Category: Climate Finance

How climate change can be addressed through executive compensation

How climate change can be addressed through executive compensation

By Nidia Martinez, Director of Climate Risk Analytics, Willis Towers Watson’s Climate and Resilience Hub and Ryan Resch,Managing Director, Executive Compensation (Toronto), Willis Towers Watson

  • One of the most useful tools in prompting leaders to address climate change is via compensation and incentive programmes.
  • Our research shows more boards will be linking relevant climate action measures to executive incentive plans over the next few years.
  • Lack of standardised climate change metrics is holding back the wider adoption of including climate action in executive compensation.

Environmental, social and governance (ESG) issues are increasingly becoming incorporated across all aspects of organizations, including business strategies, operations and product/service offerings.

Recent global research of boards of directors by Willis Towers Watson found that 70-80% of respondents have identified ESG priorities and developed ESG implementation plans. However, only 48% have fully incorporated ESG into their businesses, indicating that organizations are at different stages in their ESG journeys. While the most cited reason for taking ESG actions is that they see it as the right thing to do, over three-quarters (78%) of respondents indicate that they believe ESG is a key contributor to strong financial performance.

Though many organizations have adopted ESG principles, executives and boards could do more to meet the demands of institutional investors, customers, employees and other stakeholders especially in regard to climate change risk.

Some 41% of respondents ranked the environment – including climate change – as their leading ESG priority now; and 43% anticipated it will remain number one in three years.

A particularly effective way to advance ESG principles is through redefining responsible leadership. And one of the most useful tools in prompting leaders to address climate change and make their organizations more sustainable is through compensation and incentive programmes, and the incorporation of new climate-action metrics into such programmes.

Rising demand for sustainable solutions

The drive to make companies more climate resilient and sustainable started with institutional investors, which have long been aware of climate risk. Consumer awareness, likewise, has grown significantly as climate change becomes more apparent in their daily lives amid news stories about extreme weather, such as wildfires.

Many consumers are now more conscious than ever when choosing brands whose policies meet their own interests. For some, this attitude carries over as a factor in the companies they choose to work for, further encouraging organizations to incorporate climate action and sustainability, among other ESG criteria, to help attract and engage the best talent.

Despite this backdrop, many boards have not incorporated climate awareness into their organizations yet. Analysis of company public disclosures conducted by Willis Towers Watson shows that while approximately 11% of the top 350 European companies have CO2 emissions linked to their incentive plans, only 2% of US S&P 500 companies have it.

As we look forward, nearly four out of five (78%) survey respondents plan to change their use of ESG priorities in executive incentive plans over the next three years, with 40% looking to introduce ESG measures into long-term incentive plans and nearly one-third looking to increase the prominence of environmental measures.

Executives acknowledge need for climate action

Despite the lack of environmental and climate metrics in executive compensation and rewards programmes, executives acknowledge the need to address climate risk.

According to a 2019 survey by the United Nations (UN) and Accenture, 71% of CEOs believe that — with increased commitment and action — business can play a critical role in contributing to the UN’s Sustainable Development Goals. Yet only 48% of CEOs are implementing sustainability into their operations, which is consistent with the findings from Willis Towers Watson’s research as noted earlier.

Our research found that the most common challenges cited when incorporating ESG metrics into executive compensation plans include setting targets (52%), identifying (48%) and defining (47%) performance metrics, and establishing time periods to affect meaningful change (35%).

Given these responses, it is fair to assume that the lack of standardised climate change metrics is holding back the wider adoption of including climate action in executive compensation. Furthermore, every business has a measurable carbon footprint. Therefore, boards can make reducing that footprint — with the ultimate goal of reaching carbon neutrality — a metric for their organizations and incorporate it into executive compensation.

Since every industry is different, the metrics to incentivise climate action need to be customised by sector, as highlighted through the industry-specific standards provided by the Sustainability Accountability Standards Board or other climate change disclosure frameworks such as the Task Force on Climate-related Financial Disclosures (TCFD).

As organizations refine their climate change strategies and disclosures, they can then start to consider the linkages to their executive compensation programmes.

Multiple ways to link executive pay to climate action

As indicated by our research, more boards will be linking relevant climate action measures to executive incentive plans over the next few years. There are a few ways to make the connection, ranging from underpins, to modifiers, to short-term incentive (STI) plans, to key performance indicators (KPIs) within long-term incentive (LTI) plans, to standalone hyper-long-term incentive plans.

  • An underpin (or minimum funding threshold) is most appropriate in the case of a company with meaningfully high CO2 emissions that newly introduces climate sustainability metrics. It should include a threshold or basic level of CO2 emissions that is required for some of the payout under other incentive plan metrics to occur.
  • An individual performance rating modifier can be tailored to an individual’s role and improve line-of-sight for more qualitative or strategic climate change objectives, but it may not promote collaboration by participants to achieve a common material goal.
  • Plan modifiers are standalone metrics that consider the “how” and the “what”. A modifier allows for the entire STI or LTI award payout to be increased or decreased by a certain percentage. If the underlying target is met, then no modification would be made and the underlying STI or LTI award would be made based on the other metrics.
  • KPIs provide a direct measure that reinforces the importance of climate change and usually are easily communicated, quantifiable objectives. A more highly weighted metric requires clear linkages to funded metrics, but the KPI needs to have a material weighting to demonstrate its importance to plan participants and external stakeholders.
  • KPIs in LTI plans introduce standalone climate change metrics that are most appropriate if there is a longer time horizon to produce measurable results (e.g. carbon emission reductions). A drawback, however, is the length of performance period may dilute momentum to achieve sustainability results, which are the key drivers of LTI plan performance, and could de-emphasize financial/market performance.
  • Standalone incentive plans are separate from other incentive plans, with the sole purpose of measuring sustainability performance and reducing climate risk (e.g. a hyper-long term that aligns with the sustainability strategy). Such plans encourage participants to take a longer-term view of performance, but they may be difficult to communicate or viewed as duplicative of other incentives.

Because most CO2 emission reduction targets tend to have longer-term horizons, the typical annual and three-year incentives may not be directly aligned with these goals. Nonetheless, even short-term incentives can have a significant impact in terms of corporate culture. But to encourage longer-term decision making (e.g. a target period of 10 years) often associated with large capital investments, and to emphasize its prominence, companies could introduce a separate, hyper-long-term incentive plan focused solely on CO2 emission reductions.

