Caribbean Small Island Developing States (SIDS) are fierce climate champions despite their negligible contribution to the crisis. As they set ambitious goals in their new generation of national climate plans (NDCs) the question is now: how will they mobilize the resources needed to turn commitments into action? 

Already strained by limited fiscal space and elevated borrowing costs, severe climate impacts have proven to decimate island’s GDP, as was the case of Jamaica in 2025, where damages caused by Hurricane Melissa represented over 56 percent of the country’s GDP. 

While most countries in the Caribbean rely on international climate finance, climate funds, Multilateral Development Banks or bilateral cooperation to finance climate action, they are championing innovative instruments to overcome the scale of the challenges they face.

At UNDP, we did a deep dive into the recently submitted NDCs of 11 Caribbean countries, and this is what we learned:  

1. Countries are translating climate commitments into financing plans

We see a shift from simply identifying broad funding needs towards determining how individual measures can be financed and implemented. 64 percent of countries are developing or using climate finance strategies, investment plans or financing plans to translate NDC priorities into concrete action. With UNDP support, Jamaica has developed a financing and investment plan for its Long-Term Strategy and Trinidad and Tobago is updating its NDC Financial Investment Plan.

2. Private capital, blended finance and de-risking are becoming central strategies

Around 70 percent of countries seek to mobilize private investment, including through public-private partnerships, blended finance, and bankable project pipelines, reflecting a broader transition from simply financing projects to making projects financeable. Public and concessional finance can absorb risks that commercial investors cannot reasonably bear, support project preparation and improve investment viability.

3. Nature and blue-economy finance off a distinctive opportunity to raise capital with minimal debt burden

Coastal and marine ecosystems can simultaneously deliver mitigation, adaptation, biodiversity and livelihood benefits for SIDS. Barbados, for example, mapped approximately US$150 million in blue-economy investment opportunities, while Jamaica and Guyana connect mangrove restoration and coastal protection with adaptation finance. In this line, UNDP supported Barbados, Grenada and Saint Vincent and the Grenadines in identifying blue economy investment pipelines and financing mechanisms that can be integrated into national development plans.

4. Climate-risk finance and debt instruments are gaining traction

For Caribbean SIDS, conventional borrowing may address an immediate investment need while increasing long-term fiscal vulnerability. For these countries, debt conversions, disaster clauses, contingent finance and regional risk-pooling mechanisms can create fiscal space and protect development gains without relying exclusively on additional sovereign debt. Around 45 percent of the countries include climate or disaster insurance, parametric insurance or other risk-transfer mechanisms in their NDCs. Additionally, 36 percent of countries consider debt conversions, restructuring, disaster clauses or related mechanisms. 

The Caribbean Catastrophe Risk Insurance Facility SPC (CCRIF SPC), a multi-country risk-pool mechanism, is providing parametric disaster insurance to governments and utilities in the Caribbean and Central America. Meanwhile, Barbados and Belize are testing blue bonds to finance existing debt and fund long-term conservation efforts.

5. Adaptation remains the central climate finance challenge

All countries analyzed recognize adaptation or resilience as a priority. Yet, at least 64 percent explicitly identify significant adaptation finance needs, financing gaps or dependence on international support. SIDS continue to explore every avenue to mobilize the resources needed. Through the newly minted Fund for responding the Loss and Damage, SIDS are not only key beneficiaries but they play an important role in the governance structure, while continuing to be strategic advocates within the Fund. 

6. Closing the financing gaps requires matching investments with the right instruments

An effective climate finance at scale within small economies will require matching each type of investment with the most appropriate instruments and donor. Caribbean countries are already considering these matches in their NDCs and, in some cases, have taken steps to initiate them. 

Through Euroclima Caribbean, UNDP is working with the European Union, national governments and regional institutions to assess investment needs, strengthen pipelines and generate economies of scale. UNDP also provided technical support to issue the Development Bank of Latin America and the Caribbean’s (CAF) first Blue Bond, which raised EUR 100 million for sustainable and climate-resilient coastal development.

Caribbean countries are demonstrating their commitment to mobilizing the resources needed to achieve their climate goals, but they cannot do it alone. Strengthening and empowering regional organizations must be part of the solution. Institutions such as CARICOM, CDB, the CCCCC, OECS and the CCRIF, can help pool expertise and capacity, aggregate projects, standardize approaches, reduce transaction costs and create economies of scale, while strengthening the region’s ability to access and mobilize climate finance.

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Delivered in collaboration with a wide variety of partners, Pledge to Impact has supported over 120 countries to enhance and implement Nationally Determined Contributions (NDCs) under the Paris Agreement. Pledge to Impact is generously supported by the governments of Germany, Japan, United Kingdom, Sweden, Belgium, Spain, Iceland, the Netherlands, Portugal and other UNDP core contributors. The programme underpins UNDP’s contribution to the NDC Partnership.