A preliminary report commissioned by the governments of Jamaica and Dominica Green Bond Project cites numerous benefits that can be derived from the implementation of a green bond market. Notwithstanding this, there are some challenges that could hinder the market’s successful development. The report also referenced some solutions to these challenges as well as provided opportunities for growth and sustainability.

Green bonds are typically used to finance projects that are sustainable and positively impact the environment. As a result of that, the Jamaica Stock Exchange (JSE) joined forces as the technical partner on the project as it sees this as a key component to the development of the capital market. The opportunities the JSE sees are:

The introduction of new technologies to promote compliance with climate commitments;

The building of a regulatory framework that promotes green and blue financing;

access to multilateral and bilateral financing and technical assistance;

exchange of experiences with advanced countries in the green bond market; and

an action plan designed for issuing green bonds.

Based on the SITAWI report, all these objectives can materialise if Jamaica strengthens its sectoral capacities to quantify positive environmental impacts and create minimum criteria for structuring green projects. The minimum criteria should include issues in environmental management, labour and working conditions, pollution prevention, community health, safety and security, and conservation of natural resources.

The managing director, Dr Marlene Street Forrest, believes all the objectives outlined are achievable if the report’s broad range of recommendations are followed. “If we act expeditiously, we position ourselves ahead of the curve,” says Dr Street Forrest. “We are therefore taking a collaborative approach to moving quickly to establish the infrastructure for green bonds.”

The debt capital market is the vehicle through which climate resilience and low carbon development will be effected. Consequently, the report assessed the market’s readiness for local and international green bonds to determine how they can be integrated into the regional financial markets.

The report proposes a road map to boost the green bond market in six Caribbean countries: Jamaica, Barbados, Trinidad & Tobago, St Lucia, Dominica, and Suriname. Of those, only Barbados has issued green bonds, which Dr Street Forrest expects may serve as a reference for others. The road map lays out development stages for green bonds in these territories.

An additional recommendation is for a pilot project to better understand needs, barriers, challenges and opportunities. The results should be a design for green bonds and other financial products that align with Jamaica’s climate goals and financing needs. The JSE plans to develop a pipeline of potential projects for issuance of bonds. Dr Street Forrest, however, hinted that there are a few legal and regulatory hurdles to be addressed before this can be realised.

The JSE green bonds will raise funds on Jamaica’s and regional debt markets to finance environmentally sustainable activities. It is likely to cover engagements in energy efficiency, clean transportation, pollution prevention, sustainable agriculture, fisheries, forestry, the protection of aquatic and terrestrial ecosystems, clean water, and sustainable water management.

These projects are expected to strengthen Jamaica’s sustainability goals and build a mindset for protecting the environment. This is consistent with the Government’s plans to reduce the country’s greenhouse gas emissions by 60 per cent by 2030. The JSE’s Green Bond Project is one of the initiatives that is expected to help in achieving the Government’s objective.