To tackle the climate crisis, finances need to go hand in hand with action

All countries are vulnerable to the impacts of a changing climate. But their vulnerabilities are very different, with varying consequences on people, economics and the environment, writes Jorge Moreira da Silva.

Jorge Moreira da Silva is UN Under-Secretary-General and Executive Director of UNOPS, the United Nations Office for Project Services.

For the Small Island Developing States (SIDS), climate change and debt are two key challenges – both of which are getting more interconnected and more intense in our current circumstances.

Home to roughly 65 million people, SIDS is particularly vulnerable to the impacts of the climate crisis, even though they contribute less than 1 per cent of all global greenhouse gas emissions.

Their smallness, geographic remoteness and vulnerability to environmental threats pose particular challenges to the development of these islands. Poor connectivity and high transportation costs hinder competitiveness and reduce their participation in international markets. And so they face greater risks to their economies, livelihoods and food security.

In 2017, for example, Hurricane Maria resulted in damages that were over 200% of the GDP in Dominica. Sadly – this happened only two years after the country had sustained massive damage due to an earlier hurricane, which wiped out 96% of its GDP.

In another tragic example in 2017, Hurricane Irma, which left a trail of destruction across the Caribbean, destroyed 90 per cent of all infrastructure on the island of Barbuda, leaving approximately 50% of the population homeless.

On top of this, SIDS face the additional challenge of a more expensive response to the disaster. It costs them more to borrow money. And they face prohibitively high infrastructure costs.

Most SIDS cannot access cheaper finance set aside for lowest-income countries – because their income disqualifies them from such loans as things currently stand. Simply, our current financial structures do not consider their multiple vulnerabilities.

The struggles of SIDS are another reminder that to help support sustainable development for everyone, our world needs an overhaul of the global financial structure.

The Summit for a New Global Financing Pact – held this week in Paris – is an excellent opportunity to bring together the right actors from around the world to address the financing issues for sustainable development.

Research from 2022 showed that while all SIDS together only received US$1.5 billion in climate finance between 2016 and 2020, 22 SIDS paid more than US$26.6 billion to their external creditors during the same period. This is almost 18 times as much, which speaks of the imbalances in development finance that this week’s Summit aims to address. 

There is no doubt that the injustices of our international financial architecture must be urgently addressed. But as those conversations go on – we also need to focus on the question of implementation.

For SIDS – the climate crisis is an existential question – so it is urgent that we ask ourselves how we can translate conversations into action on the ground.

How can we work better together to deliver climate change mitigation and adaptation efforts – if and when the funding is in place – to achieve high-quality results?

The volume and the quality of public spending are equally important for SIDS and for all developing countries to build resilience in the time we still have.

The organisation that I lead – UNOPS – has a focus on project implementation, with particular expertise in infrastructure and procurement. Over the years, we have worked hard with our partners in SIDS to help deliver sustainable development. This includes supporting better access to renewable energy, water and waste management, marine protection, and health procurement.

We work with governments to strengthen national long-term infrastructure planning, and in the wake of the COVID-19 pandemic, we supported SIDS partners in their efforts to respond and recover.

That experience has proved to us time and time again that infrastructure’s key role in promoting sustainable development in SIDS. Infrastructure’s role in climate change adaptation is key to a resilient future for SIDS and deserves far more attention than it currently receives. In fact – infrastructure is simply vital to the SIDS’ battle for survival.

In the face of recurring shocks, the need for long-term infrastructure planning and decision-making at the national level is key. Infrastructure projects are costly and long-lasting, and it is crucial that governments make investment decisions based on evidence of what works. In places like Saint Lucia & Curaçao UNOPS works together with governments to provide such support, while helping develop resilient infrastructure.

A key focus of the Paris summit is how countries use climate investments to facilitate the transition to renewable energy sources. Most SIDS benefit from renewable energy sources, but far more needs to be done to help SIDS accelerate their clean energy transition.

Similarly, we know that digital connectivity remains a severe challenge for many, particularly those in remote or isolated communities. Closing the connectivity gap will have a positive impact on many development outcomes, from improving health and education to increasing resilience, improving income opportunities and more effective disaster risk reduction.

Crucially, we must look beyond SIDS vulnerabilities and identify opportunities to transition to blue economies, ensuring better stewardship of ocean resources by linking sustainable use and economic growth.

Reforms to the global financial systems can’t come soon enough, to allow developing countries – including SIDS – to effectively respond to the climate crisis and bring sustainable development. The time to plan this is now or never.