GEISHA KOW­LESSAR-ALON­ZO

As cli­mate vul­ner­a­bil­i­ties deep­en across the Caribbean, re­gion­al fi­nan­cial in­sti­tu­tions, cap­i­tal mar­ket op­er­a­tors, and mort­gage lenders are fun­da­men­tal­ly re­think­ing how cap­i­tal is de­ployed across small is­land de­vel­op­ing states.

Mov­ing past off-the-shelf in­ter­na­tion­al frame­works, in­dus­try lead­ers are mo­bil­is­ing to build lo­calised, re­silient fi­nan­cial sys­tems ca­pa­ble of fund­ing cli­mate adap­ta­tion, en­er­gy tran­si­tion and in­fra­struc­ture preser­va­tion.

Speak­ing on the pan­el “From Guide­lines to Trans­ac­tions: Build­ing T&T’s GSS+ Mar­ket”—held at the Hy­att Re­gency, Port-of-Spain, fol­low­ing the launch of T&T’s new GSS+ is­suance guide­lines, Lisa Howard, as­so­ciate di­rec­tor of sus­tain­abil­i­ty at CIBC Caribbean em­pha­sised that for­eign tem­plates can­not sim­ply be over­laid on­to Small Is­land De­vel­op­ing States (SIDS).

In­stead, un­lock­ing long-term cap­i­tal across T&T and the wider arch­i­pel­ago re­quires tar­get­ed, lo­calised frame­works an­chored by three core mar­ket pil­lars: adap­ta­tion and re­silience, tran­si­tion fi­nance and blue fi­nanc­ing.

Build­ing struc­tur­al re­silience against cli­mate im­pacts forms the im­me­di­ate pri­or­i­ty for re­gion­al mar­kets.

Point­ing to T&T’s na­tion­al adap­ta­tion plan, Howard high­light­ed key sec­tors where tar­get­ed cap­i­tal is ur­gent­ly need­ed, in­clud­ing wa­ter man­age­ment sys­tems, cli­mate-smart agri­cul­ture and re­silient pub­lic in­fra­struc­ture.

Fi­nan­cial so­lu­tions in this space cen­tre on prac­ti­cal, lo­calised risk re­duc­tion, such as con­struct­ing flood-re­silient civ­il works and strength­en­ing grid re­silience through sus­tain­able build­ing de­sign.

“Trinidad and To­ba­go’s na­tion­al adap­ta­tion plan al­ready men­tioned some of these ar­eas. Wa­ter, sus­tain­able in­fra­struc­ture, al­so agri­cul­ture and we see the po­ten­tial for fi­nanc­ing in each of these ar­eas.

“So we’re talk­ing about things like flood re­silience, en­er­gy, re­silience and en­er­gy through sus­tain­able build­ings,” Howard ex­plained.

While adap­ta­tion pro­tects ex­ist­ing as­sets, the sec­ond pil­lar—tran­si­tion fi­nance—serves as a vi­tal eco­nom­ic en­gine for heav­i­ly in­dus­tri­al re­gions.

Howard cau­tioned that Caribbean fi­nan­cial mar­kets can­not blind­ly mir­ror mod­els de­signed for non-in­dus­tri­alised for­eign economies, not­ing that

T&T’s en­er­gy-in­ten­sive in­dus­tri­al base­line de­mands cus­tomised cap­i­tal so­lu­tions that al­low lega­cy pro­duc­ers to de­car­bonise sys­tem­at­i­cal­ly over time.

“When we look at some­thing like tran­si­tion fi­nance, which I think is par­tic­u­lar­ly im­por­tant for Trinidad and To­ba­go, we see the mar­ket here can’t just repli­cate what’s been done in oth­er economies. So there’s a sig­nif­i­cant op­por­tu­ni­ty for things like the en­er­gy in­ten­sive in­dus­tries to be­come more en­er­gy ef­fi­cient, for car­bon cap­ture. A lot of the in­fra­struc­ture is al­ready in place in the is­land be­cause of the oil and gas econ­o­my,” she ex­plained.

Com­ple­ment­ing ter­res­tri­al in­dus­tri­al shifts is the third strate­gic pil­lar: blue fi­nanc­ing.

This mech­a­nism lever­ages the Caribbean’s vast ocean econ­o­my and ma­rine nat­ur­al cap­i­tal.

Ocean stew­ard­ship is an in­ter­con­nect­ed re­spon­si­bil­i­ty across the arch­i­pel­ago, re­quir­ing cap­i­tal mod­els that pre­serve coastal ecosys­tems while dri­ving eco­nom­ic out­put.

As Howard not­ed, “We have crit­i­cal as­sets like man­grove pro­tec­tion, par­tic­u­lar­ly here in Trinidad, along with the preser­va­tion of wet­lands, sus­tain­able fish­eries, and sus­tain­able tourism.”

