drive up the cost of water and thereby affect our 
customers' ability to payback their loans, especially if they are in 
water intensive industries such as agriculture, semiconductors, energy, 
select tourism, breweries and beverage companies and more.'' Wells 
Fargo also said ``Global agreements were established as a result of 
COP21; however there remains a lack of clear, consistent global and 
national regulations associated with climate change.''
    THE MOSAIC COMPANY is a Fortune 500 company based in Minnesota, the 
largest U.S. producer of potash and phosphate fertilizer, with 
facilities in Florida. It sees climate risks as chronic: ``Changes in 
precipitation resulting in droughts or water shortages at our mines in 
Florida or Saskatchewan where we manage large volumes of water in our 
daily operations could restrict our operating activities, require us to 
make changes in our operating activities that would increase our 
operating costs, reduce our efficiency or limit our output.''
    HARRIS CORPORATION, based in Jacksonville, Florida, with close to 
17,000 employees, identifies increased severity of extreme weather 
events such as storms, cyclones and flood risks as a current and direct 
risk to its operations. Their disclosure states ``For data centers, 
reduction in operational efficiency and increased component failure 
rates as increases in average temperatures and associated humidity will 
affect baseline design parameters. For example, the loss of ambient 
cooling potential. Changes in humidity may also lead to changes in 
patterns and rates of equipment corrosion. Higher humidity levels may 
also lead to new requirements to maintain internal environments within 
system tolerance ranges, as excess condensation can cause short-
circuiting or water ingress.''
    Harris also said it will, ``expand the scope of events we consider 
in our planning to include more frequent and unusually disruptive 
storms in these locations, as well as the impacts of increased/more 
severe winter storms on our operations in the Midwest and Northeast.''
    ARCHER DANIELS MIDLAND, based in Illinois, employs 31,000 employees 
serving customers in more than 170 countries. ADM can foresee potential 
loss of revenue `` ``if facilities are unable to acquire enough raw 
material to operate'' due to ``increased severity of extreme weather 
events'' and ensuing impacts. It also says, that ``the price of raw 
materials would increase, transportation via river would become 
difficult, and operations could be limited or halted.''
    CONAGRA, with headquarters in Chicago, has said ``Rising mean 
temperatures [leads to] reduced revenue from decreased production 
capacity (e.g., transport difficulties, supply chain interruptions).''
    In our Forests disclosure, CONAGRA also has said ``Our paper 
suppliers are impacted by U.S. flooding caused by extreme weather and 
exacerbated by climate change, and forest fires exacerbated by drought 
that have appeared with increasing frequency over the past few years.''
    YUM! BRANDS, based in Louisville, Kentucky, with 38,000 employees 
and operating 48,000 restaurants in 145 countries worldwide, said: ``. 
. . Shortages or interruptions to our Concepts' restaurants could 
adversely affect the . . . operations of our restaurants. Such 
shortages or disruptions could be caused by inclement weather, natural 
disasters, or a variety of other issues. Climate change influences 
several physical rik drivers that could negatively impact production, 
including extreme weather events such as tropical cyclones and changes 
in precipitation and temperature, forest fires, loss of ecosystem 
services, reduced crop yields, and thus, availability of certified 
sustainable material, which is already limited.''
    EXELON CORPORATION, also based in Chicago and employing 
approximately 33,400 people worldwide with approximately 10 million 
customers in the US, has said it foresees risk as ``Increased severe-
weather events leading to increased capital costs (e.g., damage to 
facilities). Each utility plans for storm recovery costs in their 
annual operating budget, but costs can swing year to year by 10 to 100 
million dollars (as incurred during Hurricane Sandy in 2012, and again 
in 2014 from February ice storms) depending on the significance of the 
storm event.'' In addition, Exelon says ``Extreme weather conditions or 
damage resulting from storms could stress the Utility Registrants' 
transmission and distribution systems, communication systems and 
technology, resulting in increased maintenance and capital costs and 
limiting each company's ability to meet peak customer demand.''
    In the hospitality sector, HYATT HOTELS which employs approximately 
45,000 people around the world, and another 70,000 through third-party 
owners and franchise partners, has described multiple risks, including 
``Rising mean temperatures . . . that could result in increased cooling 
demands and associated costs at our hotels. Wide-spread increases in 
energy demand may also increase the cost of utilities for our hotels.'' 
In addition, ``Hyatt's coastal properties may need to make capital 
investments in systems to mitigate the effects of sea level rise, such 
as structural reinforcement and improved drainage systems. Sea level 
rise would also compound the risks of tropical cyclones and flooding 
mentioned above for Hyatt's coastal properties, which could impact 
business continuity and increase capital costs needed for repairs. Sea 
level rise could also impact the desirability of particular locations 
or travel patterns of customers.''
    In the real estate sector, JONES LANG LASALLE INCORPORATED is the 
second-largest company of its kind in the world, with operations in 
over 80 countries and a global workforce of 82,000. On climate risks, 
the company says ``We expect insurance companies to raise premiums 
generally as the result of projected increase in extreme weather events 
resulting from the increase in global temperatures.'' Also, ``The 
occurrence of natural disasters can significantly increase the 
availability and/or cost of commercial insurance policies covering real 
estate, both for our own business and for those clients whose 
properties we manage and who may purchase their insurance through the 
insurance buying programs we make available to them. For LaSalle 
Investment Management, changes to weather patterns leading to 
increasing precipitation pose an indirect risk through rising insurance 
premiums as actuaries start to integrate climate change into their 
pricing models. These costs would normally be passed on but there is a 
risk they could impact the value of the asset.''
    ELI LILLY, with headquarters in Indianapolis, Indiana has said, 
``Changing precipitation patterns, droughts, flooding and tropical 
cyclones could potentially damage our manufacturing, research and 
development, and our housing/distribution facilities and those of our 
key suppliers, especially in flood prone areas . . . In 2017, our 
operations in Mexico, U.S. and Puerto Rico were hit by a string of 
devastating earthquakes and hurricanes. Our principal active ingredient 
manufacturing occurs at our U.S., Ireland, and Puerto Rico sites. 
Puerto Rico, where we employ 1,400, was devastated by Hurricane Maria 
in 2017, causing power outages, food and water shortages.''
    And the CDP repository has many years of similar descriptions from 
companies, and since all companies are employers, these and other risks 
described, all touch people.
    But there is also an upside concerning people and the ongoing drive 
for jobs creation. The International Labour Organization (ILO) 
forecasts that ``24 million new posts will be created globally by 
2030,'' with the caveat that, ``the right policies to promote a greener 
economy must also be in place for this to happen, along with better 
social safety nets for workers.''
    To take just one significant company, in Maryland, Lockheed Martin 
Corporation, which has more than 590 facilities in 50 U.S. states and 
employs approximately 100,000 people worldwide, identified in our 
disclosure the use of lower-emission energy sources as a $21 billion 
opportunity, which in turn presumably could generate significant new 
employment.
    And just for perspective, while of course the use of artificial 
intelligence and the IT revolution have cut into jobs creation, on the 
other hand, ``green jobs'' exist across the spectrum of work that needs 
to be done. I helped spearhead an entity called the Jobs and 
Environment Initiative back in 2006 to survey the landscape then of 
what are overly simply called ``green jobs,'' in a range of states in 
the U.S. and, for example we found in Florida, environmental demands 
were generating more jobs for sheet metal workers than geoscientists, 
in Ohio, more jobs for welders than biochemists, and so forth.
    Regarding business expectation and preparedness for policy, there 
is significant evidence of wide-open eyes. Take, for example, the 
question of whether and how to ``put a price on carbon''--meaning 
either a tax or cap-and-trade or combination.
    As of our tally two years ago, 96 companies disclosed that they had 
already set an internal carbon price for the purpose of internal 
planning, indicating that they accept and understand that greenhouse 
gas emissions carry a hidden cost to their business which they seek to 
make visible using a projected surrogate cost, an internal carbon 
price. An additional 245 companies stated they are likely to be using 
an internal carbon price by the end of this year's disclosure cycle. 
And many companies using this internal mechanism indicate they do so 
because they wish to be better prepared for eventual regulation and/or 
are operating in a jurisdiction where they already face mandatory 
requirements, such as in the EU or in China.
    Among the companies using an internal carbon price is Oklahoma Gas 
and Electric, which employs 2,500 people and serves more than 800,000 
electricity customers. Citing opportunities ahead, OG&E disclosed that 
it ``has leveraged its advantageous geographic position to develop 
renewable energy resources and completed transmission investments to 
deliver the renewable energy. The Southwest Power Pool (SPP) has begun 
to consider and authorize the construction of transmission lines 
capable of bringing renewable energy out of the wind resource area in 
western Oklahoma, the Texas Panhandle and western Kansas to load 
centers by planning for more transmission to be built in these areas.''
    Also of interest but less discussed, given the links between 
drought and water availability, and anticipated scarcities in 
predictable water supply, 89 companies have also begun using internal 
water prices to better gauge rising costs and risk, as of our 2018 
Water Disclosure request.
    And on the question of climate science, far from denying climate 
science, there is essentially no debate about it among any thoughtful 
business leaders. In fact, climate science could be said to be a new 
business language, given the growth in companies setting science based 
targets (SBTs) for greenhouse gas emissions reduction, meaning targets 
in line with the terms of the Paris agreement. As of the end of 2018, 
150 companies disclosed they had or were in the process of setting 
SBTs, up from 128 companies in 2017 and 88 in 2016.
    Regarding trends in capital investment, mainstream investors are 
also recognizing the significant upside of shifting capital to 
companies that take environmental and social factors into strategic 
account in their business management. According to the Sustainable 
Investment Forum of the US, for example, which tracks relevant data, 
today 1 in 4 dollars invested in the U.S. is screened for 
environmental, social or governance factors (esg), or 26% of the 
approximately $46 trillion US-based assets under management. That is up 
from 1 in 6 dollars in 2019 and 1 in 9 dollars in 2012.
    And, in a basic core indication of how integrated low carbon 
efficiency has become, the S&P 500 Carbon Efficient Index, which 
overweights carbon efficient companies and underweights carbon 
intensive companies, is now tracking virtually to a T with the 
venerable classic S&P 500, an alignment that indicates if nothing else 
that valuations are not reduced if low carbon intensity and energy 
efficiency are prioritized. On the contrary.
    But despite progress, returning to the science, we see that the 
clock is ticking on reversing the most dangerous climate change trends, 
as greenhouse gas emissions continue to rise due to a variety of 
interlocking factors. So looking ahead to solutions and meeting new 
demands and needs, it could be worthwhile to think of what I call the 
three I's--indemnification, insurance and infrastructure.
    First, indemnification. Currently the risks of climate change are 
bouncing around the economy like a wayward pawn on a chessboard looking 
for a place to land. They are not hitting the general economy yet 
because they are not priced in yet--but costs there are, and they are 
being borne either by the government and taxpayers, through FEMA and 
other social safety net programs, already stretched thin; insurance 
companies,; or the victims themselves, who have no recourse, either 
because they are cash-strapped, under-insured, or just plain unable to 
respond to catastrophic extremes.
    So perhaps new forms of indemnification will be needed to absorb 
risks and insulate at least the individual victims.
    This leads to insurance.
    The Committee will be hearing from Zurich Re, of course. But for 
additional relevance, according to a July 2018 overview report on 
climate risk by the Sustainable Insurance Forum and the International 
Association of Insurance Supervisors:
    On insurance market risk, the report says: ``From a pricing risk 
perspective, insurers' capacity to write insurance business may be 
constrained by increasing physical risks to insured property and 
assets, if risk-based pricing rises beyond demand elasticity and 
customer willingness to pay. There is evidence that domestic property 
in high risk areas is being rendered uninsurable due to high exposure 
to physical risks, such as wildfires, storms and sea level rise. In the 
United States, US$600bn of property within one mile of the coast is 
covered under the National Flood Insurance Programme, much of which 
will not be viable in coming decades, absent intensive adaptation 
investments.''
    And on investment risk: ``The profitability of insurer investment 
portfolios may be affected if invested in sectors or assets which may 
be especially at risk from either physical or transition-related 
factors. This could, at the extreme, constrain insurers' capacity to 
pay future claims.''
    Also, regarding insurance and risks, according to the 2018 Annual 
report from global insurance broker, AON, entitled Weather, Climate and 
Catastrophe Insight, in 2018: ``64% global insured losses from natural 
disasters came from the United States; the years 2017 and 2018 were the 
costliest back-to-back years for weather disasters on record globally, 
with an economic impact of US$653 billion, and the costliest for 
private and public insurers on record at $237 billion.:
    Moreover, of the $225 billion economic cost of natural disasters in 
2018, $215 billion were weather related.
    And finally infrastructure. We all know that America's 
infrastructure is crumbling and in urgent need of modernization. To 
undertake what is needed will require decades of capital investment, 
but we also know that any dollar invested in infrastructure 
improvements pays dividends for years to come.
    This is especially obvious as we celebrate the 50th anniversary of 
the Apollo 11 landing, one of the most fantastic accomplishments in our 
nation's history. The space program gave us much more than Tang--it 
built the communications systems that became the internet and gave the 
U.S. such an edge in digital technologies. And consider the compounding 
benefits of investments in the U.S. highway system, much of which also 
needs climate resilience updating, by the way.
    There is room for an ambitious and comprehensive focus on not only 
modernizing infrastructure but designing and planning it with climate 
change trends in mind. Climate change resiliency means strengthened 
security--if we build it, we will have it when we need it. And a focus 
on climate change as an infrastructure opportunity, rather than an 
existential threat, can mobilize and galvanize the American people 
across the nation.
    In fact, there are climate resilience infrastructure needs big and 
small vividly waiting to be met all around the nation. Through our CDP 
Cities program, we operate the Matchmaker portal where cities can 
showcase to investors their climate resilience related infrastructure 
needs, most of which have direct benefit where people live and work. 
Currently, in the states represented on the Committee alone, we have 
158 projects currently needing funding, of which 108 have preliminary 
cost estimates totaling roughly $10 billion in projected cost, ranging 
from the multi major Embarcadero Seawall renewal project in San 
Francisco, to smaller flood and mitigation projects needed valued at 
$23 million in Gretna, Louisiana. Globally, there are about 650 costed 
Matchmaker projects seeking funding, half of which need funding of 
under $1 million.
    When it comes to infrastructure we all have our horror stories. In 
my own experience, one day earlier this month, not only did Amtrak come 
to a halt because of a fire in the rail tunnel now crossing the Hudson 
River--the walls were still so hot after the all-clear, they looked 
like the inside of a toaster as our train limped through. A few days 
later, flights from Reagan international were delayed for hours due to 
overheated airplanes, too hot to board, we were told, because of high 
external temperatures on the ground that prevented normal cool down 
after a flight. The airline company had to wheel in a portable unit to 
pump cool air into the cabin, a contraption that looked like a giant 
vacuum cleaner in reverse. Anomaly, maybe, but more likely a harbinger 
of what is to come as we try to match our wits and technology to the 
exigencies of a changing climate. Perhaps there is even room for a 
Climate Resilience Infrastructure Act?
    In sum climate change is present and costly to companies and 
average Americans, and coherent inter-sectoral policies would make the 
U.S. less vulnerable. Thank you and I will be glad to answer any 
questions.
  visuals for cdp/pdiperna testimony, u.s. house of representatives, 
          select committee on the climate crisis--25 july 2019

[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]


 references for cdp/pdiperna testimony, u.s. house of representatives, 
          select committee on the climate crisis--25 july 2019
    Report on the Economic Well-Being of U.S. Households in 2018, Board 
of Governors of the Federal Reserve System, 2019 https://
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being-us-households-201905.pdf
    Are companies ready for climate change? (Global Analysis), CDP, 
2019 https://www.cdp.net/en/research/global-reports/global-climate-
change-report-2018/climate-report-risks-and-opportunities
    CDP 2018-2017 Annual Disclosure Information requests. https://
www.cdp.net/en/responses
    San Diego Gas & Electric Co. Downgraded to `BBB+', Outlook Remains 
Negative S&P Global Ratings, January 21, 2019
    Fitch Affirms Edison International and SCE; Rating Outlook Revised 
to Negative Fitch Ratings, January 22, 2019
    World Employment and Social Outlook 2018: Greening with jobs 
International Labour Office--Geneva: ILO, 2018
    Jobs Creation in the Environmental Industry in the U.S. and Nine 
States, 2006 Management Information Systems, Inc. www.misi-net.com
    Putting a price on carbon: Integrating climate risk into business 
planning, CDP, October 2017 https://www.cdp.net/en/climate/carbon-
pricing
    2018 Report on U.S. Sustainable, Responsible and Impact Investing, 
US SIF Foundation, 2018
    Issues Paper on Climate Change Risks to the Insurance Sector, 
International Association of Insurance Supervisors (IAIS), 2018 https:/
/www.insurancejournal.com/research/research/success/climate-change-
risks-to-the-insurance-sector/
    Weather, Climate & Catastrophe Insight: 2018 Annual Report, Aon, 
2018 http://thoughtleadership.aonbenfield.com/Documents/20190122-ab-if-
annual-weather-climate-report-2018.pdf
    CDP North America: Matchmaker, CDP, https://www.cdp.net/en/cities/
matchmaker

    Ms. Castor. Terrific. Thank you.
    Mr. Jabusch, you are recognized for 5 minutes.