Modern incentive plans are based on time as a constant (i.e. one- or three-year performance periods) and performance as a variable (i.e. achievement of threshold, target, stretch goals). However, a hyper-LTI could allow a different variation, in that the performance goal could be treated as constant (e.g. CO2 emission reduction of 50%) and time could be treated as the variable. Thus, encouraging early achievement of goals via incentive upside, and conversely punishing delayed achievement of CO2 reduction targets with an incentive downside.

Implementing such incentive arrangements may not be straightforward. Companies will need to consider whether and how best to rebalance other components of pay, how to deal with disclosures of mega-LTI grants, and ensure that targets are sufficiently stretched so that proxy advisors do not perceive these plans to have soft targets as way of boosting executive pay. Large institutional investors have supported proposals for long-term alignment between CO2 emissions and incentives, provided that the quantum and opportunity are properly calibrated, and mechanics are carefully laid out.

What’s the World Economic Forum doing about climate change?

Climate change poses an urgent threat demanding decisive action. Communities around the world are already experiencing increased climate impacts, from droughts to floods to rising seas. The World Economic Forum’s Global Risks Report continues to rank these environmental threats at the top of the list.

To limit global temperature rise to well below 2°C and as close as possible to 1.5°C above pre-industrial levels, it is essential that businesses, policy-makers, and civil society advance comprehensive near- and long-term climate actions in line with the goals of the Paris Agreement on climate change.Global warming can be beaten thanks to this simple plan

The World Economic Forum’s Climate Initiative supports the scaling and acceleration of global climate action through public and private-sector collaboration. The Initiative works across several workstreams to develop and implement inclusive and ambitious solutions.

This includes the Alliance of CEO Climate Leaders, a global network of business leaders from various industries developing cost-effective solutions to transitioning to a low-carbon, climate-resilient economy. CEOs use their position and influence with policy-makers and corporate partners to accelerate the transition and realize the economic benefits of delivering a safer climate.

Contact us to get involved.

To convince sceptics, focus on the bottom line

For boards and management that are a little more suspect of climate sustainability, consider the fact that climate-related measures can provide a return on investment through reduced energy consumption and waste in addition to the goodwill of stakeholders like investors, customers and employees.

As the World Economic Forum’s January 2019 publication on effective climate governance for boards sets out, monetary incentives for senior management teams should be tied to long-term organizational goals that contribute to resilience and prosperity over time. There is little to prevent linking climate-risk and opportunity-related factors to compensation if they are material to an organization’s long-term sustainability, value creation and risk mitigation.

Executive compensation has always been an effective tool to foster innovation. Now we must marshal its power to encourage the march toward a climate resilient future.

Cover photo by Markus Spiske on Unsplash.
This article was originally published by the World Economic Forum. View the original article here.
Climate chaos batters global insurance industry

Climate chaos batters global insurance industry

By Kieran Cooke

The climate crisis is exacting a rising price from the worldwide insurance industry, a relief and development agency says.

LONDON, 11 January, 2021 – The economic cost of the climate crisis keeps on rising, as the world’s insurance industry is now acutely aware. As the world digests the news that 2020 was the joint hottest year on record, two reports attempt to assess how many billions of dollars are being lost as a result of an ever-warming planet.

Christian Aid, the UK and Ireland-based charity, lists what it considers to be the 15 most serious climate-related disasters in 2020, and seeks to quantify them in financial terms.

“Covid-19 may have dominated the news agenda in 2020, but for many people the ongoing climate crisis compounded that into an even bigger danger to their lives and livelihoods”, says Christian Aid.

Six of the ten most costly disasters happened in Asia, many of them associated with an unusually prolonged and wet monsoon season. The charity estimates that floods in China cost US$32 billion, while extended rains in India cost US$10bn. Cyclone Amphan, which in May hit the Bay of Bengal region – one of the world’s most densely populated areas – caused losses valued at US$13bn.

“Covid-19 has an expiry date, climate change does not, and failure to ‘green’ the global economic recovery now will increase costs for society in future”

In Africa, unusually heavy rains and changing wind patterns are considered to have been the main factors behind devastating infestations of locusts, which caused an estimated US$8.5bn of damage to crops in Kenya and other East African countries.

In its latest update on locust breeding and movement patterns, the UN’s Food and Agriculture Organisation warns that swarms are likely to continue devastating crops across the Arabian peninsula and in East Africa in the weeks ahead.

Christian Aid says its calculations of financial losses resulting from climate crisis-related events are likely to be an underestimate. “Most of these estimates are based only on insured losses, meaning the true financial costs are likely to be higher”, the report says.

Insurance is a very unequal business: much of the property and economic infrastructure of the developing world is not insured, with the bulk of cover being in the US, Europe and other leading economies.

Australian toll

Swiss Re is one of the world’s biggest insurance groups. Its preliminary estimate of global insurance losses as a result of both what it terms natural catastrophes and man-made disasters in 2020 amounts to US$83bn, up 40% on the previous year. A large chunk of those losses resulted from claims related to extreme weather events in the US.

“Losses were driven by a record number of severe convective storms (thunderstorms with tornadoes, floods and hail) and wildfires in the US”, says Swiss Re. Wildfires in Australia were another contributing factor.

The group says climate change is likely to exacerbate what it calls secondary peril events, as more humid air and rising temperatures create extreme weather conditions, which in turn will result in more frequent wildfires, storm surges and floods.

“While Covid-19 has an expiry date, climate change does not, and failure to ‘green’ the global economic recovery now will increase costs for society in future”, says Jerome Jean Haegeli, Swiss Re’s chief economist– Climate News Network

This article was originally published on The Climate News Network.
Cover photo by Iwoelbern, via Wikimedia Commons.
Online event: Building climate resilience through insurance: Lessons from the InsuResilience Investment Fund’s first six years

Online event: Building climate resilience through insurance: Lessons from the InsuResilience Investment Fund’s first six years

The InsuResilience Investment Fund (IIF) is hosting an event at this years’ InsuResilience Global Partnership Annual Forum. The virtual side event “Building climate resilience through insurance: Lessons from IIF’s first six years” will take place on the 10th of December 2020 at 15:15 – 16:30 CET.

In addition to the side event, IIF will participate on Day 4 of the Annual Forum. Maria Teresa Zappia, Chief Impact & Blended Finance Officer of the IIF Fund Manager BlueOrchard Finance, will participate in a panel discussion on “Impacting lives”.