De­spite the clear roadmap pro­vid­ed by these three pil­lars, sys­temic bot­tle­necks con­tin­ue to slow the is­suance of the­mat­ic bonds and sus­tain­able debt across the Eng­lish-speak­ing Caribbean.

Ad­dress­ing these ex­e­cu­tion gaps, Howard iden­ti­fied mar­ket ed­u­ca­tion as the pri­ma­ry pre­req­ui­site.

Lo­cal en­ter­pris­es, in­sti­tu­tion­al is­suers and pub­lic en­ti­ties must first un­der­stand how to struc­ture, is­sue and mar­ket sus­tain­able fi­nan­cial in­stru­ments.

“One of the main things miss­ing ini­tial­ly is ed­u­ca­tion. As we at CIBC Caribbean trav­el across the re­gion, we ac­tive­ly en­gage stake­hold­ers to raise aware­ness about these emerg­ing cap­i­tal op­por­tu­ni­ties,” Howard said adding, “Once that foun­da­tion is built, es­tab­lish­ing the sup­port­ing mar­ket in­fra­struc­ture be­comes the vi­tal next step.”

Bridg­ing the gap be­tween ed­u­ca­tion­al aware­ness and mar­ket ex­e­cu­tion re­quires build­ing a uni­form re­gion­al tax­on­o­my.

With­out con­sis­tent stan­dards, green, blue, so­cial, adap­ta­tion, and tran­si­tion as­sets risk re­main­ing frag­ment­ed.

Stan­dar­d­is­ing these de­f­i­n­i­tions across ter­ri­to­ries en­sures projects are cat­e­gorised trans­par­ent­ly, lay­ing the ground­work for a ro­bust, bank­able deal pipeline.

“I think once we’ve sort of checked the box on the ed­u­ca­tion, checked the box on the in­fra­struc­ture, then we see that pipeline be­ing cre­at­ed and that pipeline get­ting stronger.

“So projects need to be iden­ti­fied. Are they so­cial? Are they green? Are they en­vi­ron­men­tal? Are they blue? Are we look­ing at adap­ta­tion? Are we look­ing at tran­si­tion as­sets? And then we need to pack­age things in a way that can re­al­ly be un­der­stood and processed by the mar­ket,” she added.

Be­yond project iden­ti­fi­ca­tion, re­gion­al cap­i­tal mar­kets face a per­sis­tent chal­lenge: in­di­vid­ual project scale.

Small bal­ance sheets of­ten strug­gle to at­tract large-scale in­ter­na­tion­al cap­i­tal in­de­pen­dent­ly.

Howard urged re­gion­al is­suers to lever­age their shared ge­og­ra­phy by repli­cat­ing suc­cess­ful debt struc­tures—such as proven blue bond mod­els—across mul­ti­ple ju­ris­dic­tions.

Ag­gre­gat­ing small­er is­land projects un­der stan­dard­ised frame­works would build re­peat is­suances, cre­at­ing the crit­i­cal mass nec­es­sary to draw glob­al in­sti­tu­tion­al in­vestors.

TTSE mod­ernises in­fra­struc­ture for GSS debt list­ings

As re­gion­al mar­ket lead­ers work to ag­gre­gate project pipelines, do­mes­tic mar­ket plat­forms are ac­tive­ly up­grad­ing their tech­no­log­i­cal and reg­u­la­to­ry frame­works to clear the path for in­com­ing debt. Match­ing the mo­men­tum out­lined by CIBC Caribbean, the T&T Stock Ex­change (TTSE) is po­si­tion­ing its plat­form to ef­fi­cient­ly list and trade these emerg­ing fi­nan­cial in­stru­ments.

Joy Ram­lo­gan, reg­u­la­to­ry, le­gal, and com­pli­ance of­fi­cer at the TTSE who al­so spoke on the pan­el, con­firmed that the ex­change is cur­rent­ly up­grad­ing its dig­i­tal in­fra­struc­ture to seam­less­ly sup­port Green, So­cial, and Sus­tain­abil­i­ty (GSS) bonds.

Recog­nis­ing that seam­less ex­e­cu­tion is vi­tal for mar­ket adop­tion, the TTSE is en­hanc­ing its on­line trad­ing mod­ule to ac­com­mo­date high-vol­ume bond is­suances and sub­se­quent as­set tranch­es.

“Lots and lots of list­ings of bonds,” Ram­lo­gan not­ed, high­light­ing the ob­jec­tive to bring sub­se­quent bond tranch­es to the plat­form to lever­age dig­i­tal ex­e­cu­tion. “To pro­mote the ex­change, we have this on­line trad­ing mod­ule, and we’re ex­pand­ing it to bonds. So it’s go­ing to be sup­port­ing the GSS bonds, the ease of trans­ac­tion.”

