“Build back better” is the rallying cry for Caribbean businesses in the aftermath of Hurricane Beryl’s devastating impact, which underscores the urgent need for companies to prepare for the effects of climate change.

Anton Edmunds, general manager of the Country Department at the Inter-American Development Bank’s Caribbean Group, drove home this point in a presentation during the Re-align Business & Investment Conference at the AC Hotel Kingston earlier this week on driving sustainable growth through environmental, social, and governance (ESG) sustainability strategies.

“We’re going to have to embrace sustainable solutions to ensure that our businesses maintain, sustain, and then recover after these kinds of events,” Edmunds told a room full of business leaders and entrepreneurs.

Hurricane Beryl’s trail of destruction has left a staggering bill — over $5 billion in damages to the agricultural sector, $10.25 billion in infrastructural damages in Jamaica, and additional uncalculated losses. The storm also ravaged Barbados’s fishing community and decimated small islands in St Vincent and the Grenadines.

Edmunds warned that this devastating scenario may become the new norm in the Caribbean. Furthermore, utility network issues persist, and the disaster’s impact on productivity and businesses cannot be ignored.

He pointed out that many entrepreneurs had to prioritise family care, while employees struggled to return to work or engage fully due to personal circumstances, which added to hidden costs significantly affecting businesses and operations.

“As much as climate change is not the result of our doing, it’s something that we’re going to have to deal with. And we’re going to have to build back better,” he urged.

In his presentation, he broke down the complex concept of ESG into tangible components — environmental responsibility, social accountability, and governance practices.

On the environmental side, companies must address waste, pollution, resource depletion, and greenhouse gas emissions. Socially, businesses must prioritise employee treatment, working conditions, community engagement, and health and safety. Governance encompasses corporate self-regulation, remuneration strategies, corruption prevention, and diversity.

Edmunds stressed that these principles are essential for every organisation, regardless of size or scope.

He further pointed to a new trend that is emerging among financial institutions; that of increasingly adopting ESG criteria to evaluate investments, businesses, and clients. This shift, he says, is not driven by a reluctance to lend, but rather by the need to ensure responsible lending practices.

While financial institutions aim to generate profits, they are also bound by internal rules and international requirements that necessitate a broader focus beyond projected margins, he said. To access international funding, financial institutions must demonstrate that their clients have equivalent systems in place. As a result, financial institutions that operate globally or regionally must implement the same ESG mechanisms as external entities and apply these checks and balances to all businesses they serve.

“We can’t lend money without ESG standards put in place,” Edmunds summed up, adding that the IDB cannot responsibly serve developing countries and economies without considering ESG frameworks.

He told attendees to the conference that whether lending to government road projects, investing in financial institutions, or supporting corporate projects and innovative ideas, ESG standards are essential for ensuring long-term sustainability.

As of January 1, 2023, the IDB has been assessing its operations to ensure they align with the transition to low-carbon and climate-resilient economies. This move is part of the bank’s commitment to the Paris Agreement and global climate compacts.

“In spite of our best interests to want to provide the services and the resources, we have signed on to global compacts that ultimately constrain who it is and how it is we can lend to people,” Edmunds explained.

The IDB has reaffirmed its commitment to addressing the region’s growing climate concerns, setting ambitious climate finance goals with a strong focus on education and capacity-building. The bank’s new institutional framework prioritises climate change as a core objective, emphasising biodiversity, natural capital, climate action, and sustainability.

A recent study conducted by IDB Invest, the private sector arm of the IDB, found a significant correlation between strong environmental and social performance and increased brand value. According to the study, businesses that prioritise ESG metrics experienced a 15 to 30 per cent increase in brand value.

“This represents an opportunity to differentiate yourself and capture new markets,” Edmund noted. “People care about who they buy from and how you treat your staff. A strong brand is community-driven and community-engaged, embracing ESG metrics and communicating that to clients. This affinity will drive business success.”

In a bid to drive sustainable development in the region, IDB Invest is pioneering financing solutions beyond traditional lending. The institution is providing technical assistance to support cutting-edge projects, such as blue green facilities, a first for the region.