One of the benefits of Jamaica’s new status as the poster child of the multila
terals is the high level of technical assistance we are currently receiving from them, with, for example, the World Bank helping Jamaica with a catastrophe bond earlier this year.

Last week, the International Finance Corporation (IFC), the private sector arm of the World Bank group, brought a high-level team to Kingston as part of its Green Bond Technical Assistance Programme targeting both the local financial and construction sectors (predominantly architects) to advise on its green and blue bond initiatives. In their presentations they observed that often it is not the funds they bring to clients that is the most valuable but their advisory services and support.

Lead presenter Diep Nguyen-van Houtte, in a presentation entitled ‘Climate business is good business’ observed that in 2014 and 2024 the IFC tripled its direct climate commitments to US $9.1 billion, while increasing fivefold the additional money mobilised to US$10.2 billion. In 2014, at $3.1 billion in direct financing, the IFC represented half of all direct multilateral development partner private climate financing to low- and middle-income countries.

She advised the IFC role, including acting as a pioneer investor (the BMR Wind Farm in Jamaica in 2016); standard setting (blue, green and biodiversity finance guidelines); and derisking, the latter including blended finance (a strategy that combines concessional funds with private sector financing to achieve development goals), risk sharing, guarantees to make climate projects in emerging markets more attractive, and mobilising private capital through investment funds to help institutional investors achieve their risk-return objectives.

The IFC has invested in close to 23 gigawatts of renewable energy over the past 10 years, while supporting green technologies with potential whole-of-system impact, such as offshore wind, green hydrogen, and battery storage, including US$3 billion in e-mobility value chain.

Green Bonds

The IFC has played a key role in developing green bonds, which are designed to finance projects that help the private sector address climate change through climate-smart investments, including renewable energy, clean transportation, and energy efficiency, with a focus on reducing emissions and strengthening resilience in developing countries. In addition to reputational benefits, issuers can achieve slightly lower interest costs of between zero and 20 basis points lower depending on the investor base. Since its inception in 2010, the IFC was the first issuer to list a billion-dollar green bond, and has issued over US$12.5 billion in green bonds for 198 projects in 22 currencies. It has worked with the International Capital Market Association (ICMA) and the Securities Exchange Commission (SEC) on their ICMA Green Bond Principles, of which 80% of financing goes to energy, transport, and buildings.

Green and Resilient

Not only is there a need to reduce greenhouse gas emissions (buildings account for 28 per cent in emerging markets and their building stock is expected to double over the next 20 to 30 years ), but there is also a pressing need for greater investments in physical resilience in countries like Jamaica (most recent earthquake in Turkey caused US $84 billion in economic losses in 2023), although we do have better building codes.

The IFC is actively working to promote sustainable construction practices in emerging markets; however, funding these initiatives presents a significant challenge, as sustainable finance markets in these regions are less developed compared to advanced economies. Consequently, a key area of interest to Jamaican real estate investors and professionals should be the IFC Green Building eligibility framework, which has five main categories: new construction, new buildings, basic green refurbishment, advanced green refurbishment, and Paris alignment (an existing portfolio of buildings that achieve a 50 per cent reduction in emissions/energy by 2030 and 100per cent by 2050), all of which use the IFC Excellence in Design for Greater Efficiencies (EDGE) certification.

IFC Tools

The IFC believes their free software tool — the EDGE green building certification programme (www.edgebuildings.com) — is better for emerging markets than the traditional Leadership in Energy and Environmental Design (LEED) certification used in developed countries, as the latter is very complex and expensive.

In her presentation ‘Aligning Sustainable Building Practices with Financial Standards’, the IFC’s Michelle Farrell outlined how to use their EDGE App (a tool for designers, developers, policymakers, bankers, and investors), which allows one to compare your green building to a “locally relevant” conventional building and enables users to model “payback” for each efficiency measure in energy, water, and other building operating costs, with additional investments required (typically less than 2 per cent, although this is a ballpark figure), thereby reducing costs and speeding up design and decision-making. It is now used in more than 100 countries, with 86,000 users, including much of Latin America.

In Colombia (there was also a presentation from leading Colombian bank Bancolombia), EDGE-certified construction reached 27 per cent of annual new builds in 2023, partly driven by incentives, such as the remission of value added tax (General Consumption Tax in Jamaica).

Other IFC tools include their Building Resilience Index (BRI), with four resilience levels (the highest being AA, meaning it will likely withstand all applicable hazards at high level), clearly particularly applicable to our general insurers. Finally, they have Advanced Practices for Environmental Excellence (APEX), a climate action planning, investment (includes local stakeholders), and policy tool that combines advisory and investment expertise for cities to attract investment to create solutions in six key areas: waste, renewable energy, public transportation, climate smart water, electric vehicles, and green buildings.

The International Financial Corporation has invested in close to 23 gigawatts of renewable energy over the past 10 years.

Keith Collister