Caribbean Development Bank (CDB) Entity Work Programme: Four Year Cycle (2020-2023) 15 January 2021
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Caribbean Development Bank (CDB) Entity Work Programme: Four Year
Cycle (2020-2023)
15 January 2021
Date
Entity Type Size E&S Fiduciary functions
Accredited
☒ Project ☒ On-Lending / Blending
Management ☒ Loans
B.14 October Direct Access -
Small A/I-1
2016 Regional ☒ Grant Award ☒ Equity
☐ Guarantees
GCF Entity Work Programme | 1
Caribbean Development Bank (CDB) Entity Work
Programme: Four Year Cycle (2020-2023)
Date Entity
Size E&S Fiduciary functions
Accredited Type
☒ Project ☒ On-Lending / Blending
B. 14 Direct Management ☒ Loans
October Access - Small A/I-1
2016 Regional ☒ Grant Award ☒ Equity
☐ Guarantees
1. Introduction and Vision
is promoting a more integrated approach to
CDB in the Caribbean development in its BMCs: it is closing infrastructure
gaps, capacity deficits and the digital divide;
The Caribbean Development Bank (CDB) is a expanding the role of the private sector role; and
regional financial institution with a mandate to balancing country demand with the Bank’s resource
support social and economic development in Small availability.
Island Developing States in the Caribbean. This
mandate was given to the Bank when it was Strategic Partnerships
established in 1970 by an agreement between sixteen
Caribbean countries and a selection of non-regional In serving its BMCs, CDB plays an important role in
members. Its membership has since expanded to the overall regional architecture for financial and
include nineteen regional borrowing member technical assistance. The Bank also regularly
countries (BMCs), three regional non-borrowing collaborates with partner organizations to mount a
members, and five non-borrowing members from coordinated and coherent response to countries’
outside the region. needs. Common international partners include the
Inter-American Development Bank (IDB) and
CDB is playing a critical role in helping countries to European Investment Bank (EIB) – partners that often
navigate many of their development obstacles. As a lend to Caribbean countries through CDB – as well as
trusted partner, CDB is providing development United Nations entities (e.g. UNDP, UNEP, FAO,
resources and technical advice at a critical time in the UNICEF) and bilateral partners (e.g. GIZ, DFID).
history of its BMCs. CDB has a track record of The Bank also collaborates closely with other
delivering support across the following sectors and regional partners that have been established to
areas: agriculture; banking and financial services; address critical sustainable development needs in the
climate resilient development; disaster prevention region, including the Organization of Eastern
and preparedness; education; emergency response; Caribbean States (OECS) Commission, the
energy; environmental protection; gender; general CARICOM Secretariat, the Caribbean Disaster
budget support; reconstruction relief and
rehabilitation; transportation; and water and
sanitation, among others. At the strategic level, CDB
GCF Entity Work Programme | 2
Emergency Management Agency (CDEMA) 1 , the
Caribbean Community Climate Change Centre Although these efforts have produced important
(CCCCC), the Caribbean Centre for Renewable results, CDB recognizes that considerably more must
Energy and Energy Efficiency (CCREEE) and the be done to meet the needs of its BMCs – countries
Caribbean Electric Utility Services Corporation that are among the world’s most vulnerable to rising
(CARILEC), among others. temperatures and sea levels, shifting precipitation
patterns and increasingly intense hurricanes and other
CDB and climate change extreme weather events. This is among the reasons
that CDB has become accredited to the Green Climate
As a member-based organization, CDB strives to Fund (GCF) and Adaptation Fund.
operate in a manner that is responsive as possible to
the evolving needs and priorities of its BMCs. Given CDB and the GCF
that the Caribbean region is increasingly regarded as
being among the most vulnerable to the impacts of a As an Accredited Entity (AE), CDB strives to become
changing climate, climate action has become a top a key GCF partner in the Caribbean. Working closely
priority for CDB’s BMCs. The Bank is responding with other AEs – including CCCCC, but also IDB,
accordingly, including by prioritizing climate EIB and UN entities, among others – CDB aims to be
resilience in its organizational priorities and by a catalyst for rapidly scaling up the flow of climate
pursuing new avenues to mobilize climate finance for finance to support climate-resilient and low-
transformative climate change adaptation and emissions development in the region. Indeed, CDB
mitigation programmes and projects. This responds to recognizes that the flow of climate finance to the
numerous high-level priorities defined by Caribbean region has fallen well short of its needs, and aims to
countries, including the Regional Framework for help rectify this during GCF-1. CDB also aims to
Achieving Development Resilient to Climate Change work with BMCs to ensure climate finance is used
– a framework that guides climate action priorities strategically to: directly leverage additional
across the region, and which CDB, CCCCC and other investment in the short run; unlock further public and
partners are expected to work together to implement. private investment in climate action in the medium
run; and equip key stakeholders to continusouly
CDB has already achieved considerable success in understand, assess and respond to climate change
supporting countries to scale up climate action. risks and impacts over the long run. This ‘vision’ is
Indeed, the Bank was able to mobilize and channel firmly rooted in CDB’s Climate Resilience Strategy
approximately USD 409.6 million in climate finance (2019-24). In short, CDB aims to support its BMCs to
to its BMCs for climate action between 2012-2017. both increase the scale of investment in climate action
Prominent initiatives in this context include the and ensure climate finance is used for the most
Climate Action Line of Credit (CALC) that CDB and impactful and transformational initiatives possible.
