The Caribbean Community (CARICOM) Committee of Central Bank Governors Wednesday said it had entered into an agreement with the International Finance Corporation (IFC) that will allow Caribbean people to benefit from new climate friendly projects.
It said that the agreement will allow for the development of a regional green finance taxonomy that will pave the way for greater investment in climate-friendly projects and help drive more inclusive and sustainable economic growth.
Under the agreement, CARICOM Committee of Central Bank Governors and the IFC, a member of the World Bank Group, will work together to develop guidelines and parameters to clearly define green assets.
The central bank governors said that the new taxonomy will deepen climate finance options in the English-speaking Caribbean, encouraging more lending and investment to support each country’s climate mitigation and adaptation goals, and boost green jobs creation.
“This partnership with IFC represents a pivotal moment for the Caribbean’s financial resilience and climate adaptation efforts. While our region contributes less than one per cent to global greenhouse gas emissions, we face dipropionate climate impacts,” said Dr. Kevin Greenidge, Governor of the Central Bank of Barbados and chairman of the CARICOM Committee of Central Bank Governors.
“By establishing clear green finance guidelines, we’re creating the infrastructure needed to channel more private capital toward climate-resilient projects, from renewable energy systems to hurricane-resistant infrastructure.
“This taxonomy will help our financial institutions better assess and fund the green investments our economies desperately need to build back better and stronger after each climate shock,” he added.
IFC Regional Manager for the Caribbean, Ronke-Amoni Ogunsulire, said as rising sea levels and increasingly frequent extreme weather events threaten lives and livelihoods, Caribbean Small Island Developing States(SIDS) face a climate finance gap of nearly U$55 billion by 2030.
“A robust private sector and deeper climate finance markets are essential to supporting the region’s adaptation efforts and unlocking a sustainable future for its people. We are proud to partner with CARICOM in this critical endeavor”.
The project, carried out by IFC’s Financial Institutions Group Advisory Services unit for Latin America and the Caribbean in collaboration with IFC’s Country Advisory and Economics team, will align with international best practices and market standards, serving as a foundation for resilient green finance ecosystems across the region.
As part of the initiative, IFC and CARICOM will engage key stakeholders, such as financial institutions, regulators, and supervisory bodies, to ensure the taxonomy is informed by the local context.
The English-speaking Caribbean is highly vulnerable to climate change risks such as hurricanes, rising sea levels, and droughts, which harm biodiversity-rich ecosystems and livelihoods.
The region’s economy, heavily dependent on climate-sensitive sectors, for example, the tourism sector , which represents around 13.9 per cent of GDP in the Caribbean, loses an average of 3.6 per cent of GDP annually due to natural hazards.
In spite of their small carbon footprint, countries in the English-speaking Caribbean face heavy debt from frequent extreme weather recovery costs. The region’s debt-to-GDP ratio was 77 per cent at the end of 2023, exceeding safe debt-limits.
“Moreover, high exposure to external macroeconomic shocks complicates disaster management and limits fiscal space for development initiatives. Strengthening climate finance mechanisms is therefore not just a priority, it is a necessity for resilience and sustainable growth,” the centra bank governors added. (CMC)