                  STATEMENT OF GARVIN JABUSCH

    Mr. Jabusch. Thank you.
    And I would like to add my thanks, Chair Castor, Ranking 
Member Graves, for the opportunity to testify today.
    Climate disruption and resource degradation both present 
significant threats and opportunities for American business. We 
know that. Every industry is affected, and since my business of 
asset management deploys capital across the economy, it is 
exposed to all these risks and opportunities inclusively.
    So risks. In investing, the purpose of it is to preserve 
and grow our purchasing power. There are volumes of portfolios 
today written about how to do this. And those theories have 
worked well for decades, but many theories of the world work 
great until the world changes. Now the change is climate 
disruption. And in the exercise of fiduciary duty, I have to 
think about the effects the climate crisis will have on every 
business I consider placing my client's assets into. And 
inversely, I have to think about the effect each business may 
have upon the climate. In doing this analysis, I minimize risk 
and can grow my clients' purchasing power into the future.
    Now the application of this is simple; it is in realizing 
that science is our path to knowing things, and science tells 
us that many of our present economic activities, like fossil 
fuel development, like internal combustion engines, use of 
topsoil to put in chemicals have to decline dramatically and 
soon. So the prudent fiduciary knows that holding securities of 
companies pursuing these activities will put client assets at 
risk, regardless of the time horizon, as madam chair has noted 
in her opening remarks.
    According to experts like former Bank of England governor 
Mark Carney and investor Jeremy Grantham and, again, as Chair 
Castor mentions, the Fed itself, climate has emerged as, bar 
none, the most important risk in asset management, and so the 
main threat to investments today is in holding the causes of 
the climate crisis. De-risking a portfolio therefore means not 
owning key threats to that economic stability.
    So those are the risks within my industry. The main risk to 
the climate that comes from my industry is that the dominant 
way of investing today flat ignores the climate crisis, 
indexing. A cnbc.com article explains that, quote, 80 percent 
of the stock market is now on autopilot, end quote. That means, 
today, the reason the stock is bought usually is because it is 
in an index, not because of what the company makes or service 
it provides. This is dangerous because the major indexes are 
packed with causes of our risks. The S&P 500 alone includes 
about 60 fossil fuels related companies and any number of risks 
to water, to topsoil, to economic equality to name a few.
    So let's be clear. If you own the S&P 500 today, you think 
you are investing passively, but you are not. You are making an 
active bet on the causes of system-level collapse. By your 
actions, if not your intent, you are signaling that you hope to 
benefit from causing climate disruption. The climate crisis is 
the most important risk to capital preservation, yet the main 
risk coming from the investment industry is that the majority 
of professionals are ignoring that, and worse, investing in its 
causes.
    There are those in investments working to change this, my 
firm among them. It sounds simple to invest for a sustainable 
economy, but investment managers haven't had great principles 
yet to guide them. So our approach to de-risking portfolios is 
to select stocks, not because of their presence in an index, 
but because of what a company does. We think the clearest line 
of sight there is to look at source of revenues, simply. Is a 
company being paid to help de-risk the economy or does it get 
paid to help drive it towards the edge? If a company's net 
activities do not mitigate risk on an ongoing basis, we 
shouldn't own it.
    Investing has to get back to judging individual cases on 
their merits, and we can use disinterested objective principles 
to make better choices. You get the economy you invest in, and 
while most investors still own the S&P 500, we will be living 
in a fossil fuels economy that it represents.
    All right. Those are risks from my industry and how to 
avoid them, but what about opportunities. Well, this is where 
there is good news, and it is that innovation is increasing, 
and the rate of that increase is itself accelerating. So 
innovation just means doing things better. It means more 
efficient economic production, getting more output from fewer 
inputs. As E.O. Wilson has noted, and I note that he was here 
on the Hill a couple of days ago talking, digitalization is key 
to achieving sustainability, because growing efficiency of 
production shrinks our ecological footprint. And we now have 
the means to mitigate climate disruption, means from fields 
from advanced materials in biotech, to renewable energy in 
storage, to zero emissions transport, and adaptations like 
indoor agriculture. Investing in solutions like these will 
drive performance at the portfolio level as these innovators 
gain market share from legacy predecessors.
    So economic production can and will be much greater than it 
is today, while consuming far fewer inputs like natural 
resources, dollars, and person hours, and with fewer 
externalities. This will create enormous wealth and result in a 
sustainable economy, meaning we can realize good standards of 
living for the 100 percent without overtopping Earth's 
capacity. The greatest opportunity to grow wealth is in 
investing for that endgame. That endgame is a zero-risk 
economy.

    Thank you.
    [The statement of Mr. Jabusch follows:]

 Creating a Climate Resilient America: Business Views on the Costs of 
                           the Climate Crisis

               The Select Committee on the Climate Crisis

  Testimony of Garvin Jabusch, Chief Investment Officer, Green Alpha 
                             Advisors, LLC

                        Thursday, July 25, 2019

    I. Climate disruption and resource degradation present significant 
threats to and opportunities for American business. Every sector and 
industry are affected, and my industry of asset management, in its role 
deploying capital across the economy, is directly exposed to it all, 
risks and opportunities inclusive.
    II. First, risks. The purpose of investing is to preserve and grow 
one's purchasing power. Whatever amount I am investing, I want to be 
able to buy as much or more with its value in the future than I could 
have with its cash value today. There are volumes of portfolio theory 
about how to achieve this, and, overall, those theories have worked 
well for decades. But many theories of the world work great, until the 
world changes. Now, the change is climate disruption, and in the full 
exercise of fiduciary responsibility as an asset manager, I have to 
think hard about the effects that climate disruption will have on every 
business I consider placing my clients' assets into, and inversely, the 
effect each business may have upon the climate. It is in doing this 
analysis, no longer optional for the prudent risk manager, that I can 
minimize investment risk and grow my clients' purchasing power into the 
future.
    What is the practical application of this? It begins with the 
realization that even within asset management, it is science that is 
our path to knowing things. Science tells us that many of our present 
economic activities, such as fossil fuel development, internal 
combustion engine manufacture, fossil powered electricity generation, 
and use of topsoil depleting chemicals, have to decline dramatically, 
and soon. Thus, the prudent fiduciary knows that holding the securities 
of companies pursuing these activities is likely to put his or her 
client assets at risk, particularly in the medium and long terms.
    According to experts such as former BoE governor Mark Carney and 
noted investor Jeremy Grantham, climate has emerged as bar none the 
most important risk in asset management, and the main threat to 
investments today is in holding the causes of the climate crisis. To 
de-risk a portfolio, it is necessary to not own the primary threats 
undermining economic stability.
    III. Those are the risks within my industry. The main risk to the 
climate coming from my industry is that the predominant way of 
investing today completely ignores the climate crisis. A recent 
cnbc.com article explains that ``80% of the stock market is now on 
autopilot . . . Passive investments control about 60% of the equity 
assets, while quantitative funds--using trend-following models instead 
of fundamental research--account for 20% of market share.'' This means 
that today, the main reason a stock is bought is because it is in an 
index, and not because of what the company makes or what services it 
provides. This is dangerous because the major indices are riddled with 
the causes of our largest environmental and therefore economic risks. 
The S&P 500 includes approximately 60 fossil fuels related companies 
and any number of other risks to water, topsoil and economic equality, 
to mention a few. Let me be clear: if you own the S&P 500 today, you 
may believe you are investing passively, but you are not. You are 
making an active bet on the causes of system-level collapse. By your 
actions, if not your intent, you are signaling that you hope to benefit 
from causing climate disruption and resource degradation. Climate is 
the most important risk to capital preservation, yet the main overall 
risk coming from the investment industry is that the vast majority of 
professionals and their clients are flat ignoring it.
    IV. There are those in investment management working to change 
this, my firm Green Alpha Advisors, among them. It sounds simple to 
invest for a more sustainable economy, but the problem has been that 
investment managers don't have good principles to guide them. Green 
Alpha's approach to de-risking portfolios has been to select stocks not 
because of their presence in a benchmark index, but because of what the 
company actually does. We believe the best way to begin, and the 
clearest line of sight, is to look at sources of revenues. Is a company 
being paid to de-risk the global economy, or is it being paid to help 
drive it towards the edge? Are the majority of revenues coming from 
business activities that will help society mitigate or adapt to the 
climate crisis, or from causing it?
    Rather than blindly indexing, investment professionals have to get 
back to judging individual cases on their merits; and we can use 
disinterested, objective principles to make better choices. If a 
company's net activities do not create a better world on an ongoing 
basis, we should wonder why we own it. You get the economy you invest 
in, and as long as most investors still own the S&P 500, we are going 
to be living in the fossil fuels economy that it represents.
    V. Those are the risks in and from my industry, and how to avoid 
them. What about the opportunities? This is the good news, and I think 
it is generally underappreciated.
    Human innovation is increasing in an unprecedented way, and the 
rate of that increase itself is accelerating. Faster and faster, we're 
coming into possession of the means to both mitigate climate 
disruption, and to adapt to what we have already committed ourselves 
to. Why? Because innovation means doing things better. It means, as it 
always has meant, making economic production more efficient: getting 
more output out of ever fewer inputs. As biologist Edward O. Wilson has 
noted, the digitalization of the economy is key to achieving 
environmental sustainability, because the associated expanding 
efficiency of production can shrink our ecological footprint. But of 
course indefinite sustainability isn't emerging only from 
digitalization, we are also today seeing great strides in advanced 
materials, biotech, renewable energy and storage, zero emissions 
transportation, water management, and in key adaptations like indoor 
agriculture. Investing in these efficiency solutions will lead to 
competitive performance returns as these innovators continue to gain 
market share from their legacy economy predecessors, and thus grow 
faster.
    VI. Economic production can be much greater than it is today while 
consuming far fewer inputs, be those inputs natural resources, person 
hours or dollars, and can do so with far fewer externalities like 
greenhouse gasses and other pollution. This will create enormous wealth 
for investors, and will also put us on the path to indefinite 
sustainability, meaning we can realize a good standard of living for 
everyone--the 100%--without overtopping earth's tolerances. The 
greatest wealth preservation and growth opportunities for my firm come 
from that; from keeping our eye on, and investing for, that endgame: 
namely, a zero-risk economy.

    Ms. Castor. Thank you.
    Mr. Walker, you are recognized for 5 minutes.

                    STATEMENT OF JAY WALKER

    Mr. Walker. Thank you, Chairwoman Castor, Ranking Member 
Graves, and committee members. My name is Jay Walker. I am from 
Houma, Louisiana, and I am the EVP and chief of lending at 
South Louisiana Bank, a community bank in Terrebonne Parish in 
Louisiana. It is an honor and a privilege to be here with you 
here today to discuss creating a climate resilient America.
    In the last three decades, my banking community have 
experienced 13 named storms. The latest, Hurricane Barry, was 
less than 2 weeks ago. Both my bank and my community long ago 
decided to pull up our bootstraps and do whatever it takes to 
build resiliency and to continue to make our living in south 
Louisiana.
    It is important for members to know that Louisiana is a 
working coast, and those of us who live in coastal Louisiana do 
largely in service of our Nation's energy and seafood needs. 
While diverse, our community's economy is driven by these two 
industries, and moving is simply not an option.
    For the people of south Louisiana, being resilient in the 
face of climate change and other challenges is a way of life. 
We have been doing it for decades. There is a hope for 
communities and businesses that pull together and take action 
to prepare and protect themselves from the inevitable process 
of climate change, erosion, subsidence and other challenges.
    In spite of these challenges, my bank has maintained a loan 
loss reserve of 2.5 times higher and a capital of 31 percent 
greater than our peers. I am not telling you this to brag but 
to point out that when you live and operate in an environment 
with increased risk, you have to maintain resiliency to make it 
through the tough times.
    While my day-to-day job is to provide our region's banking 
needs, I am also very active in the community, and those 
efforts are intertwined. My community survival is tied to 
managing risk from a manipulated delta and a channelized 
Mississippi River. Efforts to aid the Nation's waterborne 
commerce have had a severe impact on our community. Namely, 
subsidence, sinking wetlands. Since 1992, the communities in 
Terrebonne and Lafourche Parishes have been the subject of 
Federal studies to build levee protection projects in order to 
protect our citizens from the risk of hurricanes.
    The levee protection project called the Morganza to the 
Gulf is a 98-mile hurricane protection levee system. This 
project has been before Congress four times since 2000, and was 
finally authorized for construction in the 2014 WRRDA at a cost 
of $10.3 billion. But to date, we have received no Federal 
funding.
    In 2006, the Morganza Action Coalition was formed to 
advocate for the Federal funding to complete the levee 
protection project. I am currently the president of MAC, and my 
bank has contributed over $70,000 to MAC support advocacy to 
build large-scale levee protection.
    This 501(c)(4) nonprofit's efforts have been critical to 
moving our Federal partner, largely to get out of the way of 
local efforts, but to date, virtually all of our protection has 
been constructed from local and State revenues to the tune of 
over $400 million. Our community, with the State's support and 
local dedicated taxes, has partially built more than 45 miles 
of levees, and 9 floodgates.
    Let me say it again. After years of waiting for Federal 
funding, our communities both in Terrebonne and Lafourche 
Parishes voted to tax themselves to begin building this system. 
The most recent tax vote for an additional half cent in 
Terrebonne Parish passed in December 2012 by a 72 percent voter 
margin. We have taxed ourselves more than any other coastal 
community in America to reduce risk largely caused by Federal 
actions.
    Just 2 weeks ago, a Cat 1 hurricane named Barry barreled 
through the Gulf of Mexico, on a similar path to hurricanes 
Rita in 2005 and Ike in 2008. But the difference this time was 
that less than 15 homes flooded in Terrebonne Parish versus 
1,100 for Rita and upwards of over 10,000 that flooded in Ike. 
In south Lafourche where the levee system is even more complete 
no homes flooded.
    It is imperative that our coastal communities complete this 
levee protection project to protect us from up to a Cat 3 
hurricane. The most recent U.S. Corps of Engineers study 
evaluating the cost of the Morganza to the Gulf levee, which 
used actual cost data from completed sections, indicates that 
more accurate cost to complete the project is estimated to be 
$3.4 billion, one-third of the original $10.3 billion estimate. 
We believe our $400 million-plus spent on flood protection so 
far has probably saved at least that much in flood damages for 
Hurricane Barry, a single storm.
    In a couple of months, Congress will be looking at long-
term solutions for the National Flood Insurance Program. Think 
of the savings that the communities of Terrebonne and Lafourche 
Parish would have had on mitigating of flood claims from the 
completion of our levee system. The Morganza to the Gulf levee 
protection project is an investment that the citizens of my 
community have made to build resiliency to climate crisis.
    Is there a cost? Yes. But the cost of not building and 
preparing are much greater. I encourage Congress to step up and 
invest in building the Morganza to the Gulf levee protection 
project and others like it which, in the end, will save 
taxpayers billions of dollars.
    Thank you for allowing me to be with you today, and I will 
be glad to answer any questions.
    [The statement of Mr. Walker follows:]

Statement of Mr. Jay Walker, Executive Vice President, South Louisiana 
                            Bank, Houma, LA

On ``Creating A Climate Resilient America; Business Views on the Costs 
                        of the Climate Crisis''

U.S. House of Representatives, Select Committee on the Climate Crisis--
                             July 25, 2019

    Chairwoman Castor, Ranking Member Graves and Committee Members, my 
name is Jay Walker, and I am from Houma, Louisiana. I am the Executive 
Vice President, and Chief of Lending at South Louisiana Bank; a 
community bank of just under $500 Million in assets, with our home 
office located in Terrebonne Parish, Louisiana. My bank serves the 
markets of Terrebonne and Lafourche Parishes in Southeast Louisiana. It 
is an honor and privilege to be here with you today and discuss 
``Creating a Climate Resilient America''.
    I started my banking career in 1983, just as my community was hit 
with the worst oilfield industry downturn in U.S. history. Faced with 
dire straits, my management team came up with a plan to work through 
the tough times and we survived. In the last three decades, my bank and 
community, has experienced many storms, some natural, and some man-
made. You may remember the names of a few of them; Hurricanes Juan, 
Andrew, Lily, Isadore, Katrina, Rita, Gustav, Ike, and just two weeks 
ago Hurricane Barry. Then in 2010, my area was hit with a virtual 
shutdown of the oil industry as the previous administration imposed an 
offshore deep-water drilling moratorium. Both my bank, and my 
community, have decided to pull up our boot straps and do what it would 
take to build resiliency, and continue to make our living in South 
Louisiana.
    It is important for Members to know that Louisiana is a working 
coast and those of us who live in coastal Louisiana do so largely in 
service to our Nation's energy and seafood needs. While diverse, our 
community's economy is driven by these two industries and moving is 
simply not an option.
    In Terrebonne and Lafourche Parishes, we are home to one of the 
nation's most active deep-water oil ports, helping to fuel our nation. 
And home to where over 21% of all fisheries landings in the lower 48 
states is produced. And home to a thriving tourism business with 
arguably the best sport fishing in North America. What I can tell you 
is that for the people of Southeast Louisiana, being resilient in the 
face of the climate and other challenges is a way of life. We have been 
doing it for decades. Also what I'm here to tell you, is there is hope 
for communities and businesses that pull together and take action to 
prepare, and protect themselves from the inevitable process of loss 
from climate change, erosion, subsidence, and other man caused 
challenges.
    My bank, despite all of the previously mentioned challenges, has 
maintained a loan loss reserve of 2.5 times higher than our peers, and 
capital at 31% greater than our peers. I'm not telling you this to 
brag, but to point out that when you live and operate in an environment 
with increased risk, you have to maintain resiliency to make it through 
the tough times!
    While my day-to-day job is to provide our region's banking needs, I 
am also very active in the community. And those efforts are 
intertwined. My community's survival is tied to managing risk from a 
manipulated delta and channelized Mississippi River. Efforts to aid the 
Nation's waterborne commerce have had a severe impact on our community. 
Namely, subsidence--sinking wetlands. Since 1992, the communities in 
Terrebonne and Lafourche Parishes have been the subject of federal 
studies to build levee protection projects in order to protect our 
citizens from the risks of Hurricanes. The levee protection project 
called ``Morganza to the Gulf'', is a 98-mile hurricane protection 
levee system that has been before Congress four times since 2000. It 
was finally authorized for construction in the 2014 Water Resources 
Reform & Development Act, at a cost of $10.3 billion. But to date we 
have received no Federal funding!
    In 2006, a 501(c)4 nonprofit organization, called the Morganza 
Action Coalition (MAC) was formed to advocate for Federal funding to 
complete the levee protection project. I am currently the President of 
MAC, and over the past several years, my bank has contributed over 
$70,000 to MAC to support the advocacy to build large-scale levee 
protection.
    MAC's efforts have been critical to moving our Federal partner. 
Largely to get out of the way of local efforts, but to date, virtually 
all of our protection has been constructed from local and state 
revenues, to the tune of over $400 million. Our community, with state 
support and local dedicated taxes, has built more than 45 miles of 
levees, partially built to the first lift of 10-12 feet high, and 9 
flood gates. Let me say it again, after years of waiting for Federal 
funding, our communities, both in Terrebonne and Lafourche Parishes 
voted to tax themselves to begin building the system. The most recent 
tax vote for an additional \1/2\ cent in Terrebonne Parish passed in 
December, 2012 by a 72% voter margin to continue this effort. We have 
taxed ourselves more than any other coastal community in America to 
reduce risk largely caused by Federal actions!
    So, does becoming climate resilient have a cost? Sure it does. My 
bank's stockholders waited many years to be paid dividends on their 
investments, all while the bank was building capital and reserves. Only 
now to reap the benefits of consistent above average earnings and 
dividends. And so too will the residents of my community reap the 
benefits by building resiliency in our community by protecting its 
residents from the potential damage from hurricanes. Just two weeks ago 
a category 1 hurricane named ``Barry'' barreled through the Gulf of 
Mexico on a similar path to hurricanes Rita, in 2005, and Ike, in 2008. 
But the difference this time was that less than 15 homes flooded in 
Terrebonne Parish, versus over 1,100 for Rita, and upwards of 10,000 
that flooded in Ike. And in South Lafourche, where the levee system is 
even more complete, no homes flooded.
    It is imperative that our coastal communities complete this levee 
protection project, designed when completed to a height of 18 feet, to 
protect us from up to a category 3 hurricane. The most recent study 
evaluating the cost of the Morganza to the Gulf levee project by the 
U.S. Army Corps of Engineers, using actual cost data from completed 
sections, has indicated that a more accurate cost estimate is estimated 
to be $3.4 billion to complete the project; a reduction in cost of over 
two thirds from the original $10.3 billion. The total coastwise cost of 
damages from hurricane Rita was $10.5 billion in 2005, and damage from 
Ike was $30 billion in 2008. We believe our over $400 million spent on 
flood protection so far, could have saved upwards of $500 million in 
flood damages from a single storm, Barry.
    In a couple of months, Congress will be looking at a long-term 
solution to the National Flood Insurance Program. Think what kind of 
savings the communities of Terrebonne and Lafourche would have on the 
mitigating of flood claims from completed levee systems? The Morganza 
to the Gulf levee protection project is an investment that the citizens 
of my community have made to build resiliency to the climate crisis. Is 
there a cost? Yes, but the cost of NOT building, and preparing are much 
greater. I encourage Congress to step up and invest in building the 
Morganza to the Gulf levee protection project, which in the end will 
save taxpayers billions of dollars.
    Thank you again for allowing me the opportunity to speak to you 
today. I will be happy to answer any questions.

