BRIDGETOWN, Barbados, CMC – 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 stated that the agreement will enable the development of a regional green finance taxonomy, paving the way for increased investment in climate-friendly projects and fostering more inclusive and sustainable economic growth.
Under the agreement, the CARICOM Committee of Central Bank Governors and the IFC, a member of the World Bank Group, will collaborate to develop guidelines and parameters that clearly define green assets.
The central bank governors stated that the new taxonomy will enhance climate finance options in the English-speaking Caribbean, encouraging more lending and investment to support each country’s climate mitigation and adaptation goals and promote the creation of green jobs.
“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 percent 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 that as rising sea levels and increasingly frequent extreme weather events threaten lives and livelihoods, Caribbean Small Island Developing States (SIDS) face a climate financial gap of nearly US$ 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, undertaken 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, providing a foundation for resilient green finance ecosystems across the region.
As part of the initiative, IFC and CARICOM will engage key stakeholders, including financial institutions, regulators, and supervisory bodies, to ensure that the local context informs the taxonomy.
The English-speaking Caribbean is highly vulnerable to climate change risks, including hurricanes, rising sea levels, and droughts, which harm biodiversity-rich ecosystems and the livelihoods of its inhabitants.
The region’s economy is heavily dependent on climate-sensitive sectors, such as the tourism sector, which accounts for around 13.9 percent of GDP in the Caribbean. This sector loses an average of 3.6 percent of GDP annually due to natural hazards.
Despite their small carbon footprint, countries in the English-speaking Caribbean face significant debt due to the high costs of recovering from frequent extreme weather events. The region’s debt-to-GDP ratio was 77 percent 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 central bank governors added.
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