Insight

Insights from Resilience Unpacked: The Role of National Platforms in Unlocking Adaptation Investment

As climate risks intensify, the need to channel finance into adaptation has never been more urgent. Yet, despite more than a decade into formal national adaptation planning, implementation continues to lag behind. Cadlas’ recent webinar and panel discussion brought together leading experts Nanki Kaur from the Asian Development Bank (ADB), Michael Mullan from the Organisation of Economic Cooperation & Development (OECD), Bouke de Vries, independent expert and former advisor to the Executive Board of Rabobank and Danielle Evanson from the Government of Barbados’ Roofs-to-Reefs programme to explore how countries can and are already utilising national platforms to turn high-level adaptation policies into investment-ready strategies.

Unlocking the Potential of National Adaptation Plans (NAPs)

Nanki Kaur highlighted how National Adaptation Plans (NAPs) offer countries a structured way to assess climate risks and set sector-specific adaptation priorities. When done well, NAPs guide policy direction and investment planning, helping governments articulate both the urgency and strategic direction of their adaptation needs.

But turning these plans into investable projects is easier said than done. As Nanki pointed out, despite years of planning, adaptation financing remains elusive due in part to poor translation of climate risks into metrics that matter to investors. Many NAPs contain fragmented, small-scale solutions that fail to tackle adaptation at a systems level, and crucially, they’re often not well integrated into national public investment systems.

Making the Economic Case for Adaptation

Nanki also highlighted that one of the biggest challenges for countries has been demonstrating the value of adaptation. While there are many examples of economic modelling showing the costs of not adapting, very little analysis continues to be done on the benefits of proactive adaptation. This gap makes it harder for Ministries of Finance to justify adaptation investments or for private investors to see a business case for investing in adaptation.

To address this, ADB is supporting fourteen countries through its Climate Adaptation Investment Planning (CAIP) programme. This initiative focuses on aligning adaptation plans with public financial management systems and embedding economic analysis to assess the fiscal and financial returns of adaptation investment. This will in turn help governments to prioritise public funds where they are needed most, while steering viable projects towards private finance.

Building Institutional Architecture for Investment

Similarly, Michael Mullan underscored that effective adaptation planning requires robust cross-government coordination. While leadership often starts within specific ministries or agencies, unlocking finance and shifting national budgets requires collaboration from across all sectors and levels of government.

The OECD’s Climate Adaptation Investment Framework (CAIF) identifies six building blocks to integrate adaptation into investment planning including public finance mainstreaming, private investment support and sectoral regulation. To make this work, all parts of government need to be aligned. National platforms, Michael noted, can play a key role in strengthening institutional mechanisms, integrating climate risk into central government mandates and providing clearer planning signals to investors.

Lessons from Barbados’ Integrated Approach to Adaptation & Resilience

Danielle Evanson shared how Barbados is leading with an integrated, national platform approach through its “Roofs-to-Reefs” initiative. Rooted in the idea that climate resilience must stretch from households to coral reefs, the programme sits within the Prime Minister’s Office, enabling high-level coordination and oversight.

Roofs-to-Reefs operationalises adaptation planning by linking national policies, such as the Barbados Economic Recovery and Transformation (BERT) plan and Nationally Determined Contribution (NDC) with investment plans across six priority sectors including water, energy, waste, land use, ecosystems and housing. Importantly, this approach blends public and private investment, guided by a unified national vision.

Barbados has also turned to innovative financing tools to scale impact, structuring debt-for-nature and debt-for-climate swaps that mobilised investment from multilateral banks and domestic financial institutions. These mechanisms facilitated the establishment of the Barbados Environmental Sustainability Fund and the Blue Green Investment Bank, which is now in its operationalisation stage.

Engaging the Private Sector: Insights from the Netherlands

Bouke de Vries brought a unique perspective from the Netherlands Sustainable Finance Platform (SFP) convened not by a ministry, but by the Dutch Central Bank. The SFP aims to bring together stakeholders from the financial sector, government and scientific institutions to promote sustainability in the Netherlands. The platform makes recommendations for removing barriers to sustainable finance and is actively involved in pilots for sustainability initiatives.

In the SFP’s Climate Adaptation Working Group, members discuss what is needed to accelerate climate adaptation at the national level, with a particular focus on private sector stakeholders. Notably, this working group also includes the secretariat of the National Delta Programme’s commissioner.