Learn more about the event below and register today to guarantee your place.

Session description

How can we mobilize private finance to achieve real and lasting impact through offering climate insurance in developing countries? Join the IIF for a stimulating discussion to learn from its experience after six years of building climate resilience through climate insurance in Africa, Asia, Latin America and the Caucasus.

On the day that the IIF launches its new report “Protecting low-income communities through climate insurance: Achievements from the InsuResilience Investment Fund” authored by IIF, Acclimatise and Climate Finance Advisors, the panel will discuss how the IIF has used a blended finance approach to direct private capital towards building climate resilience through insurance. We will hear directly from two of IIF’s investees about how the Fund‘s investment and support has helped them to launch and grow climate insurance products, in Nigeria and in Pakistan.

The panel also includes representatives from IIF’s fund managers as well as its public and private investors, who will provide insights into how the IIF has raised USD 167 million and invested USD 133 million in 21 companies from across the insurance value chain. Through its unique model, the IIF has extended climate insurance cover to 25 million poor or climate vulnerable people in developing countries.

The session will give participants the opportunity to learn about the IIF’s strategic approach to developing an emerging ecosystem of insurance entities in developing countries and delivering real resilience benefits to poor and climate vulnerable people, and at the same time, delivering value for its investors.

The panel: Moderated by Lea Mueller, Head of Consulting at CelsiusPro, the panel will include:

  • Stefan W. Hirche is Principal Portfolio Manager at KfW, Germany
  • Chukwuma Kalu, Head, Agric Insurance & Emerging Business, Royal Exchange General Insurance Co. Ltd, Nigeria
  • Qasim Raza, Associate Principal, Investment Team, Open Society Foundation, UK
  • Zainab Saeed, Head of Research & Development at Kashf Foundation, Pakistan
  • Maria Teresa Zappia, Chief Impact & Blended Finance Officer, Deputy CEO BlueOrchard Finance, Switzerland
Climate risk disclosure picks up steam: Roundup of developments in UK, US, Australia, and New Zealand

Climate risk disclosure picks up steam: Roundup of developments in UK, US, Australia, and New Zealand

By Robin Hamaker-Taylor

Late summer 2020 has seen a flurry of activity relating to climate risk disclosure requirements, frameworks and consultations, with several milestone announcements and in the last few weeks from Australia, the US, and New Zealand in particular. We bring these announcements together here, as well as highlight a UK consultation on climate risk governance and reporting in pension schemes, closing 7 October 2020.


On September 14th, a set of guidelines on physical climate risk assessment and disclosure was launched in Australia by The Climate Measurement Standards Initiative (CMSI). The CMSI is an Australian industry-led collaboration established to assist with, and support, climate-related financial disclosures. CMSI involves insurers, banks, scientists, reporting standards professionals, service providers and supporting parties.

The CMSI has recommended financial disclosure guidelines and developed scientific scenario specifications for the purpose of disclosure of scenario analyses for climate-related physical damage to buildings and infrastructure. The open-source guidelines are voluntary, and provide Australian banks, financial institutions and insurers with robust scientific and technical information on how to assess the risk of climate-related damage associated with a set of acute and chronic risks. The guidelines aim to allow Australian firms to determine their physical risks from these extreme events in a credible and consistent way, and to disclose physical risks under the TCFD recommendations. Importantly, this guidance sets out a potential framework for regulation of climate risks, should regulators decide to mandate disclosures in Australia.

Involved parties include: QBE, Suncorp, IAG, RACQ, NAB, Westpac, Commonwealth Bank, HSBC Australia, Munich Re, Swiss Re, Leadenhall CP, MinterEllison and Investor Group on Climate Change. The new CMSI guidelines can be downloaded here.

New Zealand

All eyes were on New Zealand this month as well, when the Government announced plans to make climate-related financial disclosures mandatory for certain firms, on 15 September. The Cabinet agreed to introduce a mandatory regime through an amendment to the 2013 Financial Markets Conduct Act. Disclosures would be required from around 2023, if approved by Parliament, on a ‘comply-or-explain’ basis. At present, around 200 entities in New Zealand would be required to produce climate-related financial disclosures in line with the TCFD recommendations:

  • All registered banks, credit unions, and building societies with total assets of more than $1 billion;
  • All managers of registered investment schemes with greater than $1 billion in total assets under management;
  • All licensed insurers with greater than $1 billion in total assets under management or annual premium income greater than $250 million;
  • All equity and debt issuers listed on the NZX; and
  • Crown financial institutions with greater than $1 billion in total assets under management.

Read more about this announcement on the New Zealand Government website, which provides links to useful climate risk assessment guidance documents, such as those from the IIGCC and UNEP FI.  

United States

There is emerging evidence that key organisations in the United States are starting to understand climate risk as a financial risk. Specifically, the US Commodity Futures Trading Commission (CFTC) released a report on 9 September 2020, entitled: Managing Climate Risk in the U.S. Financial System. The report, produced by the Climate-Related Market Risk Subcommittee of the Market Risk Advisory Committee is the first of-its-kind effort from a US government entity.

The work was instigated by CFTC Commissioner Behnam, and comes after the CFTC announced in 2019 that a climate sub-committee of the Commission on climate risk would be established. Commissioner Benham recognised the global progress toward climate risk supervision, not least by the network of 60+ central banks and supervisors (known as the NGFS) who are sharing best practice on the matter. The US is not yet a member of the NGFS, and though some states, private sector actors and financial institutions have been assessing and disclosing climate risks, the federal government progress on this is sluggish.  

The report brings together a set of over 50 recommendations to mitigate the risks to financial markets posed by climate change. Though regulation of climate risk and mandated disclosure is perhaps a ways off in the US, and in many other countries, this landmark report could help pave the way for improved oversight of climate risks, in particular as the report finds that Existing statutes already provide U.S. financial regulators with wide-ranging and flexible authorities that could be used to start addressing financial climate-related risk now. The full report can be downloaded here.


In late August, the UK Department for Work and Pensions (DWP) put out a consultation which seeks views on policy proposals to require trustees to address climate risks and opportunities. In particular, this would be for trustees of larger occupational pension schemes and authorised schemes. It also invites responses on proposals to disclose these in line with the recommendations of the international industry-led Task Force on Climate-related Financial Disclosures (TCFD).