The ex­change would al­so hold a seat at the draft­ing ta­ble, en­sur­ing the in­com­ing Cari­com clas­si­fi­ca­tion sys­tem seam­less­ly in­te­grates in­to the TTSE’s ex­ist­ing bond frame­work.

“In terms of the coun­try, the Cen­tral Bank got in touch with us be­cause the re­gion­al green tax­on­o­my is be­ing de­vel­oped by Cari­com, and we’re go­ing to be hav­ing a place at the ta­ble in or­der to de­vel­op that. And that will be the green tax­on­o­my that can be added to our bond frame­work, be­cause we see this as a liv­ing doc­u­ment. When we get our re­gion­al green tax­on­o­my, that’s go­ing to be the tax­on­o­my that’s the ba­sis,” Ram­lo­gan added.

Nav­i­gat­ing Cli­mate Risks and Safe­guard Cap­i­tal

While cap­i­tal mar­ket in­fra­struc­ture up­grades progress at the ex­change lev­el, pri­ma­ry mort­gage lenders are grap­pling di­rect­ly with the phys­i­cal re­al­i­ties of cli­mate ex­po­sure. Brent McFee, act­ing chief ex­ec­u­tive of­fi­cer of the T&T Mort­gage Bank (TTMB), un­der­scored that cli­mate risk has shift­ed from an en­vi­ron­men­tal ab­stract to a core bal­ance sheet ex­po­sure.

Giv­en T&T’s ge­og­ra­phy, a sub­stan­tial por­tion of the pop­u­la­tion and hous­ing stock sits with­in 10 kilo­me­tres of the ocean.

“In un­der­stand­ing, of course, we fi­nance our ac­tiv­i­ties in com­mu­ni­ties,” McFee not­ed, point­ing di­rect­ly to the vul­ner­a­bil­i­ty of coastal pop­u­la­tions. “Cli­mate risk, the is­sue of ris­ing sea lev­els—where chil­dren and peo­ple with­in the 10 kilo­me­tres of the ocean, there’s a sig­nif­i­cant pop­u­la­tion, our pop­u­la­tion is around the ocean. And we have to pay at­ten­tion to that.”

To pro­tect its mort­gage port­fo­lio, TTMB is strength­en­ing its in­ter­nal risk con­trols to com­ple­ment reg­u­la­to­ry bod­ies like the En­vi­ron­men­tal Man­age­ment Au­thor­i­ty (EMA). “The EMA is do­ing a won­der­ful job. And we want to com­ple­ment that as well with al­so our in­ter­nal process­es to en­sure that we have a ro­bust En­vi­ron­men­tal So­cial Man­age­ment Sys­tem that mon­i­tors these things to de­ter­mine where we can con­tin­ue to de­ploy our funds,” McFee ex­plained.

This in­ter­nal over­sight is cru­cial as se­vere weath­er events in­creas­ing­ly desta­bilise lo­cal com­mu­ni­ties through in­tense rain­fall and coastal degra­da­tion.

He point­ed to vul­ner­a­ble re­gions like Ma­yaro, where se­vere weath­er can per­ma­nent­ly im­pair prop­er­ty val­ues and com­mu­ni­ty vi­a­bil­i­ty adding, “And how do we con­tin­ue to fi­nance projects in those com­mu­ni­ties? If you have a se­vere weath­er sys­tem in Ma­yaro, it be­comes ru­ined. So all of these things we have to pay par­tic­u­lar at­ten­tion to. Be­cause, of course, it is go­ing to con­tin­ue to be, or it is go­ing to be­come a fi­nan­cial risk for us” McFee said.

BOX

The Guide­lines for the Is­suance of GSS+ In­stru­ments in T&T pro­vide a prac­ti­cal frame­work to sup­port the growth of the coun­try’s sus­tain­able fi­nance mar­ket.

Cov­er­ing green, so­cial, sus­tain­abil­i­ty and sus­tain­abil­i­ty-linked in­stru­ments, the guide­lines of­fer is­suers, in­vestors, reg­u­la­tors and mar­ket in­ter­me­di­aries clear de­f­i­n­i­tions and step-by-step guid­ance across the full is­suance life­cy­cle, from frame­work de­vel­op­ment and project el­i­gi­bil­i­ty to ex­ter­nal re­view, re­port­ing and post-is­suance ver­i­fi­ca­tion. By cre­at­ing a com­mon lan­guage and clear­er mar­ket ex­pec­ta­tions, they aim to low­er bar­ri­ers to is­suance, strength­en in­vestor con­fi­dence and sup­port a cred­i­ble pipeline of GSS+ trans­ac­tions.

The Guide­lines were de­vel­oped by Cli­mate Bonds Ini­tia­tive in part­ner­ship with the IDB In­vest and TTSE, through a co-cre­ation process in­volv­ing stake­hold­ers across the lo­cal cap­i­tal mar­ket, fi­nan­cial in­sti­tu­tions, reg­u­la­to­ry bod­ies and cor­po­rates.