Sun | Oct 2, 2022

Racquel Moses | Building climate resilience through private finance

Published:Sunday | July 10, 2022 | 12:08 AM
Racquel Moses, CEO Caribbean Climate Smart Accelerator,
Racquel Moses, CEO Caribbean Climate Smart Accelerator,
In this September 4, 2019 photo, the destruction caused by Hurricane Dorian is seen from the air, in Marsh Harbour, Abaco Island, Bahamas.
In this September 4, 2019 photo, the destruction caused by Hurricane Dorian is seen from the air, in Marsh Harbour, Abaco Island, Bahamas.
Extension Rebellion activists, with police officers in front of them, take part in a demonstration against 'Greenwashing' (an attempt to make people believe that your company or government is doing more to protect the environment than it really is) near th
Extension Rebellion activists, with police officers in front of them, take part in a demonstration against 'Greenwashing' (an attempt to make people believe that your company or government is doing more to protect the environment than it really is) near the COP26 U.N. Climate Summit in Glasgow, Scotland, November 3, 2021.
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Climate finance continues to be one of the biggest unresolved issues of global policy negotiations. Ahead of last year’s UN climate change conference (COP26), climate finance was considered the key challenge facing lawmakers – while some progress was made, communities facing the impacts of climate change were left wanting more at the conclusion of the summit. With news that COP27 will aim to make meaningful progress on climate finance, there is hope that critical projects can receive much needed funding – yet communities should not be entirely reliant on public funding.

SOURCING NEW FINANCE

Private financing through specialist institutions, NGOs, or philanthropic organisations emerged as legitimate climate-finance providers during COP26 and have continued to provide much needed economic support to sustainability programmes. A recent World Economic Forum report highlights that emerging markets require almost $95 trillion to transition to a net zero carbon economy, a price tag that explains the lack of movement from major economies meant to support the transition of developing nations. There is clearly a gap in supply and demand for finance, and as the Caribbean Climate-Smart Accelerator has identified, there is growing interest from across the private sector to improve the resilience of communities at the front lines of the climate crisis.

“Encouraging investment in emerging markets can prove difficult,” explains Bill Withers, the group chief executive officer of Standard Chartered Bank, “Of the $94.8 trillion needed, there is an estimated $83 trillion opportunity for private investors. The world’s top 300 investment firms, with total assets under management of more than $50 trillion, have just two, three, and five per cent of their investments in the Middle East, Africa, and South America, respectively. Encouraging more private investment could help emerging markets transition while also increasing growth. If investors help fund a just transition, household consumption in emerging markets could be up to 4.5 per cent higher on average each year between now and 2060, with emerging market GDP 3.1 per cent higher on average each year in the same period.”

This means that private finance would not just provide needed resilience-building across emerging economies, but also lead to long-term growth. Combined with funding through public sources, like that being discussed at COP26 and the upcoming COP27 or via other multilateral agreements, this can ensure that island communities adapt to climate change. Adaptation is beyond a matter of survival or in the best interest of the region, it is, but it also avoids the medium-term consequence of additional economic and climate migrants seeking refuge in the developed world if their home countries become uninhabitable.

FUNDING AND COLLABORATION

While innovative opportunities are available to fund the solutions needed for our communities, there are two missing components critical to enacting them: patient external philanthropic capital and collaboration that leads to the creation of economies of scale within the region. We need transparency and visibility in global climate finance and greater collaboration at every level - local, regional, and international. There must be more communication and collaboration between stakeholders, including philanthropists.

The Caribbean has a range of opportunities available to create the world’s first climate-smart zone, including the Caribbean Single Energy Export Market, developments within the Blue Economy, or world-leading innovations – the region is well positioned to be a blueprint for a sustainable future. Although it is a future we must create for ourselves, it is also one in which the primary beneficiaries need to be the region that is taking on the burden without the financial benefit from the industrial revolution. We have to train ourselves to capitalise on the opportunities that are emerging.

None of us has the luxury of waiting for the yearly UN climate summits, especially Caribbean communities, to determine the amount of financial support that will be made available. The longstanding international negotiations are complex as the effects of climate change continue to impact the 44 million people living in the Caribbean – we must act ourselves, and we must do so now. Discussions held at the Caribbean Renewable Energy Forum (CREF), the Caribbean Investment Forum (CIF), and the Global Business Forum (GBF) are promoting collaboration within the region and with other international organisations.

PRIVATE SECTOR-LED CHANGE

These events showcase the willingness of decision-makers to find local sustainable solutions and encourage innovative financing opportunities from the private sector, but challenges still remain. Resilience-building of our communities is a long-term investment. The private sector is available to invest when the projects are properly prepared and can yield a commercial return. What we need is external capital to derisk, prepare, and make projects more commercially attractive for local investors. Caribbean innovation will lead the region to become the world’s first climate-smart zone, but we need more collaboration and more patient external capital that is more risk tolerant to fund the transition. We need more support that is less opportunistic but instead focused on our growth and development and the long-term benefit of the region - from the grass roots to the highest levels of government, we must collaborate more frequently and efficiently.

Racquel Moses is the CEO of Caribbean Climate-Smart Accelerator. Send feedback to columns@gleanerjm.com.