It is proposed that among the activities required would be calculating the ‘carbon footprint’ of pension schemes and assessing how the value of the schemes’ assets or liabilities would be affected by different temperature rise scenarios, including the ambitions on limiting the global average temperature rise set out in the Paris Agreement. The disclosures would be required to be made publicly available, referenced from the schemes’ Annual reports and Accounts, and pension savers informed of the availability of the information via their annual benefit statement.

The consultation closes on 7 October 2020, and more information on responding to the consultation can be found here.

Cover photo by Dan Freeman on Unsplash.

How banks are trying to capture the green transition

How banks are trying to capture the green transition

By Tomaso Ferrando and Daniel Tischer

Private sector banks in the UK should have a central role in financing climate action and supporting a just transition to a low carbon economy. That’s according to a new report from the Grantham Research Institute at the London School of Economics.

Framed as a strategic opportunity that climate change represents for investors, the report identifies four specific reasons why banks should support the just transition. It would reinforce trust after the financial crisis; it would demonstrate leadership; it would reduce their exposure to material climate risks; and it would expand their customer base by creating demand for new services and products.

The report is not alone in its attempt to put banking and finance at the centre of a green and just transition. Similar arguments are presented by the World Bank, by the European Union, and by many national task forces on financing the transition, including the UK’s.

In all these cases, banks and financial markets are presented as essential allies in the green and just transition. At the same time, the climate emergency is described as a chance that finance cannot miss. Not because of the legal duties that arise from international conventions and the national framework, but because banking the green transition could help reestablish public legitimacy, innovate and guarantee future cashflow.

Twelve years after the financial crisis, we may be aware that banks and finance were responsible for the intensification of climate change and the exacerbation of inequality, but such reports say our future is still inexorably in their hands.

Is there no alternative to climate finance?

Four decades on from British prime minister Margaret Thatcher’s infamous motto that There Is No Alternative to the rule of the market, the relationship between financial capital and the green and just transition is presented as universal and inevitable. However, a vision of the future is a political construction whose strength and content depend on who is shaping it, the depth of their networks and their capacity transform a vision into reality.

Nick Beer / shutterstock
UK banks haven’t recovered their reputation since the financial crisis.

In the case of climate finance, it seems that a very limited number of people and institutions have been strategically occupying key spaces in the public debate and contributed to the reproduction of this monotone vision. In our ongoing research we are mapping various groups involved in green financial policymaking: the EU’s High-Level Expert Group on Sustainable Finance and its Technical Expert Group on Sustainable Finance, the UK Green Finance Task Force, the participants to the 2018 and 2019 Green Finance Summits in London and the authors behind publications like the LSE’s Banking on a Just Transition report.

Across these networks, key positions are occupied by current and former private industry leaders. Having done well out of the status quo, their trajectories and profiles denote a clear orientation in favour of deregulation and a strong private sector.

Often, the same people and organisations operate across networks and influence both regional and national conversations. Others are hubs that occupy a pivotal role in the construction of the network and in the predisposition of the spaces and guidelines for dialogue and policy making. This is the case, for example, of the Climate Bond Initiative (CBI), a relatively young international NGO headquartered in London whose sole mission is to “mobilise the largest capital market of all, the [US]$100 trillion bond market, for climate change solutions”. Characterised by a strong pro-private finance attitude, CBI proposes policy actions that are infused by the inevitability of aligning the interests of the finance industry with those of the planet.

Let’s unbank the green and just transition

COVID-19 has emphasised the socio-economic fragility of global financial capitalism and represents the shock that may lead to an acceleration of political processes. While corporate giants are declaring bankruptcy and millions are losing their jobs, governments in Europe and across the global north continue to pump trillions into rescuing and relaunching the economy in the name of the green recovery.

Political debate and positioning will decide whether these public funds will be spent on bailouts or public investments, on tax breaks for the 1% or provision of essential services, or whether the focus will be on green growth or climate justice. But private finance is already capturing this debate and may become a key beneficiary. Getting a green and just transition does not only depend on the voices that are heard, but also those that are silenced.

Intellectual and political elites on the side of the banks are making it harder to have a serious discussion about addressing climate change. NGOs and campaign groups are participating, but only if they share the premises and objectives of the financial sector.

This crowds out more transformative voices from civil society and the academy, and establishes a false public narrative of agreed actions despite the numerous voices outside of this club. And it also normalises the priority of financial market activities, putting profit before people and planet.

The current crisis is an opportunity to rethink what a green and just transition would entail. We must continue to question the role of finance rather than taking it for granted and ensure that the “green and just transition” becomes precisely that: green and just, rather than another source of profits for banks and the 1%.

This article was originally posted on The Conversation.
Cover Photo by sergio souza on Unsplash
Call for members of the EU Sustainable Finance Platform, new Taxonomy Regulation, and closing public consultations – EU sustainable EU sustainable finance update part 2

Call for members of the EU Sustainable Finance Platform, new Taxonomy Regulation, and closing public consultations – EU sustainable EU sustainable finance update part 2

By Robin Hamaker-Taylor

The European Commission is continuing to progress the implementation of their Action Plan for Financing Sustainable Growth. New reports have been published, regulations have been established, and more are on the way. Much of this recent activity has implications for financial institutions. This is the second of a two-part article series that aims to round up these developments.

This article narrows focus to newly adopted EU regulations on the Taxonomy, the European Bond Standard, the European Green Deal, and a consultation on the updated EU Sustainable Finance strategy. The first article looked at the developments relating to the EU Sustainable Finance Taxonomy and impending regulation, and is available here.

Be sure not to miss the calls and consultations linked throughout this article, several of which end in mid-July 2020.

EU Taxonomy Regulation is adopted and call for members of the Sustainable Finance Platform

On 18 June 2020, European Parliament adopted the EU Taxonomy Regulation (TR). The TR creates a legal basis for the EU Taxonomy and sets out the framework and environmental objectives for the Taxonomy. It will be supplemented by delegated acts*, due to be established in 2020-2021. These acts will contain detailed technical screening criteria for determining when an economic activity can be considered sustainable, and hence when activities can be considered Taxonomy-aligned.

To help the Commission prepare the technical screening criteria and develop the taxonomy further, the Commission has launched a call for applications for members of the Platform on Sustainable Finance. This platform will be an advisory body composed of experts from the private and public sector, according to a Commission press release. Platform members will also advise the Commission on the further development of the EU Taxonomy to cover other sustainability objectives and provide advice on sustainable finance more broadly.