      Important dates and events in the history of promoting the 
    authorization and funding of the Morganza to the Gulf Hurricane 
                          Protection Project:

           1986--South Terrebonne Tidewater Management & 
        Conservation District was created (now TLCD)
           1986-1990--Local Investigation of Hurricane 
        Protection System begins with USACE suggesting Comprehensive 
        Study and EIS
           1992--USACE led Reconnaissance Study begins (MTG was 
        initiated--20 years ago)
           1992--Hurricane Andrew floods project area
           1995--USACE begins Feasibility Study with 50/50 cost 
        share with the State
           1998--USACE instructed to begin advance design of 
        the HNC Lock (PL 105-62)
           2000--Morganza to the Gulf receives Authorization in 
        Water Resources and Development Act (WRDA) contingent upon a 
        signed Chief's Report by December 2000 (December deadline not 
        met by USACE)
           2001--Local sales tax passes and currently generates 
        approximately $6 Million per year for construction of Morganza
           2001--Tropical Storm Allyson floods project area
           2002--USACE Feasibility Report completed and 
        submitted to Congress for action
           2002--Morganza Project Cost updated for WRDA by 
        USACE
           2003--Hurricane Lili and Tropical Storm Bill flood 
        the project area
           2004--No WRDA Bill passes; Project Cost updated 
        again by USACE; however, Reach J-1 of Morganza is authorized by 
        Congress
           2005--Hurricanes Katrina and Rita flood project area
           2006--Again, Project Cost is updated for WRDA
           2006--Construction of Reach J-1 initiated with $18 
        Million State and Local dollars, beginning state and local 
        efforts for construction of Morganza-to-the-Gulf
           2007--Project Cost updated for WRDA by USACE
           September 2007--Morganza is authorized for 
        construction
           December 2007-- USACE informs the local sponsor that 
        the Project Cost has exceeded the authorized limit and Morganza 
        must be reevaluated.
           February 2008--USACE stops environmental and design 
        work on HNC Lock pending completion of the reevaluation.
           June 2008--State of Louisiana dedicates $98 Million 
        to Morganza, combined with other local funding totaling $130 
        Million for Morganza construction, Non-federal dollars
           September 2008--Hurricanes Gustav and Ike flood the 
        project area
           2009--Construction begins on Reach H-3 for $7.2 
        Million State funding
           August 2009--August, USACE Post-Authorization Change 
        Study begins and is scheduled for completion in December 2012
           2009--Present--TLCD commences construction and/or 
        permitting for Reaches H-2, H-1, G-1, G-2, J-2, J-3, E, F, Bush 
        Canal Floodgate, Placid Canal Floodgate, Bayou Grand Caillou 
        Floodgate, HNC Floodgate all with Non-federal dollars
           December 2012--Voters in Terrebonne Parish 
        overwhelming approve an additional half-cent sales tax for 
        local completion of the first lift of levees and floodgates 
        along the Morganza alignment.
           May 2013--U.S. Senate approves 2013 WRDA bill, 
        including re-authorization of Morganza-to-the-Gulf at $10.3 
        billion.
           May 2013--U.S. Army Corps of Engineers Senior Review 
        Panel releases the project's final draft Post-Authorization 
        Change (PAC) Report for federal and state agency comment.
           July 11, 2013--USACE signs off on Chief's Report for 
        the Morganza-to-the-Gulf Hurricane Protection Project. A 120-
        day mandated review period by the Assistant Secretary of the 
        Army for Civil Works and the Office of Management and Budget 
        begins.
           December 9, 2013--Record of Decision released, 
        signaling final approval of project by the Obama 
        Administration.
           May 22, 2014--U.S. Congress authorizes the federal 
        Morganza-to-the-Gulf Hurricane Protection Project as part of 
        the Water Resources Reform and Development Act (WRRDA) of 2014.
    A map of the Morganza-to-the-Gulf Hurricane Protection System is 
available at http://www.morganza.org/morganza-to-the-gulf-description/.

    Ms. Castor. Thank you very much.
    Mr. Bouchard, you are recognized for 5 minutes.

                     STATEMENT OF FRANCIS BOUCHARD

    Mr. Bouchard. Good afternoon, and thank you for this 
opportunity to testify. My name is Francis Bouchard, and I am 
the head of public affairs and sustainability for Zurich 
Insurance Group.
    Zurich is the leading direct insurer that has been serving 
customers around the world for nearly 150 years, including over 
100 years in the U.S. As a risk management expert, we have 
identified climate change as perhaps the most complex risk base 
in society. It is intergenerational, it is international, and 
it is interdependent. We concur with the IPCC findings, and it 
is our aim to leverage our sector's role in society to help 
deepen awareness of climate risks and to incentivize the 
behaviors and best practices that will be required to mitigate 
against and adapt to the worst impacts of climate change. As an 
insurer, this effort is core to our mission. And as a 
responsible steward of the planet, it is simply the right thing 
to do.
    It is clear that the frequency of extreme weather events is 
increasing. NOAA captures this trend well in its analysis of 
billion-dollar weather-related disasters, with the 3-year 
average of 15 such events per year far exceeding the 30-year 
average of 6.2 events per year. Perhaps even more alarming, 
though, is the growing gap between overall economic losses and 
insured losses, both in the developing world and in the U.S., a 
phenomena insurers call the protection gap.
    The committee has asked witnesses to address the costs of 
climate change to businesses. In our view, those costs come in 
two primary forms, physical risks and transition risks, both of 
which present complex risk management challenges. This is why 
we view the disclosure regime, such as the one developed by the 
Financial Stability Board, to be constructive first steps for 
boards, management teams, and investors to improve risk-aware 
decisionmaking.
    As for managing our own physical and transition risk, 
Zurich is taking concrete steps. We became carbon neutral in 
2014, decreasing our own CO2 emissions per employee by 50 
percent from our 2007 operations, recently committing to use 
100 percent renewable energy across our global operations. We 
also set targets to reduce the use of internal paper by 80 
percent and eliminate the use of single-use plastics.
    In reality, though, insurers are relatively small emitters 
of carbon. So our ultimate impact will be achieved through our 
marketplace role, both as an institutional investor and as an 
insurer of risks. As an investor, we proactively evaluate ESG 
factors in our investment decisionmaking process, with over 87 
percent of our in-scope investments already meeting or 
exceeding our minimum standards. We are also major impact 
investors, and by year-end 2018, had invested $3.8 billion, 
avoiding 3.5 million tons of CO2 and benefiting 2.4 million 
people.
    Like other economic sectors, it is still quite early in the 
evolution of a climate-focused insurance market. That said, we 
have products that encourage better or even less driving, cover 
electric vehicles, and offer build back better options. We 
developed the first dedicated carbon capture and sequestration 
liability offering, increased our renewable energy sector 
business, and are bolstering our modeling capabilities to 
support clients who are seeking to deepen their own 
understanding of climate exposures.
    As market demands evolve, then, insurers are developing 
products and services that will help facilitate or even 
incentivize longer term resilient behaviors. In some cases, 
though, we feel the need to accelerate those trends, which is 
why Zurich recently announced a new policy to engage in risk-
based dialogs over a 2-year period with customers or those 
companies we invest in that have significant commercial 
operations in thermal, coal, oil sands and oil shales. The aim 
is to drive a deeper conversation regarding their mid- to long-
term transition plans for reducing the carbon intensity of 
their operations.
    The insurance mechanism has a clear role to play in helping 
society manage climate risk. However, a model that prices risk 
over a 12-month period, no matter how sophisticated the 
methodology, will struggle to fully reflect longer term 
evolving exposures like climate change. In those cases, 
insurers must find new ways to play their role in society that 
go well beyond the traditional products and services they 
provide. That is why Zurich and other insurers have undertaken 
a series of knowledge-based initiatives to work with other 
societal actors to apply the analytics of insurance to a much 
broader group of stakeholders.
    In 2013, as the chairwoman referenced, we launched our 
Global Flood Alliance. And with NGO and academic partners, we 
deployed a sophisticated resilience framework in over 100 at-
risk communities and have now expanded the program to broaden 
our impact even further.
    Today, 87 percent of disaster-related funding goes to post-
event recovery. And it is our goal to demonstrate both the 
humanitarian and economic benefits of shifting more funding to 
pre-event preparation.
    Another approach we take to sharing our knowledge about 
resilience is through the publication of PERC reports that 
assess human-induced elements of what are typically considered 
natural disasters, with the research revealing several 
important truths as outlined in my written statement.
    Finally, we are proud of our affiliation with SBP, a 
national resiliency nonprofit located in New Orleans, which has 
evolved into a true system level thought leader on disaster 
preparedness and recovery, particularly for the most vulnerable 
at-risk populations.
    In closing, let me acknowledge that the precise costs of 
climate change are difficult to calculate and are subject to 
unknown future scenarios. That should not inhibit business from 
acting, though, which is why we are proud of the role that 
insurers are playing to help society prepare for and address 
the costs associated with climate change. At Zurich, we take 
that responsibility seriously and are eager to work with others 
who share that commitment.
    Thank you.
    [The statement of Mr. Bouchard follows:]

Written Testimony of Francis Bouchard, Group Head of Public Affairs and 
                 Sustainability, Zurich Insurance Group

``Creating a Climate Resilient America: Business Views on the Costs of 
                          the Climate Crisis''

      House Select Committee on the Climate Crisis--July 25, 2019

    Good afternoon. I would like to thank the Chair of the Committee, 
Congresswoman Castor, as well as Ranking Member Graves and other 
members of the committee for the opportunity to testify before the 
Select Committee. My name is Francis Bouchard and I am the head of 
Public Affairs and Sustainability for Zurich Insurance Group.
    I plan to break my testimony into four main sections: a broad 
overview of how insurers view climate risk, how Zurich is addressing 
the issue of climate within our own operations, how we incorporate 
climate and environmental, social and governance (ESG) thinking into 
our market activities, and how we engage with society more broadly to 
help advance risk-sensitive climate-aware decision-making.
    Before I start though, let me introduce the company I work for. 
Zurich is a leading multi-line direct insurer that has been serving its 
customers in global and local markets for nearly 150 years. With about 
54,000 employees, it provides a wide range of property and casualty, 
and life insurance products and services in more than 210 countries and 
territories. Zurich's customers include individuals, small businesses, 
and mid-sized and large companies, as well as multinational 
corporations.
    For over a century, Zurich North America has called the greater 
Chicago area home. In 2016, Zurich moved its U.S. corporate campus a 
few blocks north in suburban Schaumburg, Illinois to an award-winning 
headquarters that has earned LEED Platinum certification, the 
highest rating from the U.S. Green Building Council. The distinctive 
design underscores our commitment to resilience, collaboration and 
innovation. The headquarters became the largest LEED 
Platinum-certified structure of its kind in the United States 
and the only one of its kind in Illinois. On the one-year anniversary 
of Zurich's headquarters, we reported a 30% reduction in water and 
electricity consumption compared with our previous location.
    Using our core risk assessment skills to respond to some of the 
most significant long-term societal and environmental trends, we have 
identified climate change as perhaps the most complex risk facing 
society today. It is inter-generational, it is international and it is 
interdependent. Representing the consensus of the international 
scientific community, the Intergovernmental Panel on Climate Change 
(IPCC) finds strong evidence that climate change is occurring, that it 
is influenced by human action, and that it is leading to changes in 
extreme weather and climate events.
    Zurich shares this belief that climate change is real, influenced 
by human actions and impacting weather patterns. It is our aim to 
leverage our sector's role as the primary risk signaler for society to 
help deepen awareness of the risks climate change poses, and ultimately 
to incentivize the behaviors and best practices that will be required 
to both mitigate the worst impacts of climate change and adapt to 
changing weather patterns. We do this because Zurich's mission is to 
protect individuals, businesses and communities, and because we believe 
it's the right thing to do.
    Furthermore, we do this because the impact of extreme weather 
events is escalating. The National Oceanic and Atmospheric 
Administration's (NOAA) National Centers for Environmental Information 
captures this trend well in its analysis of billion-dollar weather-
related disasters, with the three-year average of 15 such events per 
year far exceeding the 30-year average of 6.2 events per year (https://
www.climate.gov/news-features/blogs/beyond-data/2018s-billion-dollar-
disasters-context).
    Perhaps even more alarming, though, the gap between overall 
economic losses and insured losses due to natural catastrophes is 
growing, not just in the developing world but in the United States as 
well. As this chart from Munich Re illustrates, both economic and 
insured losses have been steadily growing over the past three decades, 
with scientific forecasts suggesting the trend will accelerate and 
likely worsen. This ``protection gap'' is a significant cost of climate 
change to governments and communities, and it is the reason 
policymakers should focus on pre-event resilience, knowledge sharing 
and risk-informed decision-making. To be clear, insurers are not only 
focused on the risks they insure, but are committed to securing more 
resilient communities for all stakeholders.

[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
                  risk management of climate exposures
    Broadly speaking, risk management responses to climate change fall 
into two categories: adaptation to the largely physical consequences of 
climate change; and mitigation of greenhouse gas (GHG) emissions and 
its associated transition risks.
    If further impacts from a warming climate are to be avoided, the 
global economy needs to be transformed over the coming decades to 
reduce greenhouse gas (GHG) emissions. If not, then a further buildup 
of GHGs in the atmosphere will lead to a rise of average temperatures 
beyond the Paris Agreement's 2 C level, which, over time, will have 
increasing effect on severe weather event patterns, frequency and 
severity.
    While the most severe physical changes of climate change are likely 
to take decades to manifest, they are largely irreversible in the long 
term. So, the challenge is to act now, to transform the global economy 
and largely decouple global economic growth from GHG emissions. At the 
same time, due to the lag effects of GHGs in the atmosphere, the world 
will need to continue to adapt to the physical effects of climate 
change for decades to come. The challenge, then, is to drive risk-
informed climate-sensitive decision-making across all sectors.
    In contrast to the physical risks, transition risks are those 
economic disruptions caused by changing customer sentiment, new 
technologies or public policy. They tend to impact sectors with a 
shorter timeframe and with less predictability. Therefore, it is 
critical that policymakers develop a clear and holistic approach to 
transition-relevant issues in order to take into account the unintended 
consequences of even the most well-meaning policy approaches.
    Assessing the potential cost of these physical and transition risks 
is essential for communities and corporations. For business leaders, 
this process may yield benefits beyond shoring up supply chains, for a 
truly holistic review of environmental risks will reveal opportunities 
as well. It is crucial that companies develop a climate resilience 
adaptation strategy, defined in four key steps:
           identify the broad business and strategic risks;
           identify the critical exposures, vulnerabilities and 
        hazards;
           develop a granular view of the risks involved 
        including, for example, individual locations; and
           develop a mitigation and resilience strategy, 
        involving--where appropriate--insurance.
    The challenge for business leaders and policymakers is to create 
strategies that optimize the opportunities associated with climate 
change adaptation and mitigation. In some cases, this can be done by 
individual initiatives carried out by the private sector and public 
sector, but in most cases, it will require multistakeholder action. In 
a few cases, it will require new technologies, new industries or new 
business models to be developed with new approaches to managing risk.
    The Financial Stability Board, the global standard-setting body 
responsible for financial stability, established a Task Force on 
Climate-related Financial Disclosures (TCFD) that has created a useful 
framework for companies to start to address the corporate governance, 
risk management, scenario-playing and measurement aspects of either 
adapting to or mitigating the impact of climate change. The hope is 
that this approach, already adopted by 800 firms globally, will form 
the basis of information that investors and other stakeholders can act 
upon to target `green' investment and policies to enable a transition 
to the low-carbon economy. This task is of course challenged by the 
definition of what is `green' and what needs to be prioritized to 
deliver sustainable finance.
    The TCFD is a good framework for disclosure of climate change 
impacts on a business, but we recognize that we are early in this 
process, and that it will take time to develop meaningful analysis of 
longer-term exposures under difficult-to-predict transition scenarios. 
That said, Zurich's research suggests that based on current disclosures 
and strategic responses companies' collective actions will not be 
sufficient to achieve the 2 degree goal of the COP 21 Paris Agreement.
    Businesses have always had to change their strategies to respond to 
market conditions, but climate change is different in that the 
timescales of the most severe impacts are far beyond most strategic 
plans. In these circumstances, scenario planning as recommended by the 
TCFD is an appropriate way to deal with such future uncertainty. In 
fact, as evidenced in a multi-sector modeling exercise hosted last week 
by the Geneva Association, a global insurance think tank, meaningful 
disclosures can serve as the basis for collective action and cross-
industry collaboration.
                  climate-proofing our own operations
    At Zurich, being a responsible and sustainable company is at the 
foundation of our business. It is the reason we have signed the UN 
Global Compact in 2011, the Principles for Sustainable Investment in 
2012, the Principles for Sustainable Insurance in 2017, and most 
recently the Business Ambition for 1.5 degrees. Even more important 
than these public commitments however, are the steps we are taking to 
future-proof our own operations.
    Zurich became carbon neutral as of 2014 through its ambitious 
internal carbon emissions reduction efforts and by offsetting remaining 
emissions. We have decreased our own CO2 emissions per employee by 50% 
percent, eliminating over 150,000 tons of CO2e (equivalent of removing 
32,000 passenger vehicles per year from the road) from our operations 
since 2007.
    We are a member of RE100 (a global corporate leadership initiative 
committed to 100% renewable energy, www.there100.org) and have 
committed to utilize 100% renewable energy across all our global 
operations by the end of 2022. Additionally, we have set ambitious, 
near-term operational targets like the reduction of internal paper 
usage by 80% and the total elimination of single-use plastics by the 
end of 2019.
    Reflecting the keen interest our people have in being part of the 
climate change solution, we have also initiated an internal training 
initiative aiming to educate at least 10,000 employees on the basics of 
the climate change challenge, as well as the role that the insurance 
mechanism can play in creating awareness of and incentives for 
solution-based thinking. In addition, we will soon be launching an 
internal platform that will allow our people to voluntarily offset 
their own carbon footprints while enhancing resilience in flood-ravaged 
regions.
                           marketplace impact
    In reality, though, insurers are relatively small emitters of 
carbon, so our ultimate impact will be achieved through our marketplace 
role, both as an institutional investor and an insurer of risks.
    As an investor, we focus on both ESG integration and impact 
investing. We pro-actively evaluate ESG factors in our investment 
decision making process, both pricing risks and seizing opportunities 
in an award-winning approach. Currently, over 87% of our in-scope 
investments are meeting or exceeding our minimum standards on ESG 
integration and we are aiming to reach 100%. As part of this, we are 
embedding climate risk into our risk management processes, and are 
strengthening our technical and analytics capabilities for managing 
climate risk within our global investment portfolios.

