What is climate finance?

Climate finance plays a crucial role in addressing the global challenge of climate change. We look at how climate finance aids this process.



Climate finance is shaping the world into a sustainable future. The Caribbean has catapulted into a developing sustainable region. Caribbean Citizenship by Investment (CBI) programmes are contributing towards building climate resilience, economic diversification and regional cooperation.

What is climate finance?

Climate finance refers to the financial resources, investments, and mechanisms dedicated to supporting efforts to combat climate change and its effects.

It involves mobilising funds from various sources, including governments, international organizations, private investors, and development banks, to finance projects and initiatives that reduce greenhouse gas emissions, promote renewable energy, enhance resilience to climate impacts, and support sustainable development.

Climate finance plays a vital role in enabling countries to transition towards low-carbon and climate-resilient economies, facilitating the implementation of climate action plans, and advancing global efforts to limit the rise in global temperatures.

By providing financial support to developing countries, climate finance aims to bridge the gap in resources and promote equitable and sustainable development worldwide in the face of climate change challenges.

Comprehending the financial mechanisms and resources dedicated to tackling the impacts of climate change

Subsequently, climate finance refers to the financial resources provided and mobilised to support activities that contribute to mitigating and adapting to climate change.  

These activities encompass a wide range of CBI projects, initiatives, and policies aimed at reducing greenhouse gas emissions. They further enhance resilience to climate impacts and sustainable development.  

Climate finance plays an important role in addressing the global challenges posed by climate change and achieving the objectives set out in international agreements such as the Paris Agreement. 

The Paris Agreement, a legally binding international treaty on climate change adopted in 2015, aims to restrict the global temperature increase to well below two degrees Celsius. 

World leaders emphasise the urgency of the one-and-a-half  degrees Celsius goal due to the severe impacts predicted by the United Nations (UN) Intergovernmental Panel on Climate Change.  

To achieve this, greenhouse gas emissions must peak by 2025 and decline by 43 per cent by 2030.  

Climate finance is essential for building a more sustainable, resilient, and equitable future for all. 

Importance of Climate Finance in Caribbean Citizenship by Investment Programmes 

Mitigating Climate Change

Climate finance in Caribbean CBI programmes’ investments in renewable energy, energy efficiency, and other sustainable practices that help mitigate the impact of climate change. 

Climate finance can support CBI investments in renewable energy projects. An example is Dominica securing their geothermal power plant construction with international companies. 

Transitioning to clean and sustainable energy sources contributes not only to mitigating climate change but also to the overall sustainability of the islands. 

Natural Resource Management

Climate finance can be utilised for sustainable natural resource management in CBI initiatives.  

This involves reforestation, watershed protection, and marine conservation to preserve ecosystems and biodiversity, crucial for Caribbean islands’ resilience. 

Infrastructure development

Climate finance can be channelled into CBI infrastructure projects that enhance the climate resilience of these Caribbean islands.

Including building or upgrading infrastructure climate-resilient infrastructure, improving water management systems, and implementing sustainable agricultural practices.

Dominica have successfully built climate-resilient homes for locals to ensure they are equipped when they are faced with environmental adversity.

This can also be seen in St Kitts and Nevis as the Government prepares to build a climate-resilient hospital in 2024.

Global equity and justice

Climate change disproportionately affects vulnerable and marginalised communities in the Caribbean.

It is essential to ensure that small island developing states (SIDS), which often bear the brunt of climate impacts, have the resources to adapt and transition to sustainable development pathways.

Encouraging sustainable development

Climate finance promotes Caribbean CBI investments in sustainable development, aligning economic activities with environmental and social objectives.  

Supporting clean energy projects, sustainable agriculture, and eco-friendly infrastructure, it fosters long-term, environmentally sound economic growth. 

Facilitating technology transfer

Climate finance can facilitate Caribbean CBIs to transfer environmentally friendly technologies from developed nations to Caribbean countries.  

By supporting research and development in clean technologies and sustainable practices It helps bridge the technological gap, enabling Caribbean SIDS to adopt cleaner and more sustainable technologies and contributes to the creation of new solutions to address climate challenges. 

Advantages of climate finance in CBI

Diversification of economies

Climate finance can aid in diversifying the economies in the Caribbean nations.  

Promoting sectors such as eco-tourism or sustainable agriculture, these nations can reduce dependency on sectors vulnerable to climate change and natural disasters. 

Capacity building

Climate finance supports capacity building in areas like climate science, disaster preparedness, and sustainable development practices.  

This empowers local communities to actively participate in building a more resilient and sustainable future. 

Contribution to national development

Revenues generated from Caribbean CBI programmes can potentially be directed toward climate-resilient projects. 

Caribbean Governments can allocate funds to initiatives aimed at adapting to climate change and transitioning to low-carbon economies. 

Attracting sustainable investments

Caribbean Governments leverage CBI programmes to attract foreign investors interested in sustainable development. 

Investors who are environmentally conscious may be more inclined to participate in projects aligned with climate goals. 

By providing resources and financial instruments, it encourages CBI investments in climate-resilient initiatives. 

Collaborative action

Climate finance encourages collaboration between governments, businesses, and non-governmental organisations.  

St Kitts and Nevis created the Sustainable Island State Agenda, which is a framework for collective action, allowing various stakeholders to work together in addressing climate change presented at COP28 and in future. 

Long-term planning

The availability of this finance enables Caribbean CBI countries to engage in long-term planning and implementation of sustainable development projects.  

This stability is crucial for achieving meaningful and lasting results in the face of climate change.