The urgent call for increased private sector investment in climate resilience echoes with a stark warning that negligence may result in serious challenges for successful business institutions in the future.

Mobilising financing for climate resilience was one of the topics discussed at the recent Jamaica Stock Exchange’s (JSE) 19th Regional Investments and Capital Markets Conference, where private investors were strongly advised to broaden their focus beyond solar and other renewable climate projects.

“Private investors are looking at making money, and they focus more on mitigation, the renewable energy aspect, but it is much broader. It is also said that private investors could invest in infrastructure projects that deal with adaptation,” said Roxanne Donegan, climate resilience specialist at the Development Bank of Jamaica (DBJ), during discussions at the conference.

Upcoming infrastructure projects, such as the DBJ’s privatisation of the Soapberry Wastewater Treatment Plant Expansion, were cited by Donegan as notable investment opportunities for impact investors. She, however, pointed out that a critical gap exists: a lack of private sector involvement in project development.

“We need more private investors at the table when developing these projects to make them bankable and more attractive to them,” Donegan urges.

In detailing Jamaica’s nationally determined contribution (NDC), an action plan for the country’s migration, such as how to reduce greenhouse gas emissions and adaptation, such as preparing to live with a changing climate and future expectations, she reveals the Government’s emphasis remains on energy efficiency, conservation projects, and later extends to the forestry sector, which looks at mitigation aspects.

“From this nationally determined contribution, it was determined that the total investment would be US$921 million. This was developed in 2020 and an implementation plan was developed in 2021. And of this US$921 million, it was expected that the private sector would contribute 76 per cent of this investment,” Donegan revealed.

In late 2023, the Government went on to develop targets for 2050, which include US$5 billion for mitigation and up to US$1 billion for adaptation. According to the International Monetary Fund (IMF), the Caribbean’s estimated investment needs for disaster risk reduction interventions and adaptation exceed US$100 billion, highlighting a dire need for more financing for climate resilience.

The challenge of attracting private investors, as pointed out by Ricardo Hutchinson, partner at Portland Private Equity III, is closely tied to perceived scale issues. Hutchinson emphasises the difficulty in securing financing for the Caribbean, despite the success of two prior funds. In 2022, approximately $10 billion was raised for private equity funding, with 85 per cent of that directed towards larger markets.

“When you look at the Caribbean compared to these markets, we don’t have the scale; people see the Caribbean as small, fragmented economies,” stated Hutchinson as a key reason why investors are less inclined to explore opportunities in the Caribbean.

Despite the Caribbean’s heightened vulnerability to climate change, the third fund of Portland Private Equity III achieved successful investments, incorporating climate resilience as a crucial component of its targets. Hutchinson highlights their commitment to driving change within portfolio companies, with the help of IDB, and incorporates things like the Paris alignment, which is geared towards identifying projects within its portfolio companies. Underscoring the long-term focus of private equity, Hutchinson encourages portfolio companies to prioritise climate resilience and invest in projects geared towards adaptation and mitigation.

“If it is that, as a Caribbean, we don’t invest in resilient business and climate resilience, we might find ourselves not having business in the long run,” he warned.