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    We are also rapidly increasing our impact investments. In 2017, we 
announced our mid-range commitment to invest USD 5 billion in impact 
investments, avoiding 5 million tons of CO2e and benefiting 5 million 
people. By year-end 2018, we had already invested USD 3.8 billion 
avoiding 3.5 million tons of CO2e and benefiting 2.4 million people. We 
are not passive investors, however, and instead work with groups like 
the Principles for Responsible Investment (PRI), Global Impact 
Investing Network (GIIN), the Green Bond Principles (GBP) and others to 
help define the standards that will mainstream ESG investing. In this 
way, we have also been instrumental in the rapid development of the 
green bond market over the past six years.
    On the product and market side, like other economic sectors it is 
still quite early in the evolution of a climate-focused insurance 
market. Many insurers have developed products utilizing technology to 
encourage better or even less driving, thereby reducing carbon 
emissions. Many, Zurich included, have dedicated policies for electric 
vehicles, and offer ``build back better'' options that achieve higher 
resilience standards. In terms of new technologies, Zurich developed 
the first dedicated carbon-capture and sequestration offering, and has 
systematically increased its solar and renewable energy business. In 
addition, it is methodically enhancing its modelling capabilities in 
order to support clients who are increasingly seeking to deepen their 
understanding of climate exposures. In short, as customer awareness 
grows and business models evolve, insurers are developing products and 
services that will help facilitate or even incentivize longer-term 
resilient behaviors.
    In some cases, though, we feel the need to accelerate those trends 
and seek to deploy a risk-based engagement strategy to some of the more 
fundamental challenges posed by climate change. That is why Zurich 
recently took an important step aimed at helping to reduce the use of 
carbon-intensive fossil fuels by expanding its existing thermal coal 
policy to include fuels produced from oil sands and oil shales.
    At the core of this new policy is Zurich's commitment to engage in 
risk-based dialogues over a two-year period with customers or those 
companies we invite in that have significant commercial operations in 
thermal coal, oil sands and oil shales. The aim is to drive a deeper 
conversation regarding their credible mid-to-long-term transition plans 
for reducing the carbon intensity of their operations.
    Depending on the outcomes of its dialogues, Zurich has pledged to 
no longer underwrite or invest in companies that:
           generate more than 30% of their revenue from mining 
        thermal coal, or produce more than 20 million tons of thermal 
        coal per year;
           generate more than 30% of their electricity from 
        coal;
           are in the process of developing any new coal mining 
        or coal power infrastructure;
           generate at least 30% of their revenue directly from 
        the extraction of oil from oil sands;
           are purpose-built (or ``dedicated'') transportation 
        infrastructure operator for oil sands products, including 
        pipelines and railway transportation;
           generate more than 30% of their revenue from mining 
        oil shale; or
           generate more than 30% of their electricity from oil 
        shale.
    Our intent is to help drive a deeper conversation regarding mid-to-
long-term transition plans for reducing the use of these fuel sources 
and their impacts on the global environment. In this same vein, Zurich 
has also committed to developing science-based targets that will 
hopefully help encourage a smoother transition in the sectors that we 
underwrite and invest in.
                       a broader societal impact
    The insurance mechanism has a clear role to play in deepening 
awareness of climate risks and incentivizing the economic and 
behavioral models to address those risks. However, keep in mind that 
the primary mechanism by which it sends risk signals is the price of an 
insurance policy. It is this price--conveyed through a simple dollar 
term--that reflects the massive amounts of historic data collection, 
modeling, diversification and risk assessment that insurers undertake. 
That policy, though, is typically for a duration of 12 months, which 
allows both insurer and insured to reassess their exposures and reprice 
the policy. That model typically works well for immediate well-known 
exposures, but less so for risks that will manifest over a 30-year 
period, like climate change.
    In those cases, insurers must find new ways to play their role as 
society's risk assessors that go well beyond the traditional products 
and services they provide. That is why Zurich and other insurers have 
undertaken a series of initiatives to work with other societal actors 
to apply the analytics of insurance to a much broader set of 
stakeholders.
    For example, in 2013 Zurich launched its Global Flood Alliance, a 
multi-sector partnership focusing on finding practical ways to help 
communities strengthen their resilience to floods. Together with our 
Alliance partners, which included the International Federation of Red 
Cross & Red Crescent Societies, Practical Action, the Wharton School 
and the International Institute for Applied Systems Analysis, we not 
only developed a unique Flood Resilience Measurement Framework, 
including a toolbox to actively measure flood resilience, but we also 
applied the framework to over 110 communities in nine countries around 
the world, generating over 1.1 million data points.
    With this framework, we plan to close the gap acknowledged by the 
UN: that currently no empirically verified measurement framework for 
disaster resilience yet exists. We do this by applying the measurement 
framework through our partners and program countries, thereby 
establishing the baseline of community resilience at the inception and 
measuring how sources of resilience develop over time as interventions 
are implemented. In addition, to validate the framework and ensure our 
sources or proxies of resilience do actually have an impact and build 
resilience, we measure outcomes of resilience should flooding occur in 
the program communities.
    Building on the success of our first five years, we have widened 
the context of the Alliance over the last 24 months and are now working 
with further implementing partners, including: Concern Worldwide 
(Haiti, Afghanistan), Mercy Corps (Indonesia, Nepal, Timor-Leste), the 
National Academy of Sciences (Charleston SC and Cedar Rapids IA) and 
Plan International (Nepal). In this second five-year phase of the 
program Alliance members aim to increase third-party investments 
dedicated to pre-event resilience by $1 billion. We seek do this by 
rolling out best-practice community programs that demonstrate the value 
of resilience-building, compiling best practices and success stories, 
and advocating for more investment in resilience with authorities and 
public and private funders.
    From our perspective prevention and resilience-building are not 
just about humanitarianism, they are about more effective use of scarce 
funds. Our research of the cost-benefit analysis from dozens of 
specific flood resilience programs has determined that there is, on 
average, a 1-to-5 cost/benefit ratio, underlining not only that 
resilience building is the proper approach to reducing human misery, 
but that it is responsible budgeting as well. However, currently around 
87% of all disaster-related funding is targeted ``post-event''. Our aim 
with Zurich's Flood Resilience Program and its multi-sectoral Alliance 
is to demonstrate the effectiveness of investing in pre-event 
resilience building and shift global funding from recovery to 
resilience.
    Another approach we take to sharing our knowledge about resilience 
is through the publication of award-winning Post-Event Review 
Capabilities, or PERCs, that assess human-induced elements of what are 
typically considered ``natural'' disasters, including the resilience of 
people, supply chains, systems, legal and cultural norms before, during 
and after a disaster. We have conducted 14 such reports covering 
extreme weather events in Germany, the UK and Switzerland, as well as 
in North Carolina and Houston. In fact, we are currently in the process 
of conducting new studies of the wildfires in California.
    Zurich's PERC analyses of global disasters leave no doubt that 
disaster risk management professionals all face several universal 
truths when it comes to attitudes and actions around preparing for and 
responding to natural hazards.
    The research clearly demonstrates that:
           Disaster risk management is playing catch-up to an 
        increasingly larger exposure to natural hazards.
           Globally, spending on climate-related response is 
        far greater than investment in pre-emptive risk reduction 
        strategies.
           Where money is invested on weather-related 
        prevention, it typically goes to protecting physical structures 
        rather than more cost-effective risk management such as 
        environmental planning.
           Infrastructure protection already in place--levees, 
        for example--can produce a false sense of security.
           Few incentives exist to encourage ``building back 
        better'' and including resilience into the rebuilding process.
           The neediest in society are often neglected before 
        and after disasters, and sometimes are still recovering from 
        one event when the next one strikes.
    Several of the studies reviewed the science on the increasing 
frequency and severity of climate hazards, especially extreme 
precipitation and storm surges. Future climate scenarios were presented 
in PERC studies on European floods, and across all the studies it was 
clear that in order to achieve a certain level of protection simply 
relying on historical data is not enough. Hazards are changing rapidly 
and planning must take this into account.
    The studies also show that societies can be vulnerable to repeated 
events and may still be recovering from one when the next one strikes. 
That was North Carolina's experience with Hurricane Matthew in 2016 and 
Hurricane Florence two years later.
    Rather than relying too heavily on disaster response, the PERC 
studies show that a better approach involves preventing the build-up of 
assets in high-hazard areas. The studies revealed, however, that there 
is little evidence that disaster risk is considered in most investment 
decision-making and land-use planning that could result in an 
accumulation of assets. For example, the PERC analysis of 2014 flooding 
in Nepal revealed that the risk of increased flooding from a planned 
hydropower plant had not been taken into consideration. In Germany, 
where flash floods caused heavy damage in 2016, the country experienced 
difficulties in controlling building in unmapped flood hazard zones.
    North Carolina did use its experience with Hurricane Matthew to 
better prepare for the impacts of Florence two years later. Changes 
were implemented at state and local levels in interagency coordination, 
staging of key resources and an increased awareness of the need to 
prepare for recovery prior to an event. For example, the Food Bank of 
Eastern and Central North Carolina prepped branches and stocked local 
partners not just along the coast, but across the state in anticipation 
of inland flooding, which they hadn't done ahead of Matthew.
    Businesses, large and small, are urged to stress employee 
preparedness at home as well as on the job to ensure that they remain 
safe and are able to continue working remotely if possible. Raising 
employee awareness a day or two prior to an event by asking about 
stockpiles of food, backup power or lodging and the security of key 
documents can potentially lower losses and hasten a return to work.
    The PERC methodology was specifically designed to turn the lessons 
learned from the consequences of disasters into actions that help 
businesses and communities become more resilient and recover quickly 
from devastating events. It is not enough to understand the dynamics of 
disaster risk and resilience, including what went wrong and what worked 
well, but that is the necessary first step.
    We encourage all interested parties to apply the methodology and 
contribute to the repository of freely available material on success 
and insights from around the world. PERC studies and a manual that 
serves as a guide for conducting PERCs are available at https://
www.zurich.com/en/corporate-responsibility/flood-resilience/learning-
from-post-flood-events.
    We are also working with our primary U.S. trade association, the 
American Property Casualty Insurance Association, to provide helpful 
data-driven analysis to advocate for public policy solutions that are 
most likely to reduce catastrophe losses and provide more ready-made 
solutions for increasingly resiliency.
    Another resilience initiative we are proud of is our affiliation 
with SBP, a national non-profit based in New Orleans. Initially 
established to rebuild homes following Hurricane Katrina, SBP has 
evolved into such a high-impact knowledgeable force in post-disaster 
environments that it is now sharing its building techniques with other 
non-profits, advising local governments on optimizing federal funding 
programs and advocating for innovative approaches to disaster 
resilience. Perhaps its most impactful effort, though, will be a new 
approach to resilience training for individuals and small businesses 
that could help avoid losses altogether. Most of the beneficiaries of 
SBP's efforts are not insured, but by driving system-level change it is 
pursuing its mission of reducing the time between disaster and 
recovery.
    An initiative we are just embarking on is to assess whether we can 
partner with others to create enough scale in the carbon offset market 
to drive projects towards nature-based solutions (e.g. coastal 
wetlands) that offer both carbon storage/sequestration and disaster 
resilience elements. The Nature Conservancy has worked creatively with 
other insurers to establish such scalable projects, and Zurich is 
already engaged in a series of discussions exploring how to expand the 
creation of such multi-benefit projects.
    A final industry initiative that is leveraging the insurance 
mechanism to enhance climate resilience in developing economies is the 
Insurance Development Forum. This public private partnership, led by 
leading insurers and reinsurers, the World Bank and the United Nations, 
is creating the technical, financial and regulatory capacity to 
facilitate the use of innovative insurance solutions at the sovereign 
and regional level. Initially targeting those nations most exposed to 
climate risks, the IDF is one of the implementing platforms for the G7/
G20 climate resilience targets, including the goal of extending 
insurance to another 400 million people by 2022. They are also 
collaborating closely with the UK, German and other development 
agencies, as well as the Global Centre for Disaster Protection and the 
Global InsuResilience Partnership, to broaden the use of modelling, 
data analysis and risk transfer vehicles.
                                closing
    In closing, let me reinforce that the insurance sector has a 
fundamental role to play in helping society prepare for and address the 
costs associated with climate change. At Zurich, we take that 
responsibility seriously, whether through our own operations, our 
market-focused actions or our knowledge-based initiatives. We are proud 
of the leadership our sector is taking in driving awareness and action 
on this critical issue. Zurich is dedicated to continuing to play a 
leadership role in driving global sustainability, and we invite and 
encourage everyone to join us in this essential effort.
    Thank you.

