Climate Bonds Resilience Programme

What is Resilience?

According to the Sixth Assessment Report published by the Intergovernmental Panel on Climate Change (IPCC), approximately 3.3–3.6 billion people live in areas highly vulnerable to climate change, with both ecosystems and individuals increasingly exposed to severe climate hazards. As climate change intensifies, there is a growing imperative to channel financing from capital markets towards bolstering climate resilience. The United Nations Environment Programme (UNEP) estimates that by 2030, the financing needs for physical adaptation and resilience in developing countries could soar to as much as USD 387 billion annually, with global adaptation and resilience finance requirements surpassing these figures significantly.

While public sector financing is insufficient to meet the capital requirements alone, there is more than enough private capital in the world to fund the necessary transition to more resilient societies. We simply need to get it flowing in the right direction.

The sustainable debt market, with its variety of thematic labels, has emerged as a prominent vehicle for channelling demand from capital market investors toward financing of climate action. More than USD4.2tn of green, social, sustainability, and sustainability linked (GSS+) debt have been issued to date and this number is expected to continue to exponentially grow.

However, financial instruments clearly designed and labelled to support resilient investments are still scarce. A major barrier is the absence of clear, evidence-based definitions of what constitutes a resilience investment. By providing the market with clear definitions and rulesets, the current universe of investments that are eligible for inclusion into green and other thematically labelled bonds can be expanded to include those that build resilience. This expansion will include not only investments that reduce the direct physical impacts of climate change (e.g., flood barriers, early warning systems, etc.) but also investments that address the underlying vulnerability of people and ecosystems to climate change (e.g., healthcare, housing, gender equity, deforestation, etc.).

 

How Resilience can expand the sustainable investing universe:

Climate Bonds Initiative has pioneered a taxonomy-based approach to best-practice sustainable investing for over a decade. The development of the Climate Bonds Resilience Taxonomy (CBRT) is just one of several key levers for mobilising finance for climate resilience that Climate Bonds is pursuing as part of its Global Resilience Programme.

This taxonomy will promote a more consistent, transparent, and systematic approach to defining and identifying such investments, and will expand the opportunity for green investing. Investors will easily envisage which assets are fit for the future and the public and private sector can reap the capital they need to make its projects and assets climate resilient.

The CBRT development will be guided by inputs of the Resilience Taxonomy Advisory Group (RTAG) and Thematic Working Groups (TWGs).

 

The Foundations: Resilience Taxonomy White Paper

With support from the United Nations Disaster Risk Reduction (UNDRR) Agency, Climate Bonds published in June 2023 a White Paper on Developing a Climate Resilience Classification Framework, which sets out a blueprint for the development of the Climate Resilience Taxonomy, including a proposal for the:

• Context and rationale for the development of the CBRT
• Proposed thematic structure and priorities for the CBRT
• Parameters to guide the population of the CBRT including use cases, screening and eligibility criteria, and go-to-market considerations

This provided the launchpad for advancing on the CBRT underpinning concepts and convening the RTAG, with the objective of further developing definitions, concepts and rulesets.

This initiative has Cadlas as technical partners for the CBRT development process. Download the White Paper here.

Download the White Paper here.

 

The Resilience Programme Steering Group

Launched on November 2023, the Resilience Programme Steering Group brings together senior representatives from notable international organizations. This collaborative effort supports the Global Resilience Programme led by the Climate Bonds Initiative.

The group is composed by institutions who share a common vision of urgently scaling up capital market investments in climate resilience. Its role is to guide the design, resourcing, implementation, and evaluation of the Global Climate Resilience Programme. It provides strategic advice on objectives, stakeholders, and outcomes, and advises on monitoring and evaluation strategies.