Bouke highlighted that climate change poses a systemic risk which also affects the financial sector. It must therefore understand and manage these risks within its assets and client portfolios, with banks, insurers and institutional investors assessing, pricing, transforming, or avoiding them. Additionally, the financial sector contributes to adaptation and resilience by financing adaptation investments and insuring against risks. These are also important commercial opportunities.

Clear labels and taxonomies provide both urgency and clarity by helping to translate climate data into meaningful signals for market actors that can inform investment decisions. Well defined and actionable national adaptation strategies and targets are much needed to make adaptation more investable and bankable, as well as communication to businesses and people to raise awareness, enabling regulation and policies.

A Systems Shift Is Underway

If there was one overarching theme from the panel, it’s that climate adaptation can no longer be treated as an isolated policy issue. It must be understood as a systems issue, one that spans ministries, markets and entire economies.

Whether through national platforms like Barbados’ Roofs-to-Reefs, cross-sectoral coordination frameworks championed by the OECD, or regional investment planning supported by ADB, the shift from planning to financing adaptation is gaining traction. But for these efforts to succeed, countries must not only clarify their priorities they must also build the economic and institutional foundations that enable investment to flow.

Adaptation Finance becomes a highlight at UNEP FI Regional Roundtable

Imagine a future where the financial sector is a powerful engine driving climate resilience across Latin America and the Caribbean. At Cadlas, we’re not just imagining it – we’re working to make it a reality!

Last week, our team had the privilege of helping to deliver the “Scaling Up Climate Adaptation Finance” workshop at the UNEP FI Regional Roundtable on Sustainable Finance in São Paulo. The room was buzzing with energy as participants from across the region came together to tackle one of the most pressing challenges of our time.

Collaboration is Key

Throughout the roundtable, we engaged in deep discussions on physical climate risk and adaptation finance.

A key takeaway? Collaboration is essential. By facilitating peer-to-peer dialogues and knowledge exchange, we saw firsthand how bringing diverse perspectives to the table can spark transformative ideas and solutions.

Piecing Together the Adaptation Finance Puzzle

So, what does it take to scale up adaptation finance? Our workshop participants identified several critical pieces of the puzzle:

1. Locally-relevant taxonomies: Adaptation finance frameworks must be co-created with stakeholders to reflect the diverse realities on the ground.
2. Alignment with policy: Embedding adaptation taxonomies within national policy instruments like NAPs is key for coherence and impact.
3. Measuring what matters: Incorporating resilience and risk reduction KPIs into taxonomies can drive accountability and help track progress against adaptation goals.
4. Growing the market: Capacity building and awareness-raising efforts are needed to position adaptation finance as a win-win for risk management and value creation.

Bridging Insights to Action

At Cadlas, we’re committed to turning these insights into action. That’s why we’re proud to be collaborating with the Climate Bonds Initiative on the groundbreaking Climate Bonds Resilience Taxonomy.

This taxonomy will provide a robust framework for identifying and scaling up climate resilience investments. And guess what? It’s grounded in the same principles of inclusivity, alignment, impact, and market development that emerged from the UNEP FI roundtable.

The Path Forward

As we continue to advance the Climate Bonds Resilience Taxonomy and engage with partners worldwide, one thing is clear: the sustainable finance community is a force to be reckoned with.

Together, we have the power to mobilize the capital needed to build a more resilient future for all. So, let’s keep breaking down silos, pushing boundaries, and daring to imagine a world where finance and sustainability go hand in hand.

Stay tuned for more updates on our work to scale up adaptation finance through the CAIL community of practice. And if you’re ready to join the movement, drop us a line! We’d love to explore how we can collaborate to drive climate resilience in Latin America, the Caribbean, and beyond.

The Role of GSS+ bonds in Mobilising Finance for Adaptation & Resilience

The Need for Adaptation Finance

The Climate Policy Initiative (CPI) reports that global climate finance flows surged to nearly $1.3 trillion USD in 2021/2022. This growth was mainly driven by a significant rise in mitigation finance directed towards renewable energy and transport sectors in countries like China, the United States, Europe, Brazil, Japan, and India. Adaptation finance also saw a moderate increase, climbing from $49 billion USD in 2019/2020 to $63 billion USD in 2021/2022.