    Ms. Castor. Thank you all very much.
    At this time, I will recognize myself for 5 minutes for 
questions.
    Ms. DiPerna, in the 2019 status report by the Task Force on 
Climate-Related Financial Disclosures, the majority of the 
respondents said their organizations considered climate-related 
issues to be a material risk today and over the near term. 
Climate change is costing companies now, not 50 years from now.
    How are companies managing that risk and what actions are 
they taking to mitigate it? If there are obstacles and 
challenges the companies see that the Congress should address, 
what would you recommend?
    Ms. DiPerna. That is a long----
    Ms. Castor. I know.
    Ms. DiPerna. We only have a few minutes. And I am not 
really in the position to recommend policy. But with regard to 
what is disclosed to us, certainly return on investment, 
companies are trying to manage these risks--so first of all, 
you can ask Mr. Bouchard from Zurich, you know, insurance is a 
very big topic, very relevant, what I call the three Is: 
insurance, indemnification, and infrastructure. So companies 
are looking at all three. How can we indemnify ourselves 
against the risk? Build in protections against physical risk, 
modernize equipment. They are seeing higher premiums.
    But also, the return on investment data that we are getting 
from disclosure is really interesting, because most of the 
investments companies are making to address the risk either by 
avoiding it, eliminating it, or building an alternative 
product, the returns on those investments tend to come in 
sooner than expected and at a higher rate of return.
    So I think what we are seeing is companies are very, very 
nimble, but it is true, as I said earlier, that these risks 
are--I won't use the word ``material'' myself, because it has a 
fiduciary meaning--but are significant and due to fall on 
somebody within the next 5 years.
    And one thing--sorry.
    Ms. Castor. Well, you mentioned that in the EU, they have 
appreciated regulatory certainty because they have maintained 
their commitment to the goals set out in the Paris climate 
accord, and that it is a little more iffy here. Can you address 
that?
    Ms. DiPerna. Yes. I think regulatory certainty--and I was 
just speaking with one of my colleagues earlier who spent some 
time at the National Academy of Sciences this week, where some 
of our data does show now that regulatory uncertainty is being 
registered as a risk. And I mentioned that one of the very 
largest utilities in the company has stipulated that it is 
sometimes more difficult to manage the uncertainty of 
regulation than the challenges of climate change.
    But as we know, regulation shouldn't be seen, in my 
opinion, as a restriction. It is at the least a level playing 
field. And if you want to be competitive, you have to know what 
your competitors are doing. And the coherence of something like 
the Paris Agreement, even though it has its shortcomings, does 
provide everybody a report card on what other people are doing.
    So if you want to make a capital investment, you want to be 
sure that it is not going to somehow be undermined in 2 years 
if there is a new policy or a higher tax rate or something you 
can't predict.
    Ms. Castor. Thank you.
    Ms. DiPerna. Business hates unpredictability.
    Ms. Castor. Mr. Bouchard, boy, we are just being socked by 
the cost of these extreme weather events now. In 2017, the U.S. 
faced the highest single total cost related to extreme weather 
events on record, totaling over $312 billion. In 2018, we saw 
the fourth highest extreme weather cost at $91 billion 
worldwide. 2017 and 2018 were the costliest back-to-back years 
for weather disasters ever recorded. People are on the front 
lines but insurers are on the front lines with them. Insured 
losses in 2017 totaled $100 billion in the United States alone. 
So what does this mean going forward for the average ratepayer?
    And then you also talked about the important investor 
mission that our insurance companies have. And are they 
actively transitioning away from fossil fuel investments 
because they know the impact on the bottom line?
    Mr. Bouchard. So first, your numbers are accurate, and that 
is what we are seeing as well. We are seeing the trend lines 
are clear and they are not reversing. We may have--I think we 
just saw numbers for the first half of this year meeting of 
actually a lower catastrophe year, which is great news, but 
over time, the numbers you cite are absolutely accurate and are 
the same numbers that we are working with and trying to model 
as well.
    In terms of what it means for ratepayers, it really depends 
on the risks that they face today. I mean, I try to make that 
case in the testimony, that sending risk signals in 12-month 
insurance policies when the risk, yes, it is escalated today, 
but the real escalation will happen over the next 5, 10, 15, 20 
years, does not reflect the full escalation of the risk in 
today's rates. It will come.
    And I do think we are seeing, in parts of the country, 
insurance rates, not only this country but other countries, 
insurance rates starting to rise to reflect the increased risk, 
but that is our role in society to do that. And it is the 
signal we send. We are a bit of the canary in the coal mine 
saying, you know, risk is up so price is up.
    You know, the second question you ask about our role as 
investors, the answer is absolutely, yes, we are applying ESG 
filters to----
    Ms. Castor. Go ahead and explain.
    Mr. Bouchard [continuing]. Environmental, social, and 
governance filters to 87 percent of our investment portfolio. 
We announced our decision, as I referenced, to begin to have 
dialogues and perhaps even divest and stop underwriting certain 
carbon intensive----
    Ms. Castor. I saw that Chubb insurance made----
    Mr. Bouchard. Chubb has done that as well.
    Ms. Castor [continuing]. Coal-related----
    Mr. Bouchard. There are a number of insurers who have done 
that, yeah. So we certainly are looking at the carbon intensity 
of our investment portfolio and taking actions appropriately.
    Ms. Castor. Thank you very much.
    Mr. Palmer, you are recognized for 5 minutes.
    Mr. Palmer. Thank you, Madam Chairman.
    I want to talk a little bit about the storm damages. You 
know, there is a report out from Roger Pielke who supports the 
idea of human-caused climate change, but he points out that 
over the last 20, 30 years, that the percentage of global GDP 
storm damages are actually lower than they were, say, in 1990. 
And also point out that when you look at it historically, the 
dollar values are more reflective of the fact that we have got 
more structures, more people living in coastal areas. And then 
I add one last point to that, is that the International Panel 
on Climate Change's last report indicated that the number of 
Atlantic storms, particularly those are the ones that tend to 
impact our coastal regions the most, have not increased in 
number, nor intensity.
    Mr. Walker, would you like to comment on that?
    Mr. Walker. You know, we have noticed that they come in 
waves. You know, down where we are, we tend to have storms in 
cycles. And so, you know, you look back all the way to 
Hurricane Andrew, then, you know, we had Katrina, Rita, Gustav, 
Ike. I mean, you know, it just--it does come in cycles. I can't 
tell you that it looks like it is any more severe, but we have 
been through a pretty good stretch where we did not have 
storms.
    Mr. Palmer. A record----
    Mr. Walker. We were able to get some things done now where 
we are to help protect us. And so, you know, I can't really 
comment too much on the science of it but, you know, we just 
know they are coming.
    I have been dealing with storms since I was born. I was 
born right before Hurricane Betsy in Houma and so, I mean, we 
face storms constantly down there. And what we do know is if we 
don't do anything to protect ourselves, that we are going to 
pay the damage. We seem to be gaining some progress right now.
    Mr. Palmer. That is one of the main points that I have been 
trying to make as a participant on this committee is that we 
know that the climate is changing. There is a historical record 
that indicates that the climate changes and it will continue to 
change.
    The thing that concerns me is the lack of attention in 
regard to preparing for that change, you know, using our 
technology and our engineering capability to prepare for that, 
to be able to adapt and mitigate. And I think that is one of 
the bigger issues. We seem to be wrapped around the axle about 
it is all about carbon, when there are certain natural things 
that are occurring that we can't do anything about that is 
going to impact us.
    I also want to go back to this issue of preparation to 
adapt and mitigate. Your State particularly has had a difficult 
time with the Corps of Engineers in doing some mitigation work. 
We had a hearing, I was chairman of the subcommittee on the 
Oversight Committee, and we had a hearing with a representative 
from the Army Corps of Engineers. And I asked how many studies 
they had underway that were over 5 years old, and he said about 
100, which, frankly, shocked me. It might not have shocked my 
colleague from Louisiana, Mr. Graves, but I found that 
shocking.
    So I asked him to send me a list of them, and among those 
were the Comite River that had been studied for 30 something 
years, about building a diversion canal from Comite River over 
to the Lilly Bayou. And Louisiana residents had been concerned 
about a possible major flood and the damage that it caused. 
And, of course, in 2016, you had that flood, lost lives, 
billions of dollars in property damage. And they finally 
decided to build that canal. They have broken ground on it.
    But out of that list of studies, and there were 97 of them 
actually, 40-something of them were more than 5 years old. The 
Corps of Engineers has spent $140 million on that.
    That is part of my concern, particularly when you are 
dealing with insurance and stuff, is that we are not investing 
infrastructurewise, technologywise, and preparing for the 
climate change that we know will come, that we must be prepared 
to adapt to and have mitigation strategy.
    You want to comment on that?
    Mr. Walker. Yeah. I mean, as you know, we face the same 
thing down where we live. You know, all the way since 2000, we 
have been trying to get levees built. You know, at some point, 
we just decided it was time to do something on our own. 
Actually, right after Katrina, it really helped things happen 
because, you know, we could see that, just decide to do 
something. And so we just decided we were going to do it 
ourself.
    Our neighboring parish, Lafourche Parish, had done it years 
before that. They had protected themselves with levees, and all 
of those storms that came through there when they had that 
system, you could see they didn't flood, we flooded. I mean, it 
is pretty easy, it is simple, it is not science. You know, so 
we just decided to do it. And thank goodness we did, because 
this past 2 weeks, we would have had the same disaster happen 
again.
    You know, we are--just recently, I think a study was 
started that we asked for of the Corps of Engineers, because we 
realize the cost of what was being estimated for that system 
was not what we were realizing. We could build it a lot cheaper 
than what that original estimate was. And so now, I am hoping 
that that might help so that we at some point can break that 
ice and get some Federal dollars to come down, because, you 
know, when you are one-third of what the original estimate was, 
that is a whole lot better cost-to-benefit ratio. Right now, 
the cost-to-benefit ratio to the Federal Government is 
infinity. We have put every dollar in, so they are getting all 
the benefit. We have not gotten anything.
    So I think it is a great time to talk about sharing and 
doing--you know, breaking that backlog that we have and maybe 
looking at some of those costs to see if those are realistic.
    Mr. Palmer. I appreciate your testimony.
    I yield back.
    Ms. Castor. Thank you.
    Ms. Bonamici, you are recognized for 5 minutes.
    Ms. Bonamici. Thank you.
    I really appreciate all the witnesses being here today. 
This is important to hear the business views on the cost of 
climate change. Businesses are employers. And we have had a lot 
of conversations in the select committee, on which I am honored 
to serve, about the jobs that can be created, and how this--we 
can address the climate crisis while supporting our economy and 
building and growing our economy.
    Just yesterday, The Washington Post covered this. A pair of 
studies were announced. Someone has studied global temperatures 
2,000 years, over 2,000 years, and found that over the past 150 
years, there has been a rise in global temperatures far more 
rapid than any other warming period in the past 2,000 years. So 
it is very timely that we are having this conversation with 
this work in the select committee.
    I represent northwest Oregon, and we have an economic 
vitality that is very dependent on the health of our natural 
resources. I have a--Columbia River is the northern boundary of 
the district, the Pacific ocean is the western boundary. 
Outdoor recreation is a year-round thing in Oregon, from skiing 
and snowboarding on Mount Hood, hiking on the Pacific Crest 
Trail. We have wonderful wineries that draw a lot of tourism. 
We have a prized dungeness crab industry and abundant 
fisheries. So there is a lot that is dependent, and we know the 
cost of inaction is going to affect all of these industries. So 
as I said, a hub for this industry. Outdoor recreation.
    Keen Footwear, I want to mention, is one business that is 
actively identifying harmful chemicals in their supply chain 
and deploying safe alternatives. Columbia Sportswear 
headquartered just down the street from my office in Oregon, 
they are manufacturing jackets with fabric that is made from 
100 percent recycled plastic bottles, dye-free, PFC-free, 
sustainably sourced down. They are really doing a lot, a lot of 
the businesses, to be responsible. And consumers are responding 
positively, and I think we are going to see this across the 
country as businesses step up.
    Mr. Bouchard, I noticed you mentioned that you have a LEED-
certified business and you saved 30 percent in water and 
electricity in the first year. I have, in the district I 
represent, a gold LEED-certified business, First Tech Credit 
Union headquarters, built out of cross-laminated timber, which 
is kind of a win-win because you are using sustainable building 
materials.
    So, Mr. Jabusch--did I say your name correctly, close 
anyway--you mentioned we get the economy we invest in. So are 
there policies, ways that we can transition our economy to one 
that will reward climate responsive financial opportunities 
over the status quo of depending on fossil fuels and harmful 
pollutants?
    Mr. Jabusch. Certainly. Similarly, I don't feel like I am 
in too much of a position to recommend policy, but there are 
things from a macroeconomic point of view that certainly would 
help. You know, obviously, a carbon tax would be huge and 
probably the first and most direct thing that we could do. 
There are externalities--and you just listed some of them, 
Congresswoman--to the price of carbon emissions, and those 
things do have a direct effect on the economy, on employment, 
as Chair Castor noted in her opening remarks.
    And, therefore, it is not inappropriate to expect the 
economy and the taxpayers to get compensation for taking on the 
burden of those externalities directly. Currently, the emitters 
aren't taking those on. Someone needs to. And right now, it is 
kind of everybody. So I think that would be the first policy. 
You know, get rid of the subsidies for carbon and replace them 
with a carbon tax. That would be the first policy I would have 
in mind if I were a policy maker.
    Ms. Bonamici. Thank you. And I want to talk about some of 
the other small businesses that are really trying to respond. 
We have had wildfires, terrible air, the health effects too 
that are affecting people in our communities, acidic waters, 
harmful algae blooms, all endangering the livelihoods of people 
who rely on commercial fishing, sports fishing.
    Ms. DiPerna, in your testimony, you mention that the 
climate crisis is no longer purely an environmental problem but 
has significant socioeconomic effects as well. How can we 
improve Federal support to help smaller businesses and workers 
better prepare for and mitigate the cost of the climate crisis?
    Ms. DiPerna. Well, not speaking particularly officially, I 
mean, I think one has to look at how the risks are being 
distributed, as Mr. Jabusch just said. These risks right now 
are not being priced into the economy, and they are bouncing 
around like during a chess game, like a pawn that doesn't have 
a square to land on. And these risks are not hitting the 
general economy because the risks are being borne by you, the 
Federal Government; us, the taxpayers; FEMA; insurance 
companies; and the victims themselves.
    So I think some form of creative view of indemnification. 
When that risk chain hits the bottom, where does that meet? We 
all know that the Fed just put out a report that said 60-
something percent of adults can't meet a $400 cash unexpected 
expense. So some form of indemnification at that level. I think 
everyone would welcome the carbon price. I could share data 
with you of how many companies have imposed on themselves 
voluntarily an internal carbon price to help plan for that. And 
certainly, some form of review of the flood insurance policy. 
And back on jobs, I can talk all day about that. I have a lot 
of data to share with you.
    Ms. Bonamici. Thank you.
    I know I am out of time, but real quickly, the companies 
that did impose that on themselves, was that driven by the 
leadership of the companies or by shareholders or by consumer 
demand? Where is that decision coming from?
    Ms. DiPerna. So that is a good question. It sort of knits 
itself together. I think part of it is the expectation that 
there will be regulation because it seems like the obvious 
thing to do. If you have a pollutant, you have to sort of 
somehow, quote, penalize it. We have a long tradition in this 
country of talking about cap and trade. We did it with sulfur. 
People are experienced with this internal pricing. Also, 
regulations. EU, they have a carbon price.
    But mostly it is a planning tool. It is to make visible 
these invisible causes by projecting a surrogate within your 
system. And now, I can give you this data, companies are also 
imposing voluntarily a water--an internal water price as well, 
again, to plan, if they were being charged by somebody other 
than the moral compass, what would it cost.
    Ms. Bonamici. Thank you.
    And I know I am out of time. Thank you for your indulgence. 
I yield.
    Ms. Castor. Mr. Griffith, you are recognized for 5 minutes.
    Mr. Griffith. Thank you, Madam Chair. I appreciate it very 
much.
    Mr. Walker, I am looking at your testimony and I heard your 
testimony when you gave it, and I find it very interesting. The 
Morganza Action Coalition, also known as MAC, was created 
apparently in 2006 to advocate for Federal funding to complete 
the levee protection project. And you are currently the 
president of that. Is that correct?
    Mr. Walker. Yes, sir.
    Mr. Griffith. I then noticed in the next paragraph, a line 
that we have heard before in these hearings, and that was you 
want the Federal Government to help but largely to get out of 
the way of local efforts. Can you explain that a little bit 
more?
    Mr. Walker. Yeah. You know, when we decided to tax 
ourselves, we felt like we had the ability to do the work. And 
part of the problem that we have had all the way along is to 
get through the regulatory, you know, blockages that we have 
had, getting permits, getting access to easements, negotiating 
those types of things. And so, you know, part of what MAC has 
done, since we have not been able to get any funding and there 
is not always money to be gotten, was to try to advocate and 
change those--the ways that we have to go through that process.
    Sometimes it would take up to 4 years to get a permit, when 
in 4 years, we have lost a lot of land in Louisiana----
    Mr. Griffith. Was that a Louisiana problem or a Federal 
problem?
    Mr. Walker. Well, for us, it was a Louisiana problem 
because we are building the levees in Terrebonne Parish.
    Mr. Griffith. But, I mean, was it a problem of getting 
Louisiana permits or Federal permits?
    Mr. Walker. At that point in time, it was really getting to 
the process with U.S. Corps of Engineers. And we have made some 
progress. We have--we feel like at this point we are gaining 
strides. Recently, we did get them to look at the cost again. 
And I think, to us, that is a large step for us to the 
possibility of us breaking the ice to get some Federal funding.
    Mr. Griffith. And I appreciate it. What is interesting is 
we heard earlier from Delegate Keith Hodges of the Virginia 
House of Delegates, celebrating this coming week their 400th 
anniversary of being a legislative body, and I would argue the 
oldest legislative body, to have continuously met and be 
elected in the world, but they only claim North America, but I 
think you can make an argument. But, nonetheless, he said we 
are trying to do what we can on the coast of Virginia, but we 
run into a lot of regulatory problems and things that get in 
the way.
    Have you found that--besides the Army Corps, have you found 
other regulatory problems that slow you down in protecting your 
Louisiana properties?
    Mr. Walker. Not so much for us. I mean, that was the 
biggest hurdle for us, other than funding for more 
construction.
    Mr. Griffith. All right. Now, I am also curious that you 
said you figured out a way to cut the estimated cost by a 
third. And, obviously, dikes or levees are not new technology; 
they have been around for about 3,000 years or maybe longer. 
But tell me how you got the cost down to about a third of what 
the estimated costs were to be.
    Mr. Walker. Well, we always knew what the cost was because 
we are building it down there.
    Mr. Griffith. Right.
    Mr. Walker. And so we have built this system to Federal 
standards. The alignment that we have is the same alignment 
that was approved by Congress. You know, we could see what we 
were spending on this, and so we just asked. Finally, we had 
the ear of the Corps, and we were able to get them to consider 
looking at what the real cost is. We have enough of the system 
built now that we know what costs are.
    So they have teamed with us. We finally have been able to 
work with them. We feel like they are on our side, and so we 
are hoping that that does help us finally get some funding.
    Mr. Griffith. And I assume that your organization, the MAC, 
or the Morganza Action Coalition, would be more than willing to 
share whatever you have learned in the process of building 
protective dikes, levees and so forth with other States as 
well. Would that be correct?
    Mr. Walker. Certainly, it is a little unique down where we 
are. We are in marshes. We are in areas that are not quite so 
stable that some states have, but we would love to share the 
process.
    Mr. Griffith. Well, I had some ancestors from Louisiana, so 
I have always been interested in Louisiana. But I also,--
because our textbooks were old in the mountains of Virginia. 
When I was growing up, we had textbooks that talked about the 
ongoing project of the Zuider Zee reclamation which, of course, 
was finished in 1933, but we were still studying it in the 
early sixties as an ongoing project. But they built a massive 
dike and reclaimed a huge area, which I have actually been in, 
the Zuider Zee where it is just mostly industrial parts today. 
So I think there is a lot of promise.
    You would agree with that, would you?
    Mr. Walker. Oh, absolutely. We have studied things down 
where we are too.
    Mr. Griffith. Yes, sir. I appreciate it greatly.
    And I yield back, Madam Chair.
    Ms. Castor. Thank you.
    Ms. Brownley, you are recognized.
    Ms. Brownley. Thank you, Madam Chair.
    I appreciate all of you being here today. And I must say, 
reading your testimony last night gave me a lot of hope in 
terms of growing partnerships between being a good steward of 
our planet and along with the business community of taking a 
larger and larger role in that.
    And, you know, you had mentioned industry wanting certainty 
and a level playing field, and I believe that that is very true 
when you talked about insurance, indemnification, and 
infrastructure, but yet industry, you know, here on Capitol 
Hill, industry still knocks on our doors and says we want to 
get rid of all these regulations, not all of them, but, you 
know, we are continuing to lobby against so much of some of the 
regulations that are out there. And I represent a large 
agricultural community, so I hear from my farmers all the time 
about regulations and how that interferes, and them being 
bigger producers of whatever they are growing.
    But, you know, when are we going to--you know, when we are 
we going to hit that tipping point where--I know in California, 
you know, labor became, you know, a great partner in all of us 
who were trying to improve our climate and became a big partner 
in that. When do you think businesses really, you know, on a 
more global basis, here in the United States anyway, is going 
to become a better--a true partner in understanding that we are 
all going to be winners if we collaborate together to begin to 
solve some of these issues? It is just to anybody to answer.
    Mr. Bouchard. Well, let me at least begin to answer that 
question. And it is a difficult question because it is such a--
--
    Ms. Brownley. There are so many variables. I understand.
    Mr. Bouchard. There are so many variables, right, depends 
the sector you are, I mean, the regulation you are facing. In 
some cases, perhaps----
    Ms. Brownley. But at some point we are going to hit a 
tipping point, I mean, broadly speaking.
    Mr. Bouchard. I guess the point I would make is being 
active on these topics for maybe the last 10, 12, 15 years from 
an insurer's perspective, I have never seen the level of 
sincere action from business. Now, I lived in Switzerland for 
many years and I have worked for a Swiss company for the last 
20 or so years, so perhaps I am tainted a little bit from a 
European perspective, but I will say that there is momentum 
growing and there are companies who are willing to make 
commitments and live by those commitments and start to alter 
their own behaviors based on the commitments they are making. 
So I would agree with you. I don't think we have hit that 
tipping point yet, but I would say that we are closely 
approaching it.
    Ms. Brownley. Well, that is good to hear. You talked 
about--I think someone mentioned that this last year was a 
lower disaster year than previous years. It did not feel that 
way in my district. I represent Ventura, the County of Ventura 
in California, and 15 months ago, we had the largest fire in 
California's history. Until just recently, we had the Woolsey 
fire, which then--the Thomas fire was no longer the largest. We 
had northern California fires, including Woolsey, that then 
became the largest fires in California. So we are--the whole 
county virtually in my district is in that place of rebuilding, 
and I feel like I know FEMA better than I have ever known FEMA 
before.
    Mr. Bouchard. Congresswoman, we are actually doing a report 
on--one of our post-event review capability reports on exactly 
that event. So we will have, as we have done with 15 other 
events around the world, we will have a diagnostic assessment 
of, not so much the physical activity, but almost the human-
induced environment in which that activity happened.
    Because what we find is that natural hazards or natural 
events do not always have to be natural disasters, and often it 
is either the policy decisions or the behaviors or other 
actions that humans have taken that actually exacerbate the 
event itself. So we will have a report, I think, within the 
next few months that certainly we can work with your office.
    Ms. Brownley. I would love that. And that is on the Woolsey 
fire then? Was it the Woolsey or the Thomas? Do you know?
    Mr. Bouchard. I don't know exactly which fire, but I know 
it is the California wildfires.
    Ms. Brownley. Okay. Terrific.
    Well, the line of questioning I was going for, and I know I 
am running out of time as well, but in terms of that 
rebuilding, you talked about how we have got to rethink how we 
rebuild after these disasters to build a more resilient 
community. And, you know, my question is, you know, if you were 
us, you know, what kind of policy would you put forward in 
terms of a national policy? Because there is disasters across 
the country and FEMA and the Army Corps and others are putting 
a lot of money into rebuilding, but are we rebuilding in a way 
that is going to help us in the future?
    So I have run out of time.
    Ms. Castor. So answer briefly, but then if you would, 
detail--provide a more detailed response for the record.
    Mr. Bouchard. We will certainly do that. I would say the 
Congress took a great step last year with the DRRA, you know, 
the section 1, 2, 3, 4 that provides the 6 percent mitigation 
fund to FEMA. If our numbers are right, and we think they are 
conservative, 1 to 5, meaning you invest $1, you are going to 
save $5. $250 billion I think will go into that fund. Imagine 
how much money is going to be saved.
    So I would continue to find ways to fund mitigation through 
the existing mechanisms you have as one start, but we will 
certainly follow up with other answers as well.
    Ms. Brownley. Thank you, Madam Chair.
    Ms. Castor. Thank you.
    Mr. Carter, you are recognized.
    Mr. Carter. Thank you.
    And thank all of you for being here. Appreciate it very 
much. I think this is a very important subject.
    First of all, let me start off by saying that I believe 
that climate change is real. I believe the climate has been 
changing since day one, and I believe that we have to do a 
number of things in order to address this situation.
    A couple of those things are we have to adapt, we have to 
mitigate, and we have to innovate. This is what I have been 
talking about, resiliency, and what we need to be doing because 
there is no question about it. I represent the entire coast of 
Georgia, over a hundred miles of coastline, and we have had 
three hurricanes in the last 3 years, and we have seen what has 
happened. And we have experienced this, and it is important 
that we boot up resiliency and not just after the fact.
    I wanted to start with you, Mr. Walker, because I also have 
a grandbaby in New Orleans, so I am very concerned about what 
you all are doing down there. I want to make sure you all take 
care of my grandbaby, okay?
    Mr. Walker. I think they have already taken care of New 
Orleans.
    Mr. Carter. Yeah, they have. But just don't get her talking 
funny like this other guy. Anyway, nevertheless--okay. I got 
some serious questions here. Seriously. But I do believe that 
it is going to take adaptation, mitigation, and innovation.
    Mr. Graves. The subtitles for his comments are down below 
the digital screen.
    Mr. Walker. I like that. Sounds like Wendell.
    Mr. Carter. Nevertheless, I want to ask you, do you think 
that we are focusing then--not only just on this committee, but 
just in general when we talk about climate change. I mean, 
everybody wants to talk about, oh, we got to decrease carbon, 
we got to do this--and all that is important, I agree, but at 
the same time, I don't feel like we are emphasizing the 
resiliency enough. I just wanted to get your thoughts on that.
    Mr. Walker. You know, whether it is a fire in California or 
whether it is a flood in Houma, Louisiana, you know, you have 
to do something different. You can't keep doing the same thing. 
And so, you know, we finally realized that we had to do that.
    You know, after Andrew, after Katrina, they started 
strengthening the building codes. I mean, that is wonderful. We 
get stronger and better construction that can withstand the 
wind. But we----
    Mr. Carter. That is right. And not to interrupt you, but 
you are exactly right. I give the example all the time. We have 
got a barrier island off of Savannah, Tybee Island. We are 
rebuilding the road now. You know, four or five times a year 
that road floods, not because of rain, but because of spring 
tides. Because the tides get so high, it floods. Well, we need 
to build it up. We need to be smart about these kind of things.
    I also give the example of, if you build a house on a slab 
next to the marsh, guess what? At some point it is going to 
flood.
    Mr. Walker. You will get wet, right. We understand that 
down in Louisiana. You know, after Ike, we have raised over a 
thousand homes in my parish. We are doing everything we can. We 
have rebuilt the barrier islands. We are building levees. We 
have raised homes. We are putting floodgates. We have got one 
of the largest floodgates in North America on our major 
waterway, the Houma Navigational Canal. So you have to do it 
all and you can't just do one thing.
    You know, I am only active on the Morganza, you know, 
project primarily, but you can't sit back and wait for it to be 
done the same way every time. You have got to adopt.
    Mr. Bouchard. Mr. Carter, can I jump in with a different 
answer?
    Mr. Carter. Yeah, please.
    Mr. Bouchard. Another area that we have identified through 
our PERC analysis reports is that communication, how we talk 
about risk is not infiltrating policymakers or individuals or 
decision makers. The insurance industry is part to blame there.
    We talk about 100-year events, we talk about 1 and 250-year 
events. I am not going to be 200 years old, so once I go 
through one of those, my natural assumption is I will never see 
one again. Whereas, if you think about the likelihood of being 
in a fatal car crash in Washington, D.C., 1 in 14,000, but 
every time we get in a car, that is in the back of our mind, if 
not the front of our mind. We drive safely so we are not in a 
fatal car crash. Get in an airplane. Your chances of dying in a 
plane crash are 1 in 11 million, but when you are in the air, 
or at least when my wife is with me in the air, you are 
thinking constantly about the possibility of an event.
    We don't have that frontal lobe kind of awareness and 
understanding about natural hazards, not only in this country, 
but I think across the world. We need to do something to make 
this a more natural, that you would actually wonder why you 
don't rebuild that road in a different way.
    Mr. Carter. Exactly. And real quickly, just two more 
things. Another example from Tybee Island when we were having 
flooding there, we found out just how important sand dunes are, 
and we got to make sure that we are replacing those sand dunes. 
It is not always that you can wait on nature to do it. I mean, 
how can we assist in that? That was one of the things that we 
really worked hard on.
    The other thing I want to mention because it is real big in 
my district, as it is probably real big in everybody's 
district, is the National Flood Insurance Program. You know, 
some of these homes we bought two or three times. I mean, that 
is ridiculous. We got to be smarter than this. You know, 
whether you think--whatever you think about climate change, we 
have to be resilient, we have to be smarter. And that is just 
the point that I am trying to make here.
    And I realize my time is out. Boy, 5 minutes flies, I tell 
you. But thank you all for what you are doing.
    And, Madam Chair, if I may, this is a good hearing today, 
and this is something we can all agree on. We do need to be 
more resilient. Thank you. I yield back.
    Ms. Castor. Thank you, Mr. Carter.
    Mr. Casten, you are recognized for 5 minutes.
    Mr. Casten. Thank you, Madam Chair.
    I would like to thank the witnesses. I would especially 
like to thank Mr. Bouchard, whose corporate headquarters are 
just outside Illinois 6, but draws on what many people have 
told me are the smartest, best looking, and most humble people 
in the country.
    Mr. Bouchard. By the way, I want the record to show that 
was not in my testimony.
    Mr. Casten. So climate change is a--I am glad I am in this 
hearing--because it is a fundamental deep, deep threat to our 
financial system, and I don't think we have really internalized 
what that risk is in the way that we are making investment and 
business decisions oftentimes not in as informed a way as we 
should have.
    Let me give a couple numbers. My colleague, Mr. Palmer, 
mentioned the historic records, so let me just walk through 
some historic numbers. The Earth has already warmed about 1 
degree Celsius since the 19th century. In the last few decades, 
as we have all talked about, there has been these extreme 
weather events. We have seen the arctic ice sheets melting, 
wildfire seasons are getting longer, parts of Alaska are on 
fire, mosquitoes are moving North carrying tropical diseases. 
It has only just begun.
    We are talking--the most ambitious goals in Washington are 
talking about limiting future temperature rise to 1 to 2 degree 
Celsius. If you look back at the historic record over the last 
million years, there is a lag time, but every degree in 
temperature rise, on average, is about 2 meters of sea level 
rise. We have already got baked in 2 feet of sea level rise as 
it sits right now. What that means when you add that up is we 
are looking at sea level rise that we know is coming about the 
height of this room. Louisiana is done, Florida is done. And we 
don't think about that, as you pointed out, Mr. Bouchard. Our 
brains don't process these risks, but we have to deal with 
them.
    And when I asked on the--I sit on the Science, Space, and 
Technology Committee, when I asked one of our scientists, at 
that level of sea level rise, what are the cities you are most 
concerned about, her response was the Eastern Seaboard.
    So what does that mean if you are a property manager 
investing in assets in Miami Beach? What does that mean if you 
are a seed developer who has seeds that are not going to be 
able to germinate in my home State of Illinois within my 
lifetime? I think if you are an investor, you would like to 
know the answer to those questions. And the risks that we are 
facing in our financial system are going to make the 2008 
financial crisis look like a walk in the park.
    Now, it is also a fantastic opportunity, because almost 
everything we do to lower CO2 emissions means that 
we burn less fuel, and fuel ain't free. I spent my whole career 
helping businesses do that, and I know that sometimes in this 
town, we think about spending money as how do you pay for it. 
In the rest of the world it is called an investment, and it is 
a pretty good thing when you can invest money and save money. 
And I think we have got a real opportunity, provided that 
businesses understand both the costs of the risk they are 
exposed to and where there are investments that they have to 
hedge that exposure.
    So I want to start with Mr.--everybody is saying your name 
wrong--Jabusch. In your testimony, you discussed how the nature 
of these underappreciated risks and opportunities often distort 
investment in capital deployment.
    Mr. Jabusch. Yeah.
    Mr. Casten. Would standardized disclosure of those risks, 
including those that result from a corporation supply chain, 
risk to physical assets, and from the nature of their business 
plan, help investors like you better identify and better 
allocate capital?
    Mr. Jabusch. Yeah. Congressman Casten, one of the things I 
said in my testimony was there haven't been great guideposts to 
help investment managers figure out where, in relative terms, 
to place your forward-looking bets just because there isn't a 
standard, there isn't a required disclosure. There is no 
general agreed accounting principles. There is just everyone's 
best guess, and there is relative how does each company stack 
up inside of their own industry type of thinking, but nothing 
that is concrete and standard the way that regular financial 
regulations and disclosures are. So, yeah, I have to conclude 
that that would certainly help.
    Mr. Casten. Well, I hope before you leave, you and Ms. 
DiPerna swap business cards, because in your testimony, Ms. 
DiPerna, you had mentioned that your CDP disclosure is both 
qualitative and quantitative and based, in part, on existing 
SEC disclosures.
    Can you maybe expand on the prior comment and explain why 
it is important to have qualitative and quantitative 
disclosures in a standard format?
    Ms. DiPerna. Yeah, because we are not talking about 
completely concrete issues, as we just talked about. There are 
variables, and companies have to maintain a certain amount of 
nimbleness and qualitative judgment over the kinds of remedies 
they undertake. And as you pointed out, investment also 
requires a little secret sauce, so a qualitative disclosure 
allows the company the flexibility to try to put their best 
face forward.
    That being said, standardization is, you know, invaluable, 
and we are very active. As I mentioned, we are trying to 
align--you know, we have been sort of a placeholder until there 
was some sort of guidepost that could be said to be 
standardized nationwide. In the meantime, however, we have 
aligned ourselves with the Task Force on Climate-Related 
Disclosure because they are seeking this kind of 
standardization.
    I guess I got a red light there.
    Mr. Casten. Am I already over on my time? Oh, all right. 
Well, let me--I had a bunch more, but let me just quickly say 
that----
    Ms. Castor. I know you were just getting started.
    Mr. Casten. The reason for this questioning is--I am very 
proud to have introduced H.R. 3623, the Climate Risk Disclosure 
Act, along with Senator Warren, which would do exactly this, 
quantify these disclosures and would basically help us 
understand what the exposures are to companies, both in terms 
of their contributions to global warming and which companies 
have a strategy that is a useful hedge against that so that we 
can better allocate capital.
    The bill has been endorsed by over 50 organizations. Madam 
Chair, I would like to ask unanimous consent to enter a letter 
of support for those organizations, for the record.
    Ms. Castor. Without objection.
    [The information follows:]

