Win for SIDS and win for our planet
Superlatives fall far short of the existential threat faced by Small Island Developing States (SIDS), which collectively are responsible for stewarding nearly a third of the world’s ocean. The UK’s International Development Select Committee is currently holding an inquiry into whether the UK government’s Small Island Developing State strategy is sufficient to cover the multiple challenges these nations face.
Climate catastrophes persistently overwhelm many of the world’s SIDS. These nations have to borrow constantly to rebuild and prepare for the next catastrophe. This deflects their energy and resources from making progress on human development and United Nations Sustainable Development Goals (SDGs). As these countries balance rebuilding costs, debt service, and progress on human development, they have to delay expensive interventions to adapt their economies and societies to rising sea levels and to build resiliency into their economies. With only two percent of global finance for adaptation flowing to SIDS, their leaders express frustration that world leaders and financial institutions are failing them.
We welcome the inquiry by the International Development Select Committee of the British Parliament into UK’s approach to supporting SIDS. The UK Government already does a great deal. It champions change in the multilateral system, supports debt relief, and encourages all finance providers, including the private sector, to prioritise economic and climate resilient investments. But the UK can do more given its unique position in the global economy, its development credentials, and the world leading financial capabilities in the City of London.
The Foreign, Commonwealth & Development Office (FCDO) strategy for SIDS highlights six areas of focus: climate change and natural disasters, ocean and biodiversity, economic diversification and prosperity, debt, inclusive governance and shared values, and multilateral modernisation. The UK can provide leadership with potentially transformational outcomes for SIDS in several areas.
Innovative Finance
The first is for UK to make far better use of its pre-eminent position to bring innovative financial solutions to the range of challenges that SIDS confront. As the global finance hub, London has a lot to offer. The London Stock Exchange was the world’s first major exchange to establish a dedicated Green Bond Segment. Today, its dedicated Sustainable Bond Market champions innovative and sustainable finance – and improves access, flexibility, and transparency for investors. The depth of expertise and knowledge available is unmatched.
A range of innovative financing instruments and structures incentivise wider efforts to protect nature’s assets, build resilience, and deliver much needed income streams to countries most vulnerable to climate change. We’ll pick two examples: the Fiji Blue Bond and the Indonesia blue economy programme called Blue Halo.
Through a catalytic and relatively small FCDO investment, Fiji is in advanced stages of developing its first Blue Bond framework to finance resilience, sustainability, and jobs in its blue economy. For the first time, this effort will bring private sector and philanthrophic investors into investment programmes to help protect coral reefs and recycle waste. The programmes also protect and expand Fiji’s mangrove cover, a rich carbon sink, which takes carbon out of the atmosphere.
The Indonesian Government announced its Blue Halo finance programme at the G20 meetings in 2022. The programme aims to use a blended finance approach to combine public and philanthropic capital with private sector investment to generate positive outcomes for ocean conservation, sustainable fisheries, and livelihoods, aligned with the UN SDGs. Lessons learned from and applications of this model in Indonesia, an archipelago country of 17,000 islands, will be highly relevant for a wide array of SIDS.
Of course, financial instruments are just a tool. The leadership and direction must come from the countries themselves. Partnering with them to execute long-term visions is a theme that Foreign Secretary James Cleverly and Minister for International Development Andrew Mitchell have consistently emphasised.
UK Global Leadership
The UK can provide leadership to crowd in international support behind SIDS. One example of this is the lead that the Commonwealth, with 39 SIDS members, took in developing and launching the Commonwealth “Blue Charter,” which elevated the crisis facing oceans to the global stage. The Charter was launched in 2018, a year before the Intergovernmental Panel on Climate Change (IPCC) Special Report on Ocean and Cryosphere in a Changing Climate and 18 months ahead of COP25, which spotlighted oceans and climate change for a world-wide audience. SIDS can and should lead the direction of Blue Ocean economics. Support through innovative finance approaches can turbo-charge their efforts.
Beyond the Commonwealth, the UK Government’s diplomatic efforts to rally support for fundamental change at the World Bank and the International Monetary Fund (IMF) is notable. A helpful starting point would be to use its position on the G7 to lobby for collective support for the Bridgetown Initiative mooted by Barbados Prime Minister Hon. Mia Motley. This is a significant global effort to reduce the cost of borrowing by using resources that are already available at the World Bank and the IMF to do what the UK is beginning to do at home: catalyse private finance at scale and speed and ensure that SIDS are at the front of the queue and not at the back, where they usually find themselves.
Finally, the UK is extremely well placed to move international cooperation in support of SIDS to the “beyond coordination” phase. There is no reason why UK, US, Australia, Canada, and other like- minded development partners cannot collaborate through pooled financial resources for joint programming to support SIDS.
There is a window of opportunity to adapt and build resilience across SIDS. This window is fast closing. Urgency and speed are what SIDS have called upon the UK to deliver time and again. Agility, speed, and scale have traditionally been the hallmarks of UK’s international development in the past. It can be the most pragmatic thing that the UK can do once again.
Sarah Dunn is Managing Director of Abt Global in Britain.
Satyendra Prasad leads Abt work on climate change across the Indo-Pacific region and is a former Ambassador of Fiji to the UN and governance specialist for UK’s Department for International Development and the World Bank.
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