The deadline for applications is 16 July 2020. For more information on the Platform on Sustainable Finance and how to apply, please visit: Register of Commission expert groups – Calls for applications.

*Delegated acts are legally binding acts that enable the Commission to supplement or amend non‑essential parts of EU legislative acts, for example, in order to define detailed measures. Read more about the proposed timeline for EU Taxonomy delegated acts and what they mean for climate risk disclosures in part one of this two-part series.

European Bond Standard

The European Commission is exploring the possibility of a legislative initiative for an EU Green Bond Standard in the context of the public consultation on the renewed sustainable finance strategy. That consultation is running from 6 April to 15 July 2020. A targeted consultation on the establishment of an EU Green Bond Standard, that builds and consults on the work of the TEG, and is running for an extended period of 16 weeks between 12 June and 2 October 2020.

Based on the outcome of these two consultations, as well as ongoing bilateral stakeholder dialogues, the Commission will take a decision in Q4 2020 on how to take the Green Bond Standard. Read more about the EU Green Bond Standard here.

European Green Deal and sustainable finance

The European Green Deal is the EU’s roadmap for making the EU’s economy sustainable and make the EU climate neutral by 2050. It includes actions to boost the efficient use of resources by moving to a clean, circular economy and restore biodiversity and cut pollution, according to the European Commission’s dedicated Green Deal website.

The Green Deal outlines investments needed and financing tools available, and explains how to ensure a just and inclusive transition. Climate Action is one of nine policy areas of the Green Deal. Under the Climate Action umbrella, the Commission is proposing to establish the first European Climate Law which makes it a legal requirement for the EU to become climate-neutral by 2050. On the adaptation and resilience side, the Commission will adopt a new, more ambitious EU strategy on adaptation to climate change in early 2021, according to the Commission. The aim will be to strengthen efforts on climate-proofing, resilience building, prevention and preparedness, ensuring that businesses, cities and citizens are able to integrate climate change into their risk management practices. A public consultation will inform the design of the new adaptation strategy.

The EU recognises that Climate Action will require alignment of many key areas, including sustainable finance. While the EU will fund climate action itself, it expects that its efforts in establishing the Taxonomy Regulation and implementing the will also boost private sector investment in green and sustainable projects. So while the Green Deal may seem like a parallel initiative, it is very much intended to align with the EU’s current efforts to make finance and the wider economy sustainable.

Consultation on the renewed sustainable finance strategy

The European Commission is currently consulting on an update to the 2018 sustainable finance strategy. Building on the 2018 Action Plan on financing sustainable growth, the renewed sustainable finance strategy will provide a roadmap with new actions to increase private investment in sustainable projects and activities to support the different actions set out in the European Green Deal and to manage and integrate climate and environmental risks into our financial system. The initiative will also provide additional enabling frameworks for the European Green Deal Investment Plan. The public consultation is open until 15 July 2020.

Cover photo by Marius Badstuber on Unsplash
Why climate resilience bonds can make a significant contribution to financing climate change adaptation initiatives

Why climate resilience bonds can make a significant contribution to financing climate change adaptation initiatives

By Maya Dhanjal

There is a rising cost associated with economic damages related to climate change with 2019 being the most expensive year to-date and expected to only get worse. Governments who are mainly responsible for providing this funding are strapped in their ability to mobilise and manage emergency funds. Resilience bonds provide a unique opportunity to hybridise principles in debt securities and insurance policies and ultimately divert available funds into climate-resilient projects that will enhance adaptive capacity, particularly for long-lived infrastructure assets that have to face the test of time and a changing climate.  Conceptualised in a RE.bound white paper  back in 2015, the resilience bond has now been successfully put into practice .

Extreme weather events are becoming more frequent and severe thanks to climate change. In 2019 alone, the world stood witness to devastating bushfires in Australia, Venice’s worst flooding in 50 years, and Japan’s biggest storm in decades. In 2019, the United States of America, where data on cost incurred per natural disaster is most available, suffered 409 natural catastrophe events resulting in economic losses of $232 billion.

2010 to 2019 was the most expensive decade of global economic losses resulting from events caused by climate-related natural disasters, exceeding $2.98 trillion – $1.19 trillion higher than the preceding decade.

Given these numbers, the most pressing question is: Who bears the cost of such damages? Taxpayers? Businesses? The insurance industry? Historically, the cost of damages to the environment, such as pollution, have been treated as an “externality” in our economic models – continuously passed onto those who can least afford it, not to mention those who least contributed to it. As the frequency and associated costs of catastrophic climate-induced disasters increase over time, governments are finding themselves in a reactionary position, and strapped in their capacity to disburse emergency funds, let alone manage and coordinate them.

This is not exclusive to climate-related events – in response to the economic fallout from COVID-19, developed nations worldwide are expected to provide a financial stimulus which will only further tighten their hands and potentially purse strings from a fiscal policy perspective. So how will governments manage financing the exorbitant and rising costs of climate change? One solution is to transfer the risk to capital markets via a resilience bond.

What is a resilience bond?

Resilience bonds are a novel insurance product developed and authored in 2015 by re:focus partners in collaboration with other members of RE.bound. They were inspired from catastrophe (or “cat”) bonds which are a debt instrument designed to raise capital for insurance companies (who arguably are the best-equipped at handling risk of loss, translating hazard into damage and damage into cash) in the event of a natural disaster under a trigger event, such as an earthquake or tornado. In the case of resilience bonds, the capital raised would be specifically earmarked for projects that increase resilience to climate change, such as sea walls to combat sea-level rise or building shelters in cyclone- and typhoon-vulnerable areas.

If you got confused reading the first sentence of the above paragraph and asked: “wait – how can resilience bonds be an insurance product?”, you have come to the right place.

Let’s take a step back and quickly review bonds: bonds are a fixed income/debt instrument that an issuer (such as a government or large corporation) sells to raise capital for projects. These projects typically require large sums of liquid cash that the issuer does not have on-hand but needs, so they go to the capital markets to obtain it. When the issuer sells the bond to investors, they raise that liquid cash needed to cover a project. Issuers are now happy. Over the lifetime of the bond, issuers will provide interest (aka “coupon”) payments to the investor which incentivises investors to have parted with their liquid cash in the first place. More often than not, this means that once the bond has matured, investors not only receive back their principal investment but also the accrued interest over of the lifetime of the bond which results in a return on investment. Investors are now happy.