                       Submission for the Record

                       Representative Sean Casten

         Select Committee on the Climate Crisis--July 25, 2019

                                                      July 15, 2015
Senator Elizabeth Warren,
Washington, DC.
Representative Sean Casten,
Washington, DC.
    Dear Senator Warren and Representative Casten: The 52 undersigned 
organizations write to you in support of the Climate Risk Disclosure 
Act of 2019. The bill is a necessary step to ensure that shareholders 
have the information they need to adequately mitigate financial, 
physical and legal climate-related risks to their investments. By 
ensuring that private capital can appropriately assess climate-related 
risks, the bill will help accelerate the transition away from fossil 
fuels to cleaner and more efficient energy sources and reduce the risk 
of financial instability.
    Climate change poses significant challenges to businesses, whether 
or not companies have acknowledged this in their public communications. 
For example, fossil fuel companies already face worsening flooding at 
refineries, the potential for stranded assets, and mounting lawsuits by 
municipalities seeking to recover costs of adapting to climate-related 
sea level rise and other climate impacts. These impacts, and many 
others, will only intensify in the coming decades. Despite these risks, 
many companies continue omitting this critical information for their 
shareholders.
    The international financial community is already taking steps to 
meet global commitments to rapidly transition to a low-carbon economy, 
striving to limit global warming to 1.5 degrees Celsius above pre-
industrial levels to avoid the worst effects of climate change. The 
bill tasks the Securities and Exchange Commission with developing the 
standards that would allow systematic evaluation of climate-related 
risks, matching mainstream investor expectations as reflected in the 
2017 vote by a strong majority of ExxonMobil shareholders demanding 
that the company report on its business plans for a world in which 
global temperature increase is kept well below 2+ Celsius, as well as 
this year's vote by 99% of BP shareholders calling for the company to 
report on how its business plans align with the goals of the Paris 
Agreement and in the recommendations of the Task Force on Climate-
related Financial Disclosures.
    Ensuring that climate risk disclosure is standardized will allow 
companies and investors--especially those managing state employee 
pension funds and other long-term portfolios--to plan for a low-carbon 
future, and that science and data guide the process.
    We are grateful for your leadership in addressing the necessity of 
climate risk disclosure and holding public companies accountable to 
their shareholders.
            Sincerely,
    1000 Grandmothers for Future Generations, 350 Bay Area Action, 350 
Spokane, 350.org, Acadia Center, Alliance for Affordable Energy, 
American Family Voices, Anthropocene Alliance, As You Sow, Center for 
International Environmental Law, Climate Hawks Vote, Climate Reality 
Project, Connecticut Coalition for Economic and Environmental Justice 
Corporate Accountability, Dwight Hall Socially Responsible Investment 
Fund Earth Action, Inc. Earthworks Environment America Fossil Free 
California, Franciscan Action Network Friends of the Earth, Friends of 
Watersheds Gasp, Global Witness, Green Century Capital Management 
GreenLatinos, Greenpeace USA, Gulf Coast Center for Law & Policy Hip 
Hop Caucus, Institute for Agriculture and Trade Policy Interfaith Power 
and Light, League of Conservation Voters, League of Women Voters of the 
United States Mercy Investment Services. Movement for a People's Party 
Natural Investments LLC, Oil Change U.S., Polar Bears International 
Public Citizen, Rachel Carson Council Sierra Club, Sisters of St. 
Francis of Philadelphia Sunrise Movement, The People's Justice Council, 
The Sustainability Group of Loring, Wolcott & Coolidge Trillium Asset 
Management, Trinity Health, Union of Concerned Scientists Unitarian 
Universalist Association Utah Moms for Clean Air, Vert Asset Management 
Voices for Progress.

