The Caribbean is among the most climate-vulnerable regions in the world. Small Island Developing States face rising sea levels, stronger storms, and mounting economic pressures that threaten communities, ecosystems, and livelihoods. Yet, these same conditions present opportunities to accelerate the transition towards a green and blue economy, creating pathways for renewable energy, resilient infrastructure, sustainable tourism, and ocean-based industries.
Financial institutions in the region are central to unlocking this potential. By mobilising capital and integrating sustainability into core banking practices, they can act as catalysts for resilience and inclusive growth. However, the absence of robust environmental and social risk management systems, together with limited experience in structuring sustainable financial products and thematic bonds, has constrained their ability to fully capture these opportunities.
To help overcome these barriers, BASE, with the support of IDB Invest, is working with a leading regional financial institution to strengthen its sustainability framework and expand its capacity to finance sustainable investments. The initiative is structured around two complementary pillars.
The first focuses on the development of a comprehensive Environmental and Social Management System (ESMS). An ESMS provides and puts in place a set of policies, procedures, tools and internal capacity to identify, evaluate, manage and monitor the exposure to environmental and social risks of its clients, investors and investments. This system will be aligned with international best practices and integrated into the institution’s risk and credit management processes. It will be piloted with live transactions to test its applicability. Training and capacity building will ensure that environmental and social risk management becomes an enduring feature of the institution’s governance and operations.
The second pillar addresses sustainable finance preparedness. Through a detailed portfolio analysis and market study, opportunities for climate mitigation, adaptation, renewable energy, energy efficiency, and social impact financing will be identified. These findings will underpin the creation of a Sustainable Finance Management System, including a tailored taxonomy, eligibility criteria, and a framework for measuring environmental and social outcomes. Building on this foundation, the project will design new sustainable financing lines and support the development of a Green, Social, or Sustainable Bond Framework. This will prepare the institution to unlock new capital for projects with positive environmental and social impact.
The expected impact of this consultancy is to enable the institution to systematically manage environmental and social risks, expand its portfolio of sustainable financial products, and enhance its credibility in capital markets. By laying the groundwork for the issuance of a thematic bond, the initiative will help mobilise resources for climate action and resilience, positioning the Caribbean financial sector as a driver of sustainable development in the region.
