Creating a Corporate Coastal Resilience Security (bond) 

Industriesoperating in coastal areas,such as real estate,ports, andtourism or hospitality, areincreasingly vulnerable to extreme weather events and ocean-derived risks.  In tropical areas and Small Island Developing States (SIDS), many private businesses are seeking to limittheirexposure with well-targeted insurance solutions, but their financial viability is undercut by rising insurance premiums and diminishing asset values.

Ecosystems such as mangroves, coral reefs, seagrass beds and salt marshes act as a natural defence and mitigatebusinessexposure to ocean hazards.Yet the private sector hasnot been able to fund natural capital because there are currently no financially sustainable funding mechanisms available.  

ORRAA is working with GreensquareVentures to design and arrange financing for a Corporate CoastalResilienceSecurity (bond), and identify a private sector issuer. Thesecuritywill mitigate the issuer’s exposure to ocean risk in coastal areas by allocating proceeds towards sustainable infrastructure investmentsand a transition to a low-carbon business strategy.

Thesecurityhas the potential to mainstream nature-based solutions through a financially viable and cost-sensitive approach, with benefits for various actors in addition to theprivate sectorissuer.  Theinsurancesector will mitigate its exposure to ocean risk and will strengthen client portfolios and partnerships by limiting or reducingpremium increases; local communities andgovernments will profit from more resilient and productive coastal ecosystems; and investors will be able to participate in a securitythat offers risk-adjusted returns aligned with their Environmental, Social and Governance (ESG)Impact objectives.  

The security willbe designed to be replicable and scalable across a range of coastal ecosystems.  As part of the project, GreensquareVentureswill also design anEnvironmental, Social and Governance (ESG)Impact, Measurement and Reporting Framework aligned with relevant sustainability standards and, where relevant, include coastal ecosystem impact as measured by the Coastal Risk Index (CRI).