Now that we have covered how a bond works, we can apply the above principle to understand how a resilience bond raises capital for climate-resilient projects. However, what happens if a trigger event occurs over the lifetime of a resilience or cat bond? That would naturally disrupt the interest payments that an investor is due to receive until maturity, so how does pay-out work? This is where the insurance policy bit kicks in and why resilience and cat bonds, albeit have the word “bond” in the title, do not operate like traditional treasury or municipal bonds.

Similar to an insurance policy, once a trigger event such as a typhoon or flood occurs, the resilience bond will pay out cash to those who can cover the costs incurred from economic losses, which as previously mentioned are typically insurance companies who would be best equipped to manage and disburse proceeds from the resilience bond. Is it still worth the investment to investors if the bond will not pay out money to them after a trigger event? In one sense it would be twisted for an investor to look forward to a pay-out of funds after a catastrophic climate event. In another sense, investors who put money into climate-resilient projects that will likely withstand harsher conditions and still economically provide after a trigger event will be considered a smarter investment in the long run.

Re:focus authors best explain that just as a life insurance policy has reduced premiums for interventions that reduce overall risk (such as quitting smoking or exercising regularly), resilience bonds have reduced premiums for climate-resilient interventions that reduce economic losses from disasters over the term of an asset (such as seawalls or flood barriers). So, what is a marriage of sorts between a fixed income instrument and an insurance policy, resilience bonds respectively not only provide financing for projects that aim to increase resilience, they also provide a certain coverage against climate-induced disasters. However, as the re:focus authors warned, just as life insurance does not actually make you physically healthier, resilience bonds do not actually reduce physical risks, rather they reduce the financial consequences for asset owners. 

How does a resilience bond raise money for climate-related disasters?

To understand how a resilience bond reduces the financial consequences for assets owners, it is imperative to review how a resilience bond is priced. Issuers use financial models to determine the price of resilience bonds on two levels: in the situation where a trigger event (which has a predetermined threshold, such as a 10-foot surge or $1 billion in economic losses) occurs with the resilience project, and in the situation where a trigger event occurs without the resilience project. Since a resilience project by nature will reduce the chances of a trigger event incurring damages, resilience bond investors are willing to accept a lower coupon payment after the project is completed (lower risk = lower coupon payments). This difference in coupon payments (with versus without a resilience project) therefore represents the financial value of a resilience project which is captured in the form of a resilience rebate. This resilience rebate will ultimately be used to finance risk reduction investments which includes covering economic losses from a trigger event and alleviating the burden from budget-constrained governments to cover these vast costs.

Not only do resilience bonds provide a reduced investment risk to investors once a project is complete, they also provide financing to governments for risk reduction investments that will reduce exposure and build resilience over the long-term.

Say there is no trigger event over the lifetime of the bond –  investors recoup their principal investment as well as their regular coupon payments under the “bond” principle. Now, say there is a trigger event over the lifetime of the bond – policyholders of the bond will retain the full value to pay off the losses, leaving investors either a portion or none of the cash they initially invested under the “insurance policy” principle. This does not sound ideal for an investor to lose all of their investment; however, this article will conclude with why an investor in their right mind would engage with this capital markets product in the first place. For the meantime, it can broadly be said that investors of resilience bonds are typically institutional investors with large, diverse, and robust portfolios, and have a higher risk appetite for a higher return on their investment.

The world’s first resilience bond

The first resilience bond was issued in 2019 by the European Bank for Reconstruction and Development (EBRD): a five-year climate resilience bond rated AAA (by Moody’s/S&P/Fitch) at 1.625% which raised US$700 million. The first orderbook’s distribution statistics saw demand from 15 countries (58% from Europe, 28% from North America and 14% from Asia) from over 40 accounts (32% asset managers, 31% central banks/official institutions, 28% banks, 9% insurance and pension funds).

The bond was actually oversubscribed by $200 million which demonstrates strong investor appeal so much so that the demand exceeded the supply. As mentioned earlier that bond proceeds must be earmarked for specific resilience projects, EBRD has developed a €7 billion portfolio of adaptation-related projects under which funding can be made available, including climate-resilient infrastructure (such as the Qairokkum hydropower plant in Tajikistan), climate-resilient business and commercial operations, and climate-resilient agriculture and ecological systems (such as the Saiss water conservation project in Morocco).

The bond is also aligned with the four core principles of the Green Bond Principles including: use of proceeds, process for project evaluation and selection, management of proceeds, and reporting. By having these overarching principles, the climate bond market demonstrates and actively promotes integrity, transparency, disclosure, and reporting. It would be difficult to name one institutional investor or pension fund that does not have a demand for that kind of data. Not only does the EBRD bond adhere to the Green Bond Principles, but the projects earmarked for the “use of proceeds” are aligned with the Climate Resilience Principles (CRP) by the Climate Bonds Initiative (CBI). Fun fact: CBI convened an Adaptation and Resilience Expert Group of which our own Acclimatise CEO, John Firth, sits on. As EBRD was the first issuer to use the CRP to structure their climate resilience bond, EBRD gained the first-mover advantage which will hopefully motivate others to support climate resilience.

As amazing as this innovation is, one recurring and fair concern investors have on the climate bonds market is the monitoring, reporting and evaluation of the bond proceeds, and whether the bonds truly do demonstrate attractive, if not stronger, returns – which leads us to the future of climate bonds.

The future of climate bonds

Given this financial product has not been around long enough to amass robust data, it is hard to gauge the value of the resilience bonds market. However, on pace with other green products, the climate bonds market has an estimated value of $346 billion, while the cat bonds market has an estimated value of $30 billion. Therefore, the demand for resilience bonds is expected to grow rapidly.

There are likely an array of reasons why demand is rising. We are seeing an increased demand from institutional investors and fund managers with an appetite for stable or ESG-integrated investments. Institutional investors (who are the primary buyers of climate bonds) are pouring money into green investments for the following reasons:

Climate bonds offer an attractive interest rate.

An interesting phenomenon is happening in Europe at the moment – there is around €15 trillion of bonds trading at a negative interest rate. Think about that. A bond offering a -0.5% interest rate? It seems weird to have negative rates (meaning the investor has spent more money for a bond than its value), but that is the reality. In fact, earlier last week, the United Kingdom government for the first time in history sold a treasury bond that pays a negative yield. And negative-yielding bonds typically lose money for bondholders. Climate bonds, on the other hand, are not trading at a negative rate and with negative interest rates expected to stay down in the economy at the moment, bond markets are making resilience bonds more attractive to investors.