Adaptation Gap Report 2023 | UNEP – UN Environment Programme

However, despite this encouraging trend, adaptation finance remains just a small fraction of the total global climate finance pie. As climate change becomes increasingly difficult to both mitigate and adapt to, closing the global adaptation finance gap is crucial. CPI estimates that developing countries will need $212 billion USD annually up to 2030 to adapt to the rapidly changing climate, with African countries alone requiring at least USD $52 billion per year until 2030.

This underscores the urgent need for innovative financing instruments to support adaptation efforts. One promising solution is the use of green, social, and sustainability (GSS+) bonds that incorporate adaptation and resilience as eligible uses of proceeds (UoP). This market has seen rapid growth, with over 2500 GSS+ bonds with adaptation issued at a volume of just over USD $1 trillion since Sweden’s City of Gothenburg first included adaptation as an eligible UoP in its 2013 green bond issuance.

Cadlas recently conducted research into GSS+ bonds with adaptation UoP over the period 2013 to September 2024, using data from the Environmental Finance database. This examined trends in the volume of GSS+ bond issuances as well as the total number of issuances across various issuer types including sovereign, sub-sovereign (agency & municipal), corporates, financial institutions and supranational entities. Below is a brief breakdown of our major findings:

Global Trends

High-Income and Upper-Middle Income Countries:

Issuers in high and upper-middle income countries have mobilized over $620 billion from 1,657 bonds between 2013 and September 2024. Europe leads with over $430 billion from 557 bonds, while the Asia-Pacific (APAC) region follows with just over $110 billion from 383 bonds. North American issuers accounted for approximately 42% of the bonds issued in the region, but only mobilized about $70 billion in total. Municipal entities in the U.S. were responsible for nearly half of the total issuances, although their bond volumes were smaller compared to European sovereign issuances, which made up over 60% of that region’s volume.

Low-Income and Middle-Income Countries

In contrast, low and middle-income issuers have contributed 219 bonds valued at $72 billion. The APAC region stands out, accounting for over 60% of total bonds issued and 55% of the total volume. Latin America and the Caribbean (LAC) followed with nearly 20% of the volume, while Africa accounted for 13% of all issuances but only 4% of the volume, reflecting a predominance of smaller bond issuances in the region.

Regional Trends

APAC:
The APAC region has mobilized over $140 billion from approximately 523 bonds. Countries like Japan, South Korea, Hong Kong, and Australia collectively accounted for nearly 70% of the bond issuances during this period.

Africa:
Africa saw just over $3 billion from 27 bonds, primarily driven by South African financial institutions, which made up 65% of the bond volumes.

Europe:
In Europe, Sweden, the United Kingdom, and France led in the number of bonds issued, with sovereign bonds accounting for 72% of the region’s total volume despite making up only 29% of total issuances.

LAC:
Brazil dominated the LAC region, issuing 10 of the 28 bonds and generating the highest volume, while Colombia followed with 8 sovereign bonds.

MENA:
The MENA region’s landscape included 6 sovereign bonds and 16 issued by financial institutions, with the UAE leading in volume.

North America:
North American bond issuers accounted for approximately 712 bonds, generating over $80 billion in volume. The U.S. dominated in bond issuances, especially among municipal entities.

Conclusion

While adaptation finance still represents a small fraction of global climate finance, the growth of GSS+ bonds signify a positive trend in bridging this adaptation finance gap, particularly in developing countries. As awareness of climate resilience and its importance continues to grow, GSS+ bonds can become a vital instrument in mobilizing in adaptation initiatives.

Insights from Climate Bonds CONNECT 2024: Fostering Resilience in a Changing World

From discussions about transition planning for corporates to the path to achieving interoperability and innovative models for scaling up finance for resilience, Climate Bonds CONNECT 2024 was filled with valuable insights and impactful discussion sessions around adaptation and resilience.

The jam-packed day began with Climate Bonds Initiative (CBI) CEO, Sean Kidney’s opening speech where he emphasized the need for global effort on building resilience to climate change given that it is a global challenge.Furthermore, efforts to avoid catastrophic climate change continue to be hindered by a range of crises, including socioeconomic inequality, health and food security concerns, all of which are exacerbated by climate change itself. These challenges require international cooperation and coordination, particularly around adaptation and resilience.

