Fiji is set to issue the first sovereign green bond from a developing country, prime minister Frank Bainimarama revealed on Wednesday.
With technical support from the World Bank, the Pacific island state aims to raise 100 million Fiji dollars ($50m) to build resilience to climate change and support a shift to 100% renewable energy.
In a statement issued by the bank, Bainimarama touted the move as an example of financial innovation to protect the vulnerable.
“The Fijian people, along with every Pacific islander, live on the front lines of climate change,” Bainimarama said. “The rising seas, changing weather patterns and severe weather events are threatening our development, our security and the Fijian way of life, along with the very existence of some of our low-lying neighbours.
“I have made access to climate finance a key pillar of our upcoming COP23 presidency, and we are proud to set an example to other climate-vulnerable nations by issuing this green bond to fund our work to boost climate resilience across Fiji.”
Fiji is recovering from a direct hit by Cyclone Winston in 2016, the strongest tropical storm recorded in the southern hemisphere. The economic losses were estimated at nearly a third of the country’s GDP – and climate change is predicted to increase the intensity of storms.
Green bonds are a mechanism to raise funds for climate-friendly projects, offering a kind of low-risk package that appeals to institutional investors. A small but emerging sector of the market, “green” bonds are set to reach $134.9 billion in value this year, according to the World Bank.
The announcement coincided with Fiji hosting a preparatory meeting for next month’s UN climate summit, which Bainimarama will preside over in Bonn, Germany.
In a speech to the “pre-COP” meeting, Bainimarama stressed that parties to the Paris climate agreement must hold themselves to its toughest warming limit.
“We can no longer ignore this (climate) crisis,” he said, as reported by Reuters. “An absolute dedication to meet the 1.5C target is what we need and what we must take to Bonn.”
That is at the higher end of the range of ambition expressed in the Paris, where 195 countries agreed to hold global temperature rise from pre-industrial levels “well below 2C”.
A study last month claimed it was still geophysically possible to stay within 1.5C, albeit politically and technologically challenging. Other analysts are sceptical, given the world has already warmed by 1C and coal power plants are still being built, locking in future carbon emissions.
The Intergovernmental Panel on Climate Change is due to release a special report on the 1.5C threshold next year, summarising the available evidence.
Fiji’s government has campaigned hard at home to enrol the population in the COP23 presidency, hosting community awareness-raising events. On Tuesday, as the pre-COP meeting closed, the Fiji Sun reflected this enthusiasm, running a front page dominated by the words: “Bonn here we come”.