Climate-resilient projects are financially viable and will make money.

Although climate bonds are on par with other bonds (meaning they are not necessarily cheaper or more expensive), they are rated the same way as other bonds. When rating agencies such as Moody’s or S&P assign credit ratings to bonds, they are concerned with default risk or missing interest payments because their rating is based on cash flow generation – not environmental or climate factors. To assess cash flow generation, rating agencies look at the financial health of the issuer. Issuers will receive a credit rating, and given that many issuers are governments (for example EBRD’s AAA-rated climate resilience bond was backed-up and guaranteed by the European Bank), rating agencies will assign AAA status which is the highest rating due to the little chance of default.

Investors have an increasing moral appetite to invest in ESG-related products

Ceteris paribus, the opportunity cost of investing into a climate bond is relatively the same when compared to investing into another debt security. However, climate bonds are emerging as a preferred investment because of the moral aspect – investors want to see their money put towards climate change and resilience. What with markets crashing from COVID-19, many are realising that money needs to be spent more mindfully to ensure we prevent massive pay-outs that could have been avoided down the line. This realisation is evident with the rise of many industry-led initiatives that champion climate integration into financial systems and services, such as signatories to the UNEP FI Principles for Responsible Banking, Taskforce on Climate-related Financial Disclosures pilots, Net-Zero Asset Owner Alliance, Global Reporting Initiative, Network for Greening the Financial System, Principles for Responsible Investing, and more. In fact, pension funds who have a fiduciary duty to consider climate-related risks are growing their appetite for these kinds of products such as Canada Pension Plan Investment Board (CPPIB) with $420.4 billion AUM who issued their inaugural green bond back in 2018. And more recently than that, a BlackRock study this week found that in the first quarter of COVID-19’s market drop, 94% of sustainable indexes outperformed traditional ones. The data is starting to catch up to investor ears and they are listening.In conclusion, resilience bonds are an innovative capital markets product that possess the ability to finance climate change adaptation by providing liquid cash for risk reduction investments, as well as actively build resilience while providing a return on investment to investors. They are inspired from cat bonds and work similarly to insurance products rather than traditional bond products, yet resilience bonds (unlike cat bonds) have earmarked proceeds for resilience projects, which can be aligned with the Climate Resilience Principles. Having these industry-wide initiatives such as CRP and even the Green Bond Principles ensure transparency and provide more data to investors who are increasing their appetite for ESG-related products. The first climate resilience bond was issued by EBRD and its oversubscription is another clear indication of the strong demand (particularly across Europe and Asia from governments and institutional investors) for these green products. This demand, alongside the financial strength and growth of the broader climate market in general (such as green bonds or ESG investing) and their outperformance of other products, indicate the potential of climate resilience bonds as an effective tool to build resilience. Although climate bonds have yet to establish themselves as a systemic response and solution to the changing climate of both our world and global economies, they represent progress towards a future that is aligned with the Paris Agreement and a resilient future with adaptive capacity to deal with the extreme effects from climate change.

Sources used:

Cover photo by Robert Bye on Unsplash.
GCF readiness efforts in the Caribbean: Learning from practice

GCF readiness efforts in the Caribbean: Learning from practice

A new learning paper by Acclimatise provides an insight on the lessons learnt from implementing Green Climate Fund (GCF) Readiness projects in the Caribbean and aims to inform future Readiness efforts in the region or globally.

The Caribbean is particularly vulnerable to the effects of climate change with many island nations and coastal communities facing rising sea levels and more extreme and frequent weather events. The GCF is well-positioned to help the Caribbean alleviate climate-induced impacts by providing funding to build Readiness, invest in high-impact projects and develop the capacity of the small island developing states (SIDS) to collectively address and tackle some of the biggest issues in the region. This paper seeks to build the knowledge base of how the Caribbean can successfully build capacity in the region by informing future efforts on GCF readiness, making aware the challenges that are unique to the region and continuing to help Caribbean countries battle the effects of climate change.

Authored by our own Virginie Fayolle, the learning paper titled “Capacity Building of the National Designated Authority (NDA) and Preparation of Country Strategic Framework – Belize, The Bahamas and Guyana”, discusses the key success factors and challenges of meeting the learning outcomes set out by the Delivery Partner, the Caribbean Community Climate Change Centre (CCCCC), as well as the lessons learnt from delivering readiness projects across the Caribbean, particularly in Belize, The Bahamas and Guyana. Valuable inputs and feedback from the CCCCC team were provided.

Across the three countries, there were a number of successes and challenges which can inform future readiness efforts. Early and inclusive engagement efforts with national stakeholders, strong coordination and collaboration between NDAs and UNFCCC focal points (if both are not under the same ministry), and a strong emphasis on capacity building and hand-holding of the NDA and existing/potential project proponents had led to a more informed country dialogue and promoted buy-in in the identification of the country’s GCF investment priorities. In addition, the convening power of the NDA and broader awareness-raising activities were critical in mobilising a more diverse group of stakeholders through the readiness activities, including amongst non-governmental and non-expert stakeholder groups (e.g. private sector). However, human and technical capacity within the NDA teams, limited representation of non-governmental stakeholders during the readiness consultation and engagement activities (such as indigenous peoples, women’s associations or private sector) were key challenges faced throughout the readiness activities with adverse implications in terms of their engagement downstream in the subsequent design, financing and implementation phases of GCF projects and programmes.. In most countries, project pipelines are often immature, and this is often exacerbated by the complexities and high upfront costs of completing funding applications. The timeline and budget for the delivery of the readiness activities are often underestimated and do not consider the frequent changes in GCF policies and procedures, lengthy feedback time, as well as uncertainties linked to ongoing country institutional changes.

As a result, the recommendations for the CCCCC and its role as the Delivery Partner for GCF Readiness, as well as for future readiness efforts in the region, include:

  1. Increased focus on the long-term sustainability of capacity-building activities (such as strengthening national institutions to become GCF-accredited) by investing time in the initial stages, building credibility with partners, and developing the pipeline of investment-grade projects,
  2. Strengthening human capacity, particularly new skills and expertise, within NDAs so they are well-informed to make swift decisions on appraising concept notes and/or funding proposals, continue professional development of staff, and better coordinate GCF-related activities within the region and/or country,
  3. Ensuring sufficient resources for outreach and communication activities so as to gain traction with new audiences, develop a social media presence for the dissemination of relevant updates about the NDA and GCF funding opportunities,
  4. Setting a realistic timeframe and budget for the delivery of the readiness support considering impactingfactorssuch as frequent GCF policy changes, potential election periods or uncertainties in countries from institutional changes, and
  5. Capturing and disseminating best practices and lessons learnt from the implementation of country-level readiness efforts such as the no-objection procedure or country programme to further strengthen the knowledge foundation that future efforts can build off of.