Mr. Kidney underscored this point by noting that climate change will adversely impact the planet irrespective of global progress on mitigation/decarbonisation. As a result, it is necessary now, more than ever to scale up action on adaptation and resilience. While the challenges around decarbonisation/mitigation are well documented this is not the case for resilience/adaptation. However, he noted that tools like CBI’s recently launched Climate Bonds Resilience Taxonomy, for which Cadlas served as the lead technical partner, provide important guidance and clarity on a range of urgent priorities for building resilience.  In closing out his speech Mr. Kidney said that despite the enormity of the challenges surrounding climate change, he is still hopeful that we can work together to find a solution. He pointed out that “we are a hive species” intimating our need to work collectively to solve global challenges and cited the ‘green revolution’ and the role of technology as great opportunities.

Immediately following Mr. Kidney’s speech was Torsten Albrecht, Principal Investment Officer at the Asian Infrastructure Investment Bank (AIIB), who spoke about AIIB and the role of multilateral development banks (MDBs) in supporting the green, social and sustainable (GSS+) bonds market, particularly in emerging economies. He highlighted AIIB’s goal to achieve sustainable economic development through infrastructural projects and the bank’s work to actively scale up private sector participation in climate focused projects. Mr. Albrecht noted that despite the encouraging growth of the GSS+ bonds market in developed markets, there is still a sizeable finance gap and more focus should be placed on emerging markets to help close this gap. This was followed by session 1, a panel discussion on opportunities for corporates and countries around transition planning.

After a brief networking and coffee break, attendees were back in the plenary for session 2 on interoperability between taxonomies which was moderated by CBI’s Director of Thought Leadership, Anna Creed. There are over 45 national or regional taxonomies in existence across the globe, with more in development. While this is necessary given the range of geographical contexts and differing levels of development, it presents a significant reporting challenge to investors and regulators. Panellists highlighted the need for and importance of comparability, equivalence and disclosures in achieving interoperability between taxonomies. Following this was a networking lunch which preceded the second 5-minute OnSwitch session on the Asian Development Bank’s work in the GSS+ bonds market in Southeast Asia.

Immediately after this was what CEO Sean Kidney pointedly referred to as the most highly anticipated session of the day. Session 3 was entitled ‘Innovating for Resilience: Scaling-up Proven Models to Catalyze the $3 Trillion Opportunity’ and was moderated by CBI’s Director of Strategic Programmes, Ujala Qadir. Before jumping into the discussion, Ms. Qadir asked panellists to share how climate change has personally impacted their lives within the last year. Several panellists spoke about their experiences with increased rainfall, flooding, extreme heat, landslides and hurricanes which set the tone for the panel discussion and underscored the importance of adaptation and resilience. She noted that we already have solutions and the capital, but they needed to be repackaged to direct finance towards adaptation and resilience. Panellist Gerald Evelyn, Invesco’s Senior Client Portfolio Manager, cited the use of blended finance in driving institutional investment towards building resilience in the world’s most climate vulnerable regions. He noted that there has been significant interest from institutional investors in Invesco’s Climate Adaptation Action Fund.

Lasitha Perera, the co-founder and CEO of the Development Guarantee Group, also highlighted the usefulness and opportunity guarantees provide, pointing out that “guarantees have mobilised the most private capital but are the most underused.” He noted that many adaptation and resilience investments, especially in emerging markets, sit in sub-investment grade countries. While simultaneously instilling confidence in investors, guarantees provide access to private finance for investees and countries that are often excluded because traditional institutional investors rely on ratings as an indicator of risk. The conversation then continued to the role of MDBs in scaling up finance for adaptation and resilience in which Xianfu Lu, Consultant on Adaptation and Climate Resilience at AIIB, noted that the capital is already there and MDBs already have several processes in place to track adaptation finance, but these efforts are hindered by a lack of “good projects in the pipeline.” In agreement with Ms. Lu, British International Investment (BII) Managing Director of Climate, Diversity and Advisory, Amal-Lee Amin, pointed out that while development finance institutions (DFIs) and MDBs can help build out the pipeline, governments needed to work on creating ‘enabling environments’ for project development. She also noted the importance of collaboration in managing risk and building capacity to scale up finance for resilience. Panellists also spoke about the importance of metrics for helping investors to understand and gain greater transparency around resilience issues and needs. In concluding the session, Ujala Qadir cited the usefulness of the Climate Bonds Resilience Taxonomy in helping investors to understand the impact of their investments on building resilience.

