Climate change can have severe impacts on the private sector, especially micro, small and medium-sized enterprises (MSMEs). The adverse effects of climate change can interrupt business operations such as transportation, attendance of workers, product quality and quantity, threatening their bottom line.
MSMEs must explore ways of reducing their vulnerability to climate change while being cognizant of the opportunity for them to capitalise and make societies more resilient to the changing climate. How do we do this? In particular, how do we mobilise MSMEs in climate action? What is preventing them playing a significant role?
At the Green Climate Fund (GCF) Structured Dialogue with the Caribbean in June 2017, Jamaica led the charge to mobilise the region’s private sector. With support from the Commonwealth Climate Finance Access Hub through the placement of a national climate finance adviser, the Climate Change Division of Jamaica’s Ministry of Economic Growth and Job Creation secured $582,000 from the GCF.
The funds were utilised to implement a readiness initiative to mobilise the private sector to support low carbon and climate resilient development in Jamaica and other Caribbean countries.
In this blog, we highlight four ways that Jamaica is accelerating private sector engagement in climate action through this readiness initiative.
1. Understanding the challenges and barriers – Jamaica undertook a national scoping study to investigate the barriers faced by private sector in climate investment. The study revealed barriers such as:
2. Building capacity to access climate finance – Opportunities exist to support private adaptation investment such as the Climate Change Adaptation Line of Credit (CCALoC) for Adaptation under the Adaptation Programme and Financing Mechanism of the Pilot Programme for Climate Resilience (PPCR), which supports the agriculture and tourism sector. There is also the “Financing Water Adaptation in Jamaica’s New Urban Housing Sector” which supports households in adopting adaptation technologies. However, through the readiness initiative, Jamaica will focus on training selected private sector entities to transform project ideas into bankable projects. While the training will focus on developing project concepts for the GCF, it will also allow for greater uptake of other funding opportunities that support private adaptation and mitigation investment.
3. Increasing capability to directly access multilateral climate funds – To date, no national or regional private finance institutions that can access the financial resources available from the GCF’s private sector facility. The readiness initiative will investigate the most appropriate candidates for accreditation in the region and undertake a gap assessment to identify at least two entities who can meet the GCF accreditation requirements.
4. Following a plan – In March 2019, a regional scoping study was undertaken, targeting five Caribbean countries – Barbados, Belize, Jamaica, St. Lucia and Trinidad and Tobago, and to identify the barriers to climate investment faced by the private sector. This study will inform the draft regional action plan outlining the priority initiatives to overcome the barriers identified. From this, many capacity development interventions will be formulated for implementation.
In conclusion, while MSMEs are vulnerable to climate change, they remain a key player in building resilience in communities. Many MSMEs may not be yet ready to take climate action but Jamaica is committed to laying the groundwork to support private adaptation investment.
The viewpoints in this blog are those of the author.