    Mr. Casten. And I am way over my time, so I just urge all 
my colleagues to please join the bill. Thank you.
    I yield back my negative time.
    Ms. Castor. Thank you, Mr. Casten.
    Mrs. Miller, you are recognized for 5 minutes.
    Mrs. Miller. Thank you, Chairwoman Castor. And thank you 
all for being here today.
    I know that many of our American businesses work diligently 
to be good stewards of our environment. My home State of West 
Virginia, due to geography, has had a lot of flooding, and I 
have seen how important it is for our communities and 
businesses to partake in predisaster mitigation to minimize the 
impacts of these natural disasters.
    As this committee moves forward in making recommendations, 
we must ensure that we further protect businesses from 
burdensome regulation.
    Mr. Walker and Mr. Bouchard, what is available to small 
businesses, at present, to allow them to be involved in 
predisaster mitigation?
    Mr. Walker. You know, I am not sure what programs there 
are, but I can tell you that for years, the people down where 
we are avoided trying to do it themselves. You know, it took 
repetitive, you know, storms to come through to finally, you 
know, get people moving down where we are. As I said, we taxed 
ourselves twice now to try to do what we do. And the reason we 
did that is there was not a lot of help from anything else. 
There was not a lot of other programs back then that we could 
rely on, and so the first times we tried to do that, the tax 
failed. But once you get beat up over and over and over, you 
know, people tend not to do something until they have 
experienced a problem with it, right? And that is what happened 
down where we are and, finally, we have got enough, and that is 
when we did what we did.
    I am sure there is things now that can be utilized, but 
back then, we really didn't have anything else.
    Mr. Bouchard. I guess I would--I might not have the accent, 
but I am going to use a Louisiana example as well. Zurich was a 
sponsor of a golf tournament in New Orleans the year right 
before Katrina hit. And following Katrina, we saw firsthand 
that it was really small business that felt the brunt. It was 
small business that wasn't returning, which meant people 
weren't coming back for the jobs. It meant people didn't go to 
a store or dry cleaner or restaurant to attend. It was--so your 
point about focusing on small business is a critical one, 
before the event, not after the event.
    I would say that in terms of what is particularly or 
directly available to small business is probably--I know that 
an organization that I am part of, SBP, does education 
resilience, education for small businesses. So I think one 
thing that small business owners need to do is really 
understand their exposure, really understand--not only the 
exposure to their physical building, their storefront and 
whatnot, but the people who work for their businesses. Are they 
going to be able to come into the office? Are they going to be 
able to come to the store and the shop? And there is a lot more 
that you have to think about when you think about business 
continuity, particularly a small business person who one or two 
people don't come to work and that is really going to have an 
impact as opposed to a thousand employer type of organization 
that perhaps that is not going to have as much of an impact.
    So I would say education is certainly a part of it, and I 
would encourage small businesses in their local organizations 
to really start to demand a voice and a place at the table for 
local communities talking about pre-event mitigation.
    Mrs. Miller. Along those same lines, is planning for 
climate risk something that many small businesses have the 
resources or bandwidth to do?
    Mr. Bouchard. Probably not. That is why I would not sit 
here and recommend that every small business go out and 
undertake the same level of disclosure and scrutiny that Zurich 
has done and many other global firms have done. I can tell you, 
as the last staff person to look at the CDP filing before it 
goes to management, it takes a lot of time to do this, to do it 
sincerely, at least.
    So, no, I don't think we can expect small business to have 
that same level of depth of knowledge, but they can work with 
their insurance agent. They can identify their basic risk and 
the risk to their people and, again, ask and engage in the 
community level to say, hey, small business in this area needs 
more focus on preparation, because we are the ones who are 
going to pay the brunt after an event.
    Mrs. Miller. You are right.
    Mr. Walker, I enjoyed your testimony when you talked about 
how the economy in Louisiana is dependent upon the energy 
industry. I see the same in my State.
    What are some of the best practices that you have seen in 
Louisiana to increase resiliency both in your communities and 
actions taken by small business?
    Mr. Walker. Like I said, way back we realized that we 
needed to do something, you know, my community now has a hazard 
mitigation plan that we update every year, but we actually 
completely go through that on a 5-year basis. And so we look at 
every risk in our community with that plan, and so I think that 
was a good start to the process of what we really needed to 
build. It got all of the local community leaders in line to be 
able to do what we needed to do to control our risk.
    Same thing at our State level. We have a State master plan 
and we, you know--excuse me--the CPRA, Coastal Protection and 
Restoration Authority, I couldn't get it out--was started so 
that we could look at those risks and go through, you know, an 
assessment of what really needs to be done and the focus of 
where--what funding we have needs to go. And so I think, you 
know, it is at the community level that it needs to start, and 
then it builds from there.
    But, you know, right now, we have assessed that we had to 
block the storm surge that was coming in from every storm. It 
was just happening over and over and over, and that is where 
the Morganza system came to bear. And so now, you know, finally 
that we are making progress, we can see some of the fruits of 
it. Like I said, this past storm came through, it was only a 
Category 1, we had about 60- to 65-mile-an-hour winds in Houma. 
Normally, we would have had a lot of flooding for that. We 
still had a little bit, but even with that Category 1 storm, we 
had storm surges up to 8 or 9 feet. Some of the levels of the 
system that we have were only built to that level, so we had 
some overtopping.
    Ultimately, we would like to get it up to 18 feet. I don't 
know. You know, you may have a storm that can get over that. I 
am not going to be in Houma when that happens, but certainly 
having nothing was, you know, just a repetitive process of 
destruction and having to rebuild every time. So right now, we 
are feeling that we are making some progress on it.
    Mrs. Miller. Thank you.
    Ms. Castor. Mr. Levin, you are recognized for 5 minutes.
    Mr. Levin. Thank you, Chair Castor.
    The topic of today's hearing is extremely important 
because, not only is climate change a threat to the health of 
our communities, but also to our economic prosperity, so I 
thank you all for the good work that you are doing.
    I think it is important that those risks are explained and 
quantified, which is one reason I am proud to support the 
Climate Risk Disclosure Act, which my friend, Representative 
Casten, spoke about a minute ago. This important bill would 
require public companies to disclose how they will be impacted 
by the climate crisis, creating an environment of transparency 
for investors.
    And before I get to questions, I do want to take just a 
moment and address some of the arguments I have heard against 
taking bold action. Sometimes we hear the arguments from 
business, sometimes from other people here.
    First, we hear that the United States is already reducing 
greenhouse gas emissions better than anybody else, so we don't 
need to take any further action or make significant policy 
changes. I think it is clear that any reductions are hampered 
by the backwards policies that we are seeing from this 
administration. We only need to look to the 3.4 percent 
increase in carbon dioxide emissions in 2018 to illustrate this 
point.
    To the extent we are making progress, we are making 
progress, in large part, because of the aggressive actions 
taken at the State and local level, such as the proliferation 
of State renewable portfolio standards as well as the policies 
of the last administration, like the fuel economy and tailpipe 
standards that President Trump's EPA is working so hard to 
undermine.
    I applaud my friends on this day in the State of California 
for their major announcement that they went out and they 
negotiated a deal. My friend, Mary Nichols, and others, our 
attorney general, with four major auto companies. That is a 
big, big deal, and I wish we had that kind of leadership from 
this administration.
    I have also heard, secondly, that the U.S. shouldn't act on 
climate because China and India aren't doing it, so why should 
we? But I think we should measure all of the things we are 
doing with the international impact and specifically the term 
``followership.'' So this is a good friend of mine, David 
Victor, at UC San Diego, Professor Victor always talks about 
how our actions and policies lead to other countries' similar 
actions and policies to reduce emissions, or are the actions we 
are taking enable others to pollute freely with no regard for 
climate impact?
    When we fail to lead, we are letting ourselves and others 
off the hook, and that is sometimes something we fail to 
acknowledge. So I think we have got to continue to use our 
economic power and our political power to pull others with us.
    Third, some say that reducing greenhouse gas emissions will 
put people out of work. The reality is that the transition to 
clean energy creates jobs with high wages. The renewable energy 
industry is now one of the country's major employers. Almost 
3.3 million people work in clean energy in this country, which 
is three times more than the fossil fuel industry, and the 
industry is continuing to grow. And in 2018, the renewable 
energy industry was the fastest growing workforce in 12 States 
in the union. These are jobs that can and must be made 
available to Americans living in all regions of the country, 
not just in California.
    And finally, I have heard that emissions reductions will 
cost too much, but today's testimony from you confirm that the 
climate crisis could cost companies almost $1 trillion, while 
acting to address the crisis could have more than $2 trillion 
in upside due to increased revenue. So the real costs here are 
driven by failing to act.
    You know, I am tired of people saying that they believe or 
don't believe in climate change. We believe in things that we 
may or may not know to be true. We know that climate change is 
true. The scientific evidence is overwhelming, and we have got 
to take action.
    And with that, I will turn to questions.
    Ms. DiPerna, in your testimony, you mentioned that European 
companies report more than double the potential business 
opportunity associated with climate solutions when compared to 
American companies. You say this could be related to the 
European Union's clear climate policy framework.
    Can you expand on this point, and specifically, are there 
policies that create business opportunity in Europe or is it 
just the fact that they have a climate policy framework at all?
    Ms. DiPerna. No, I think there is some specific things. 
Again, back to Paris, which is a framework and a sort of 
universal target system. People can find their own way to the 
target, so that gives the companies the nimbleness they need, 
but everybody knows we are trying to get to 2 degrees 
Fahrenheit of increase maximum.
    There are also some interesting things with regard to 
finance. The establishment of benchmark for indices that 
require companies that you can only be eligible to be listed in 
that index if you have a science-based target that is 
conforming with Paris. So if you are not aware of the science 
of Paris in building that in your business plan, you may be 
ineligible to be listed in European investment vehicles.
    So they are throwing out the companies that--so this gives 
companies a guidepost to think about. You want to be in that 
index, I better get with the Paris science. And so, you know, 
the combination of science, policy, and capital, it has only 
worked together once, in my experience, which was in Paris 
where you had science, policy, and capital working together.
    In the absence of U.S. leadership relative to Paris, that 
policy piece, the third leg on that stool, is very collapsed 
because we are a big economy. If we were in there--and David 
Victor's exactly right. We are permitting people to do things 
which are not in their own interest or in the interest of 
people around them by a lack of coherence in a policy. Whatever 
the policy, it has to be coherent, and I can give you more 
details. But I think the differentiation between a coherent 
policy and a grab bag of policy is a very big obstacle for us.
    Mr. Levin. Thank you.
    And I see the red light in the corner of my eye, and I will 
yield back. I thank the chair for this great hearing today.
    Ms. Castor. Thank you, Mr. Levin.
    The ranking member is recognized for 5 minutes.
    Mr. Graves. Thank you, Madam Chair.
    Let me ask you all a question, a simple yes or no, do you 
believe that our own Federal Government--and I want to be 
clear, not talking about any particular administration, just 
collectively--our own Federal Government is doing a good job 
with adaptation and resiliency? Just a yes or no.
    Mr. Walker. No.
    Mr. Bouchard. No.
    Mr. Jabusch. No.
    Ms. DiPerna. I have to say no as well.
    Mr. Graves. Madam Chair, the thing is, look, you and I have 
discussed this. It is a space where I used to work for many 
years. We have identified the stupidity, and it is here. It is 
right here. It is in this city. It is in this body. We are not 
taking the steps and the policies. We are accepting mediocracy. 
We are watching as the Corps of Engineers--and I have said this 
before, my friend, Mr. Huffman, I mean, they may be slow but at 
least they are expensive. And everybody laughs, but it is sad 
because, it is--you know, Mr. Bouchard, it is our money. It is 
the Federal Government's money. It is your company's money that 
we are shelling out needlessly. This is so stupid what we are 
doing.
    Study after study after study shows that for every $1 you 
invest, you get X dollars in return. You can find studies to 
show anywhere from $3 to 12 bucks. I think in some cases it is 
even higher.
    We have allowed for this process to just sit there and 
morph into this complete--just stagnant process that is 
victimizing the very people that we are representing. Mr. 
Walker's organization, collectively with some of the State 
funds that we put forth, and like you said, they have taxed 
themselves more than any other community in the Nation and 
cobbled together--where are we--420 million bucks right now.
    Mr. Walker. Over that. About 440.
    Mr. Graves. $440 million trying to protect their homes, 
their families, their businesses. And as he said--and I hope 
that that subtle remark he made, I hope that you all heard it, 
because of what the Federal Government has done, that is what 
has made them vulnerable, and that we can't even get the 
Federal Government to come to the table and participate with 
them. But I will pivot for just a minute.
    Ms. DiPerna, I am curious, you made mention of the 
importance of stability or predictability, certainty--I don't 
remember which word you used. Couldn't agree with you more. How 
do we establish certainty, predictability? How do we do that 
when--as I said in my opening statement, the U.S. is on a 
trajectory of reducing emissions--China is quadrupling the 
offsets that we are achieving? So how do you project certainty 
when you have such uncertainty?
    Ms. DiPerna. Well, I think as you pointed out, the global 
regime--I mean, China is a signatory to Paris. We are the only 
country that is outside of that consensus, so the certainty is 
Paris is trying to build to that certainty. I also think there 
is different kinds of certainty. There is scientific certainty. 
You can manage your business at least to that certainty. And 
with regard to the leakage----
    Mr. Graves. Let me ask this: Is their increase in 
emissions, is that contributing to certainty or contributing to 
uncertainty?
    Ms. DiPerna. Well, I think that is a bit apples and 
oranges, because the leakage that you are talking about, 
emissions going up here, down there, I take a plane, you take 
the train. You take a plane, I take my bicycle. We are 
constantly trading off the tonnage that we are causing to be 
emitted. That is the same among companies. But you can balance 
that with a cap of some kind, a reduction target of some kind. 
That is the certainty that is missing, which is what is the 
minimum amount of emissions that an ordinary company should be 
permitted to emit under certain circumstances given a certain 
amount of time, and that is where it becomes complicated.
    But I think, you know, certainty comes to us from all 
different--in all different forms.
    Mr. Graves. I hear what you are saying. I am not sure how a 
country that is substantially increasing their emissions in any 
way does anything other than contributes to the uncertainty by 
sending the trajectory upward into concentrations we have never 
experienced. It is especially concerning. But let me pivot.
    Madam Chair, as you know, every hearing I have, I want to 
give a compliment to my friend, Mr. Huffman, and today will not 
be an exception.
    Mr. Huffman. You like my tie?
    Mr. Graves. I like a lot of things about you, Mr. Huffman, 
and one of the things I like about you is that one of the 
challenges that we have experienced with the Morganza project 
is this essential fish habitat issue, where the National 
Fishery Services come in and determine that when land erodes, 
it becomes essential fish habitat. So if you are going to come 
back and restore it, you have to mitigate for impacts to the 
fish. The fish didn't mitigate for taking our land. I don't 
know why we are forced to mitigate for taking theirs.
    Mr. Huffman worked incredibly well in cooperative effort 
with us to come up with a solution for that to pass the House. 
We are still working on the Senate, but I want to thank you for 
that.
    Mr. Walker, you noted that some of the regulatory 
challenges, in many cases, you all are carrying out projects 
that are actually environmental in nature, and our own Federal 
Government regulations designed to protect the environment are 
actually impeding you. Could you talk about that a little bit?
    Mr. Walker. Well, one of the biggest things that gives me 
heartburn is we have to mitigate to build a levee. Why do we 
mitigate to build a levee? That is the mitigation. We have 
already seen where freshwater marshland is building back behind 
the system. So, you know, that is another thing we really want 
to study, is that we think just the fact that we are building 
that levee is improving the habitat. I mean, we know it is. So, 
you know, those are the kinds of things that drive us crazy.
    You know, some of the other things that we face are with 
permitting, and we have had some good partners down where we 
are, you know, ConocoPhillips, Apache. The oil companies that 
own the majority of the marshland where we are have been our 
partners to gain access in right-of-ways to build these levees, 
but the permit process requires that they give us perpetual 
servitude. Who wants to give up their land to perpetuity?
    So we have been facing those kinds of things down there 
where, hopefully, at some point, we can gain some ground with 
that. It makes it real costly because mitigation is not cheap.
    Mr. Graves. Thank you, Madam Chair. I just want to make 
note that it may seem counterintuitive the levees actually 
protecting an ecosystem, but when it is exposed to open water, 
it erodes, you lose it all. The levee system actually 
stabilizes the ecosystem that is protected behind it, and we 
have got a number of examples in Louisiana.
    I yield back.
    Ms. Castor. Thank you.
    Mr. Huffman, you are recognized for 5 minutes.
    Mr. Huffman. Well, thanks, Madam Chair.
    It is fun to hear Mr. Graves speak eloquently about the 
value of investing in adaptation, how we can actually get a 
multiplayer effect from those investments. The good news is we 
don't have to just talk about treating the symptoms here; we 
can also get a multiplayer effect by investing in decarbonizing 
and actually treat the disease.
    So my understanding, Ms. DiPerna, you studied over 7,000 
companies and found that over half of them were able to 
identify business opportunities in the transition to a low-
carbon economy and you found a multiplier effect for a lot of 
those companies, didn't you?
    Ms. DiPerna. Yes. That is what they disclose. There are 
lots of opportunities that come along with, you know, taking 
measures to come into conformity with, you know, the need to 
reduce increased revenue, competitive advantage, even cheaper 
access to capital, because----
    Mr. Huffman. Those opportunities outweighed the cost of 
transition by a factor of seven in some cases. Is that correct?
    Ms. DiPerna. I think we set up factor--at least for the 
sample of the goal, the 500 largest companies, I think was 
double.
    Mr. Huffman. Thank you.
    Mr. Bouchard, I am fascinated by your perspective on all 
this because I think, if we were all in the business of risk, 
and especially for reinsurers, the ultimate backstop for huge 
risks, we would have solved this thing a long time ago.
    I have been working on carbon capture and sequestration for 
quite some time, and at our last hearing, I bristled a little 
bit when somebody referenced natural gas as a climate solution 
as clean energy, because it is not. When you factor in the 
methane loss, I think it is likely no cleaner than coal. And my 
belief, because I think we are in a crisis here, is we don't 
have time for fake solutions. I am rapidly coming to the 
conclusion that carbon capture and sequestration is a fake 
solution.
    Over a decade ago, I wrote a bill in California to try to 
set standards for geologic carbon capture and sequestration, 
because my mind was open. If we could find a way to 
dramatically reduce emissions, I found myself working with 
Chevron and other fossil fuel companies to try to get this 
done. We walked into a buzz saw of technical problems, and that 
bill, despite the support of all of this industry, despite 
bipartisan support in the California Legislature, didn't go 
anywhere.
    I then found myself in Zurich speaking at a carbon capture 
and sequestration conference hosted by Swiss Re that year, 
where I got to hear a little bit of an inside perspective from 
the industry where I heard enormous skepticism from technical 
experts and economic experts in the industry that this would 
ever be cost effective or ever be feasible at scale.
    And here we are today, fast-forward to 2019, and we still 
hear people talk about carbon capture and sequestration as the 
holy grail, but there are no projects that are actually doing 
it. We have a few, the Petra Nova power plant and others that 
get bandied about. They are doing enhanced oil recovery. They 
are not helping with the climate; they are actually producing 
more oil.
    So I was intrigued to hear you say that you are offering 
liability coverage for carbon capture and sequestration. I am 
just wondering, are those policies selling?
    Mr. Bouchard. No, they are not, sir.
    Mr. Huffman. Sounds like a pig in a poke to me. Do you have 
any reason to disagree?
    Mr. Bouchard. I think when you look at the role that we 
play, and we are not a reinsurer, we are a direct insurer, 
right, so we are actually engaging directly with the industrial 
companies that are trying to look at these different solutions. 
You know, our role is to find a way to manage the risks that 
they would be facing for such a project.
    So what we did is we combined kind of the technology 
expertise we had for our underground storage tank business with 
our traditional energy business and found a way to create a 
liability policy that we felt quite comfortable.
    Mr. Huffman. Okay. So you could figure out the cost of that 
risk, you can offer that liability policy----
    Mr. Bouchard. Yeah. We think we can, but there has not been 
a lot of, shall we say, market demand.
    Mr. Huffman. And that seems to me a very significant fact, 
and I thank you for telling us that. Because if people were 
serious about really doing this, as opposed to the feel-good 
advertisements we see on TV all the time that say that, gosh, 
Exxon is already, you know, addressing the climate crisis 
because of carbon capture and sequestration, nobody is even 
serious enough to buy an insurance policy, I think that tells 
us a lot.
    The other question I have for you is that you and your 
clients are basically picking up the externalized cost of 
decades of enormous profits from the fossil fuel industry. Do 
you have any advice--if you are advising the uninsured folks 
who are also picking up those externalized costs, and I am 
talking about governments, basically, and communities and folks 
that don't have fancy insurance policies, you are in the risk 
business, what would you advise governments to do to manage 
their risk?
    Mr. Bouchard. Looking at the form that those externalized 
costs take today, it really goes back to that protection gap 
that I cited in my testimony. It is that gap between the 
economic losses and the insured losses.
    So I think there are multiple things we can do. One is we 
can encourage more parties to not be uninsured, whether it is 
municipalities, whether it is businesses. Unfortunately, 
whether it is individuals. If you look at a typical 
catastrophic event, say, a hurricane or a large flood in the 
United States today, half of the losses go to individual 
households that are uninsured under the program today.
    So we can do a better job of expanding, you know, the tools 
that are out there today to insure many people. And then I 
would say government, and we have been talking about it this 
whole hearing, can and should be focusing on creating these 
adaptation and mitigation programs that minimize those 
externalities.
    Mr. Huffman. Should those be funded by redirecting those 
externalized costs back to those who have been able to 
externalize them so well for so many decades?
    Mr. Bouchard. Well, I think that is your job as a 
Congressman and a policymaker to determine kind of how to 
allocate funds and collect those funds, but I think there is--
as the DRRA last year shows, there is funding already available 
in some forums that can make a major impact to mitigation 
today.
    Mr. Huffman. Thank you.
    Thanks, Madam Chair.
    Ms. Castor. Excellent. Well, I would like to thank our 
witnesses for your outstanding testimony, and our members who 
are here today. I think it is clear that we need to raise the 
consciousness of the American people, businesses, and 
hardworking folks about the escalating risk in cost of the 
climate crisis and to focus on the opportunities ahead and the 
solutions. And we have some time to do this, but we don't have 
a lot of time. So I will encourage all of you to answer some 
questions that we will pose in writing to follow up.
    I would also like to let everyone know that the Climate 
Crisis Committee is going to go on the road. We are going to 
have our first field hearing starting in Colorado next week at 
the National Renewable Energy Laboratory and other folks 
focused on mitigation and adaptation and the solutions and 
opportunities for the future.
    So thank you all again.
    Without objection, all members will have 10 business days 
within which to submit additional written questions for the 
witnesses. Please respond.
    With that, the hearing is adjourned.
    [Whereupon, at 3:55 p.m., the committee was adjourned.]