After this, the day continued with even more insightful sessions on the role of finance in advancing sustainable agriculture, the use of sustainable land bonds to finance nature-based carbon capture and storage as well as transparency and reporting in the GSS+ bonds market. In his spirited closing remarks, Sean Kidney invited attendees to share their own reflections on the day’s discussions and reiterated his hopefulness and excitement for the future.

Unlocking the potential of sustainable bonds for financing climate resilience: the Climate Bonds Resilience Taxonomy

Today has seen the launch of the Climate Bonds Resilience Taxonomy (CBRT) during New York Climate Week. This exciting development offers the potential to scale up market action on financing climate resilience (also referred to as adaptation) by providing clear and consistent definitions of climate resilience investments – in other words, a common vocabulary for climate resilience financing that can be used by broad range of stakeholders including investors, issuers, regulators and policymakers.

The CBRT builds upon Climate Bonds’ extensive experience of taxonomy development and extends their existing Climate Bonds Taxonomy into the increasingly urgent, but comparatively under-funded, area of climate resilience. Cadlas is pleased to be the Lead Technical Partner on this ground-breaking initiative, having worked closely with Climate Bonds since 2022 to bring in our extensive, practical experience of climate resilience financing.

The sustainable bonds market represents a significant source of financing for sustainable development, with total sustainable bond issuances now exceeding USD 5 trillion. However, only a small fraction of the capital raised through these issuances currently addresses climate resilience. While Climate Bonds’ analysis suggests that around 19% of labelled green bond issuances include climate resilience (or adaptation) as an eligible use of proceeds (UoP), evidence suggests that only a small fraction of this financing is being challenged into climate resilience investments.

Nonetheless, sustainable bonds are potentially a key instrument for mobilizing investment in climate resilience. Since the City of Gothenburg first included adaptation as an eligible UoP in its 2013 green bond issuance, market activity has progressively increased so that today around 2,500 sustainable bonds issuances have included adaptation as an eligible UoP, while a total volume of just over USD 1 trillion. While most of this activity has taken place in Europe, North America and the Asia-Pacific (APAC) region, there is a need for greater action in Africa, Latin America & the Caribbean (LAC), and the Middle East & North Africa (MENA) regions, where sustainable bond volumes with adaptation UoP remain relatively low despite these being some of the most climate-vulnerable regions of the world with significant climate resilience investment needs.

This highlights the need for much greater flows of financing for climate resilience, as the frequency and severity of climate change impacts – and their economic and human costs – continue to accelerate. For example, the United Nations estimates that developing countries need up to 18 times more adaptation finance than is currently provided. Furthermore, at present more than 98% of reported adaptation finance is provided by public institutions such as development finance institutions (DFIs), which highlights the need for much greater action on mobilising private finance for climate resilience.

An important obstacle to private finance mobilisation for climate resilience has been a lack of clarity on definitions and criteria for climate resilience investments. ​This creates uncertainty for both investors and issuers and hinders the flow of capital.​ While sustainable finance taxonomies can play an important role in directing private and public investments toward sustainability goals, they have hitherto not given due attention to climate resilience as an investment theme.

To date, climate resilience has tended to take a back seat to ​climate mitigation (or decarbonisation) objectives in sustainable finance taxonomies, with a lack of consistency in the sectoral coverage and breakdown of climate resilience financing. This has been compounded by process-based definitions that are difficult for users to apply, and a lack of clear eligibility criteria for determining whether an investment is meaningfully contributing to climate resilience.

The CBRT directly addresses these challenges by providing a credible classification system for climate resilience investments. It offers focused, detailed guidance on climate resilience, an area often under-prioritised or addressed only broadly in many existing taxonomies. The CBRT provides clear, consistent and comprehensive coverage of climate resilience investments based on six Climate Resilience Themes. This covers a broad range of investment types ranging from financing the adoption of specific climate resilience measures within investments to financing economic activities that provide A&R solutions​.