Read the full report here.

Cover photo from Wikimedia Commons.
Podcast: four countries working together to get climate finance to the local level

Podcast: four countries working together to get climate finance to the local level

Article by IIED,

Government and non-government institutions in Senegal, Mali, Tanzania and Kenya are working out the best and most inclusive way to get funding for sustainable climate investment to the local level. Members of this devolved climate finance alliance share their experience in a new podcast.

While no countries will be spared the negative impacts of climate change, developing countries, particularly the least developed, will experience the effects most keenly. Their location, economic reliance on natural resources and limited capacity to respond to climate hazards, all play a part. 

These same factors also lead to people on low incomes being critically affected. Without an adequate response, the climate crisis is likely to entrench or deepen existing poverty.

By signing up to the Paris Agreement, the global community has committed to protecting vulnerable people, communities, and sectors from extreme weather events. Countries worldwide have agreed to build resilience through helping their citizens to adapt to climate change.

Millions of dollars are being mobilised by governments, businesses, and individuals for this purpose, but the question is: how can it get to where it matters, to those communities and people who need it most?

In the third instalment of the ‘People, Planet and Public Finance’ podcast, by IIED and the International Budget Partnership, IIED researcher Emilie Beauchamp and Bara Gueye, former director of IED Afrique in Senegal, discuss a new mechanism for getting public money to the local level; a mechanism that accounts for the need to reduce financial risk and ensure accountability.

What is stopping money getting to where it matters?

First is the fact that, despite countries committing millions in climate finance money, much of it has not yet been paid. Of the money that has been paid, only around US$1 in $10 is reaching the local level.

Then there’s the question of whether all governments know how to integrate climate actions with their planning. It requires accurate risk assessment and predictions to be done before decisions can be made.

For that to happen, the right people must be involved, and that is not always the case. Local communities, local businesses and local authorities are often left out of conversations.

How can that change?

IIED and IED Afrique in Senegal have been working alongside organisations in Kenya, Tanzania and Mali, as part of the Devolved Climate Finance Alliance to design a robust and inclusive way to invest in climate adaptation, using climate finance.

In this podcast, Beauchamp and Gueye describe the process and the mechanism that has resulted, with a focus on Senegal. They consider what has worked well and the challenges that remain: how, for example, can it be made sure that all parts of society are able to voice their needs, when some people – men, for example – are used to making decisions for all?

And while much has been achieved, in all four countries, more needs to be done, which will take time, especially if the participatory approach, key to the mechanism, is done in the right way.

As Beauchamp says: “Countries and donors need to be open to long-term programmes and to different ways of managing, money and relationships – open to new ways of doing development”.

To mark Earth Day on 22 April, IIED researcher Florence Crick highlights the work of the DCF Alliance, and Adaptation Consortium coordinator Victor Orindi profiles work in Kenya that is helping to increase ambition on climate action

People, planet and public finance

Previous episodes of the ‘People, planet and public finance’ podcast have focused on how countries can “green” their budgets and how much are people and families spending to address climate impacts.

The latter features IIED chief economist Paul Steele and Shaikh Eskanderm from Kingston University London, the authors of ‘Bearing the climate burden: how households in Bangladesh are spending too much‘. It focuses on their disturbing findings on what poor rural households in Bangladesh are spending of their own money to deal with climate catastrophe, how these families’ future prospects and security are being hurt, and what governments and the international community should do.

  • Find out more about how IIED is researching the benefits and challenges of getting development and climate finance flowing to the local level through its Money Where It Matters programme.

This article was originally posted on the IIED website.
Cover image from Climate Visuals, Creative Commons licensing.
Lessons learnt on enhancing country ownership through GCF Readiness

Lessons learnt on enhancing country ownership through GCF Readiness

By Caroline Fouvet

The 2019 United Nations gathering on climate change (COP25) was an occasion for the Green Climate Fund (GCF) to present its latest developments and activities. The Fund’s Readiness programme, aimed at fostering countries’ capabilities to engage with the Fund, was presented. As a result of the programme, beneficiary countries are able to strengthen their climate finance-related capacity, engage stakeholders in consultative processes, realise direct access to the GCF, access GCF finance, and mobilise the private sector.

Stakeholders directly involved in implementing GCF Readiness spoke about their experience at a GCF side event on 9th December, and how the programme had helped their countries become ready to access climate finance.

A representative from the Kingdom of Tonga’s National Designated Authority (NDA) explained how the country ensured its ownership of the Readiness programme by involving their Ministry of Finance as a delivery partner (DP). As most of GCF DPs are usually international entities, having Tonga’s Ministry of Finance responsible for the management and implementation of GCF Readiness funding constitutes an important achievement for the country’s ownership of the climate finance it receives.

Input from Fundacion Avina, a Latin American philanthropic foundation, focused on lessons learnt from their implementation as a DP of the readiness programme in Argentina, Paraguay, Ecuador, and Peru. Securing country ownership of GCF finance often implies enhancing national climate governance, educating stakeholders on climate change and what a suitable project is for the Fund, as well as taking into account a country’s local circumstances.

Finally, the Global Green Growth Institute (GGGI) shared their experience of implementing Readiness support in Mongolia.  The GGGI representative stressed that the programmes’s objective was, first and foremost, to “help the governments to help themselves”, and that the role of international organisations such as GGGI was to provide technical assistance to government and sub-government entities to directly access climate finance. In Mongolia, GGGI contributed to the set-up of the Mongolia Green Finance Corporation (MGFC), which aims to ultimately blend GCF equity funding with international and Government finance, along with funding from national commercial banks.

On the road to ensuring low-carbon and climate-resilient growth to developing countries, it seems that building their own capacity to access climate finance constitutes the linchpin of country ownership. Programmes such as GCF Readiness empower countries to take control of their own development while ensuring its climate alignment.

Acclimatise has provided capacity building to Belize, Guyana and The Bahamas within the framework of their Readiness activities, and is about to support the second Readiness phase in Belize.

Cover photo provided by Caroline Fouvet of Acclimatise.