United States House of Representatives, Select Committee on the Climate 
                                 Crisis

   Hearing on July 25, 2019, ``Creating a Climate Resilient America: 
          Business Views on the Costs of the Climate Crisis''

                        Questions for the Record

                             Paula DiPerna

                            Special Advisor

                           CDP North America

                       the honorable kathy castor
    1. Many companies in the European Union are capitalizing on 
climate-related opportunities. What are some of the policies the EU has 
enacted to support businesses opportunities in addressing climate 
change and how can the United States learn from these successes?
    First and foremost, the EU has set clear and coherent emissions 
reductions targets and goals consistent with the Paris Agreement. Each 
nation within the EU has its own nationally determined contribution, of 
course, but the EU overall has set reduction targets. All nations in 
the EU, therefore, are on the same ``carbon diet.'' With a clear 
horizon line for reductions, companies can make intelligent investment 
decisions about when, how and where to achieve these reductions 
consistent with these targets. In turn, this regulatory certainty 
enables a longer term planning horizon for companies, which in turn 
enables them to make investments without concern that the return on 
investment has to be too short term to show profit.
    Specifics on the EU targets can no doubt be found via the U.S. 
Foreign Service and U.S. Ambassador to the United Nations.
    Policies on the financial front are of equal interest. The EU is 
making considerable efforts to make sure that basic investment vehicles 
and standards take climate change risks into account. In France, for 
example, companies are asked to show how their investment portfolios 
align with the national reduction target and other risk-related 
assessment concerning natural resource use, inside and out of France.
    Also of considerable policy relevance is the European Commission 
High-Level Expert Group on Sustainable Finance (HI-LEG), which has 
examined and/or instituted numerous policies aimed at integrating 
climate risk considerations, and opportunities, throughout the 
investment landscape. U High-Level Working Group on Sustainable 
Finance. The final report of HILEG can be found here: https://
ec.europa.eu/info/publications/180131-sustainable-finance-report_en
    Of particular note is the move toward integrating climate risk 
through investment benchmark standards, which I referenced in my 
comments at the Select committee hearing in July 2019 To expand on 
those remarks regarding benchmarks, significant changes are underway to 
ensure the accuracy and integrity of the main categories of low-carbon 
benchmarks used in individual or collective investment portfolios by 
establishing two types of financial benchmarks: 1) EU climate 
transition benchmarks, which aim to lower the carbon footprint of a 
standard investment portfolio. More precisely, this type of benchmarks 
should be determined taking into account companies that follow a 
measurable, science-based ``decarbonisation trajectory'' by end-2022, 
in light of the long-term global warming target of the Paris agreement; 
and 2) EU Paris-aligned benchmarks, which have the more ambitious goal 
to select only components that contribute to attaining the 2+C 
reduction set out in the Paris climate agreement.
    In addition, there would be an obligation for all benchmarks or 
families of benchmarks to provide an explanation of how environmental 
factors are reflected in their investment strategy, as well as how the 
methodology aligns with the target of reducing carbon emissions.
    The intention of these benchmarks is to provide greater 
transparency and information for investors on the carbon intensity or 
``carbon risk'' or ``carbon footprint'' of a given investment option.
    Companies that do not meet the criteria for the new climate-
sensitive benchmarks will be excluded from eligibility. So, to avoid 
exclusion, no doubt U.S. public companies will try to come into 
alignment. This begs the question of why then would their not be 
comparable efforts in the U.S. so that a U.S.-based company would be 
able to meet a single set of global minimum standards, which would 
reduce uncertainty and operational dissonance, not to mention reduce 
compliance review costs.
    And disclosure regimes in the EU will track with new regulatory 
requirements, so companies will be required to disclose to the public 
and investors the degree to which their activities are aligned with the 
objectives of the above changes. Many of these requirements are 
enshrined already in the recommendations of the TCFD (Task Force on 
Climate Related Disclosure). CDP, which is a voluntary quantitative and 
qualitative global disclosure system, has aligned its annual 
questionnaire with TCFD requirements already, so companies disclosing 
to CDP, including in the US, are better prepared than others to align 
and comply with emerging requirements.
    In the US, we have no comparable coherent policy efforts that 
integrate the exigencies of climate with investment frameworks and some 
would argue this can leave U.S. companies exposed to hidden climate 
risks--not to seek out may mean not to see.
    2. Why are companies increasingly setting internal carbon prices 
and science-based targets?
    On Carbon Pricing: CDP has been tracking use of internal carbon 
prices by U.S. based companies since 2013 (https://www.nytimes.com/
2013/12/05/business/energy-environment/large-companies-prepared-to-pay-
price-on-carbon.html) Since this 2013 report, the number of companies 
using an internal carbon price has only risen. Reasons companies use 
such prices vary: 1) to comply with existing mandatory cap-and-trade or 
carbon tax regimes in jurisdictions where same apply, such as the EU; 
2) to prepare for mandatory regulation, since most far-sighted 
companies expect such regulation to occur, even if they do not press 
for it; 3) for internal planning and/or reward systems to encourage 
reductions among staff and/or budget considerations. For examples, some 
companies such as Microsoft, which pioneered internal carbon pricing, 
put each department in the company on a ``carbon diet'' and tie budget 
allocation to a department's ability to reduce its ghg emissions/unit 
of production, etc. These segmented reductions then add up to a 
company-wide reduction strategy, incentivized by an internal carbon 
price where planning occurs ``as if'' each tonne of ghg emitted carried 
a higher cost than is today visible. (For further info See link below 
to CDP Carbon pricing report, 2017)
    Most importantly, internal carbon prices are an emerging 
international financial tool and lingua franc that helps companies 
price and gauge the financial costs of inaction as well as the premium 
attached to taking action. No matter the currency or price level used, 
only carbon prices can link financial implications to the actual 
physical problem--reducing tonnage of greenhouse gases going up into 
the atmosphere. Carbon pricing is quite literally becoming the coin of 
the realm.
    Carbon prices are levied on a per tonne basis, and no matter what 
country, a tonne is a tonne is a tonne. Marrying this fixed physical 
unit to a price per that unit helps make it possible to compare 
relative costs and activities across companies, and within companies. 
And whether there are regulatory drivers that have created regulated 
carbon markets, such as in Europe with the European Union Emissions 
Trading Scheme, or in California, or in the northeast with RGGI, or 
individual state-based programs, or whether carbon pricing is purely a 
voluntary act of strategic and prudent planning, more and more 
companies are translating the language of tonnage to the language of 
costs via the mechanism of carbon pricing.
    And whereas companies may express their internal carbon prices in 
local currencies for internal planning purposes only, as regulatory 
regimes emerge worldwide, ultimately those prices will be expressed in 
international currencies and become fungible. Companies that have acted 
early on carbon pricing will have their carbon accounting well in 
order--their diet plan in hand with a good grip on what it may cost.
    Perhaps most to the post the standardized information in the CDP 
report enables investors to compare one company to another on 
environmental risk, to measure a company's progress over time, and to 
make investment decisions based on actual costs.
    The extensive use of carbon pricing by companies suggest that they 
are increasingly preparing for the demands of a low-carbon economy and 
the extraordinary opportunities inherent in shifting away from a 
negative to positive. The less emissions, the less cost.
    Through carbon pricing, the world speaks the same language and that 
can only help companies plan and be prepared for the unpredictable 
nature of climate risk, and think ahead to the significant 
opportunities that attend climate change intervention, innovation and 
technology shift.
    On Science-Based Targets: Companies are increasingly setting 
science-based targets for similar reason as internal carbon prices: to 
conform corporate energy use and emissions patterns to the realities of 
climate science and predicted extremes of weather, supply chain 
disruption etc. Since the Paris agreement itself has a broad science-
based target, complying with Paris means each company needs to manage 
its own ``slice'' of that target. Also, as noted above, various 
benchmarks and investor esg requirements are increasingly asking 
whether companies have science-based targets and the HILEG revised 
benchmarks will make science-based planning mandatory. In short, having 
a science-based target is increasingly necessary to attract investment 
in jurisdictions outside the US. Since most companies are now global, 
companies must conform to the highest standards regardless of home 
base.
    3. Can you discuss CDP's matchmaker program and provide some 
examples of these projects?
    What is Matchmaker? Matchmaker is a specialized dashboard aimed at 
illuminating to potential investors climate-change related 
infrastructure projects that likely face a funding shortfall, but which 
represent significant environmental needs. Matchmaker cities disclose 
to CDP through the CDP-Cities program, and Matchmaker deepens their 
disclosure on infrastructure needs related to climate change. Many 
cities worldwide, including in the US, seek to implement local policies 
and infrastructure projects that address climate change and build 
resilience. But these projects are often isolated from basic economic 
development planning, and also from the investor community.
    Matchmaker aims to bridge this divide. Launched in 2017, it 
provides subscribers with information on climate resilient 
infrastructure projects in cities through a specialized dashboard. 
Using data from 570 cities, collected through CDP, Matchmaker works 
with cities to highlight projects in flood control, waste management, 
sustainable transportation, renewable energy, water management, and 
energy efficiency and links them to the investment community. It serves 
as an important clearinghouse to provide cities with a streamlined 
pathway to showcase planned projects to the finance sector and better 
position them to mitigate against and adapt to climate change.
    Another way of looking at this is that the Matchmaker pipeline 
represents a visible portion of the pending demand and need for project 
funding that could be met by private, public or innovative hybrid 
sources.
    See Matchmaker Website (https://www.cdp.net/en/cities/matchmaker).
Potential subscribers include:
     Municipal banking
     Municipal bonds/municipal fixed income
     Impact/responsible investing
     Infrastructure/project finance
     Renewable energy development
     Corporate social responsibility teams
     Project developers
     Risk teams
     Credit rating agencies
Project types include:
     Renewable energy
     Energy efficiency
     Outdoor lighting
     Building retrofits
     Water management
     Stormwater retention/flood control
     Urban resiliency
     Greenspace/tree planting
     Waste management
     Waste recycling
     Urban planning/assessment
Current subscribers:
     Bank of America
     HSBC
     S&P Global
Quick facts on U.S. coverage in 2018
     United States
           314 projects from 98 cities
           161 total cities disclosed
           $15.2 billion USD pipeline
           Average project $86 million
Matchmaker events thus far in 2019:
     Washington D.C.
     Toronto
     New York
     Cleveland
     Chicago
Information on Dashboard includes:
     2018 project disclosure from disclosure cycle
     2017-2019 project disclosure from Matchmaker
     City-wide emissions
     City-wide emissions by sector
     Local government emissions
     City-wide emissions reduction targets
     Change in community emissions
     City climate change action plans
     City-wide emissions reduction activities by sector
     Renewable energy & electricity targets
     City climate hazard disclosure
     Impact of climate hazards by anticipated timescale
     City vulnerability assessments
     City adaptation plans
     City adaptation actions to reduce vulnerability by hazard 
type
     Municipal water risks
     Water adaptation actions by water risk
    Selected actual Projects * on Matchmaker dashboard from the United 
States (at 30 Aug 2019)
    * For city locations and further details, contact 
[email protected]
       sample cdp matchmaker projects--u.s. solar and water focus
     98 U.S. cities reported 314 projects worth $15.2bn seeking 
investment through the annual disclosure to CDP.
     Of the 314 projects, 58 are renewable energy projects, 51 
are energy efficiency projects, and 20 are water management projects.
     19 U.S. projects have been submitted through our more 
detailed project intake process. These projects are updated on a 
rolling basis.

----------------------------------------------------------------------------------------------------------------
                                                                       Total cost of
             Project Sector                    Status of Project       project (USD)      Project Description
----------------------------------------------------------------------------------------------------------------
Renewable energy........................  Operation.................      10,000,000  2 MW initial solar farm
                                                                                       for City electric
                                                                                       utility. There is an
                                                                                       additional 8 to 10 MW
                                                                                       opportunity on reclaimed
                                                                                       city land fill.
----------------------------------------------------------------------------------------------------------------
Renewable energy........................  Scoping...................      10,000,000  Series of solar energy and
                                                                                       energy resilience
                                                                                       investments for County
                                                                                       facilities.
----------------------------------------------------------------------------------------------------------------
Renewable energy........................  Not reported..............      10,000,000  The City already has over
                                                                                       100,000 sq.ft. of green
                                                                                       roofs and an additional
                                                                                       200,000 sq.ft. of parking
                                                                                       garage roofs, both of
                                                                                       which would be excellent
                                                                                       candidates for large
                                                                                       solar installations.
                                                                                      Very few solar arrays have
                                                                                       been installed to date,
                                                                                       but zoning ordinances
                                                                                       have been adjusted to
                                                                                       allow for them.
                                                                                      These roofs could
                                                                                       potentially provide 1
                                                                                       megawatt of power.
                                                                                      At an estimated cost of
                                                                                       $10/watt this would come
                                                                                       to $10,000,000.
----------------------------------------------------------------------------------------------------------------
Waste recycling/renewable energy........  Implementation............       8,000,000  Match funds for a waste-to-
                                                                                       energy project at the
                                                                                       Water Pollution Control
                                                                                       Plan to install a bio-
                                                                                       digester to use food
                                                                                       waste, organic fraction,
                                                                                       and other bio-solids to
                                                                                       create gas for CNG fuel
                                                                                       or to generate
                                                                                       electricity.
----------------------------------------------------------------------------------------------------------------
Waste management........................  Not reported..............       7,000,000  The City desires a biogas
                                                                                       digestion plant to reduce
                                                                                       biosolid landfilling,
                                                                                       reduce carbon emissions,
                                                                                       and creating a
                                                                                       sustainable source of
                                                                                       independent energy.
                                                                                      The City owns and operates
                                                                                       its advanced wastewater
                                                                                       treatment plant (AWWTP),
                                                                                       which processes waste
                                                                                       from the City and
                                                                                       portions of OTHER CITIES.
                                                                                       A biogas digester could
                                                                                       save up to 85% of
                                                                                       emissions, which would be
                                                                                       nearly 15,000MTON of CO2
                                                                                       mitigated.
                                                                                      Furthermore, it could
                                                                                       power nearly all of the
                                                                                       AWWTP's energy needs and
                                                                                       potentially sell energy
                                                                                       back to the grid
                                                                                       providing additional
                                                                                       revenues.
----------------------------------------------------------------------------------------------------------------
Renewable energy........................  Pre-implementation........       5,000,000  The City is looking to use
                                                                                       power purchase agreements
                                                                                       to increase solar on
                                                                                       public buildings without
                                                                                       upfront capital costs.
----------------------------------------------------------------------------------------------------------------
Energy efficiency/retrofits.............  Scoping...................       5,000,000  Municipal building
                                                                                       facility assessments,
                                                                                       retrofits and energy
                                                                                       performance contracting.
----------------------------------------------------------------------------------------------------------------
Renewable energy, energy efficiency/      Pre-implementation........       5,000,000  Installation of solar PV,
 retrofits.                                                                            battery storage and deep
                                                                                       de-carbonization/energy
                                                                                       efficiency retrofits to
                                                                                       create a Zero Net Energy
                                                                                       facility with microgrid
                                                                                       on the City's Main
                                                                                       Library. Would include
                                                                                       electrification of all
                                                                                       water heating and HVAC.
----------------------------------------------------------------------------------------------------------------
Renewable energy........................  Scoping...................       4,000,000  5 solar PV sites for a
                                                                                       total of 1.1 MW. Prefer
                                                                                       PPA arrangement with
                                                                                       buyout option. Some self-
                                                                                       financing may be
                                                                                       involved. Sites are
                                                                                       municipal facilities.
----------------------------------------------------------------------------------------------------------------
Renewable energy........................  Implementation............       4,000,000  Solar PV and battery
                                                                                       storage for the NAME
                                                                                       Water Pollution Control
                                                                                       Plant. Current project
                                                                                       funding obtained from
                                                                                       [STATE SOURCE] to create
                                                                                       1 Megawatt of power
                                                                                       generation, comprising
                                                                                       60% of the plant's
                                                                                       electricity needs. The
                                                                                       City wants to add
                                                                                       additional PV generation
                                                                                       to provide a basis for
                                                                                       microgrid (solar +
                                                                                       storage) installation.
----------------------------------------------------------------------------------------------------------------

                            references page
CDP Archives and Key Reports:
    Report on Risks and Opportunities Associated with Climate Change as 
Disclosed by Companies, 2018: https://www.cdp.net/en/research/global-
reports/global-climate-change-report-2018/climate-report-risks-and-
opportunities
    CDP Report on ESG and role of Boards of Directors/Investor 
expectations: https://6fefcbb86e61af1b2fc4-
c70d8ead6ced550b4d987d7c03fcdd1d.ssl.cf3.rackcdn.com/cms/reports/
documents/000/002/891/original/CDP-US-Report-2017-v2.pdf?1519227634
    CDP Report on Use of Internal Carbon Pricing, 2017: https://
www.cdp.net/en/climate/carbon-pricing
    CDP Report on Mainstreaming of Low Carbon on Wall Street, 2015: 
https://b8f65cb373b1b7b15feb-
c70d8ead6ced550b4d987d7c03fcdd1d.ssl.cf3.rackcdn.com/cms/reports/
documents/000/000/783/original/CDP-USA-climate-change-report-
2015.pdf?1471960506
    For further information see: www.cdp.net
    Also contact: Paula DiPerna, Special Advisor, CDP: 
[email protected]

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