The CBRT fills a critical market need for a common foundation that helps investors identify and scale up finance for a wide range of investments that genuinely contribute to building climate resilience. It addresses three critical gaps:

1. Clear, Science-Based Definitions and Criteria: The CBRT provides clear, science-based definitions and criteria for identifying investments that substantially contribute to climate resilience. This is essential for overcoming the lack of clarity that has hindered resilience finance flows to date.
2. Navigating the Regulatory Landscape: The CBRT helps investors and companies navigate the evolving regulatory landscape. It aligns with and advances beyond regulatory standards like the EU Sustainable Finance Taxonomy, providing a rigorous, globally applicable framework for demonstrating the climate resilience credentials of investments.
3. Flexibility and Adaptability: The CBRT has been designed to be flexible and adaptable to diverse country contexts and investor needs. This is crucial for building resilience, which requires tailored approaches that reflect local vulnerabilities and priorities. The format of the CBRT also allows for further improvements and tailoring to be added over time.

The next exciting chapter in the CBRT story begins now, as it begins to be taken up and put to use by issuers, investors, regulators, policymakers and others. The CBRT will not only enhance transparency for investors by eliminating certain information asymmetries but also support the alignment of global capital flows with local resilience needs and opportunities underpinned by rigorous, science-based eligibility criteria.

As Cadlas continues to collaborate with partners across the finance landscape to enhance resilience financing in various country contexts and investor mandates, we are confident in the CBRT’s applicability across multiple use cases – particularly as it relates to the sustainable debt market. By supporting a range of issuers, investors and other participants in applying and using the CBRT, we can enhance the effectiveness and impact of climate resilience investments, driving more capital towards projects that are crucial for adapting to and mitigating the effects of climate change.

Cadlas is committed to fostering a resilient future by enabling more informed and impactful investments in climate adaptation and resilience. Stay tuned for more updates on how the CBRT is set to transform the landscape of climate finance.

Basing investment decisions on climate adaptation and resilience impact

As investors become increasingly aware of the implications of our changing climate, there is a growing need for more information about the positive adaptation & resilience impacts of investments.

Private investors are increasingly aware of emerging investment opportunities in adaptation & resilience, with the Bank of America forecasting that the global market for adaptation & resilience may reach USD 2 trillion by the middle of this decade, and MSCI estimating that 11% of publicly listed companies deliver products and services that contribute towards adaptation & resilience.

Information about the positive adaptation & resilience impacts of investments can help to engage private investors and mobilise finance for urgently needed investments in adaptation & resilience.

But private investment in adaptation & resilience is held back by a lack of clear, practical and investor-relevant adaptation & resilience metrics that investors can use to identify, appraise and prioritise investments that make meaningful contributions towards adaptation & resilience​.

Therefore Cadlas is pleased to have worked with the Adaptation & Resilience Investors Collaborative (ARIC) and the United Nations Environment Programme Finance Initiative (UNEP-FI) to develop guidance for investors on the assessment of adaptation and resilience impact in private investments. This guidance, which is available here, sets out a practical framework for assessing adaptation and resilience impact across a broad range of investments using a set of clear, consistent and investor-relevant metrics.

Assessing adaptation & resilience impact in private investments: new guidance for investors

Cadlas is pleased to have provided technical support to the Adaptation & Resilience Investors Collaborative (ARIC) for the development of a framework for assessing the positive impact of private investments towards climate adaptation and climate resilience goals.

This leverages the experience of impact investing to set out a clear framework to help investors measure and manage the way that their investments contribute towards adaptation and resilience.

As private investors become more aware of the scope for investment in adaptation & resilience interventions and solutions, there is an increasing need for meaningful and consistent information about the positive contributions of those investments towards the climate resilience of people, the planet and the economy.

For further details, read the full report which is available on the ARIC webpage: Adaptation & Resilience Impact: A measurement framework for investors

Measuring impact for scaling up investment in climate resilience

Investors need clear, consistent and comparable information about the impact of their investments in order to allocate capital towards effective climate resilience responses and solutions. Cadlas is pleased to be working with the Adaptation and Resilience Investor Collaborative (ARIC) and the United Nations Environment Programme Finance Initiative (UNEP-FI) in an important initiative to advance the measurement of climate resilience impact.

Further details available here.