EIB signed in 2011, and the follow-up USD 110 The ways in which CDB aims to do this are described
million Climate Action Framework Loan signed by in more detail in Sections 2 and 3 of this document.
these two organizations in 2017. CDB has also
partnered with bilateral donors, who have used
CDB’s position as the only regional development Experience with GCF’s Results Areas
bank to channel support to countries for climate Mitigation:
action in support of countries’ NDCs. For example, ☒ Energy generation and access
through a partnership between CDB and DFID, the ☒ Transport
UKCIF programme is helping countries to build more ☒ Energy
resilient infrastructure. CDB was also able to support ☒ Buildings, cities, industries and
GCF readiness activities in some member countries in appliances
2015, and more recently supported the development Adaptation:
of GCF concept notes for several of its BMCs with ☒ Livelihoods of people and communities
funding from GIZ. Meanwhile, in 2020, the ☒ Health, food and water security energy
Government of Canada partnered with CDB to assist ☒ Infrastructure and built environment
BMCs’ climate change efforts through a new CAD20 ☒ Ecosystems and ecosystem services
million Canada-CARICOM Climate Adaptation
Fund.
1 For example, CDB has supported and (co-)financed numerous
CDEMA projects, including the Model Safe Schools Programme
and the Enhanced Emergency Response programme.
GCF Entity Work Programme | 3
2. Strategic Priorities Overview 2 level with (b) regional assistance, including
to facilitate exchange and cooperation among
CDB Strategic Plan participating countries. Such programmes
provide a means of responding to countries’
The support provided by CDB – including in needs and priorities while achieving
partnership with GCF – is guided by CDB’s Strategic economies of scale, thus improving
Plan 2020-24. This Strategic Plan includes three efficiency for the country, CDB and the GCF.
strategic objectives that are aligned with the 2030 CDB aims to develop and deliver a number
Agenda for Sustainable Development: (i) building of such programmes in sectors where this
social resilience; (ii) building economic resilience; approach is most relevant and impactful, and
and (iii) building environmental resilience. The do so in partnership with interested countries
Strategic Plan also defines what CDB will do to help and (typically) other international entities.
achieve these strategic objectives, including (but not The development of these programmes
limited to) addressing countries’ critical (described in more detail in the ‘Indicative
infrastructure needs and promoting an expanded role Programming’ section of this document)
for the private sector. The Strategic Plan similarly have been initiated by CDB based on prior
defines how CDB will operate to deliver this support, discussions and engagements with BMCs and
including by: prioritizing partnerships; crowding-in the priorities they have identified in this
additional financing, particularly concessional context. 3
resources; pursuing value-for-money; ensuring the
Bank is selective and focused on high-impact (ii) Single-country projects. In some countries
initiatives (where possible) while also ensuring it (and sectors therein), circumstances are
remains responsive to countries’ unique sufficiently unique that they warrant being
circumstances and needs (where relevant). All of addressed through single-country projects
these elements of the 2020-24 Strategic Plan inform rather than multi-country programmes. This
how CDB intends to partner with the GCF. may be due to unique governance or
institutional arrangements, geological or
Pipeline management hydrological conditions, or other such
aspects of the baseline scenario. In such
CDB’s approach to pipeline management will be circumstances, CDB will continue to respond
guided first and foremost by the principles of country to BMCs’ needs through single-country
ownership and leadership. BMCs have already projects if this is deemed to be the most
identified their climate change priorities in their appropriate way forward – i.e. when a
Nationally Determined Contributions (NDCs) and the country requests the Bank’s assistance and
policies, strategies and plans that underpin them, as (for the reasons outlined above) it is not
well as in other planning documents such as GCF practical or feasible to address the country
Country Programmes and CDB Country Strategy request through a programmatic approach.
Papers. CDB will focus on supporting countries to
mobilize and effectively utilize resources to deliver
on these priorities. The ways in which CDB will The projects and programmes developed by CDB are
approach this are two-fold, and are informed by the driven by the demands of its BMCs. Hence, CDB is
core tenets of its Strategic Plan (2020-24): ensuring that the GCF programmes and projects it
develops are aligned with the priorities outlined in
(i) Multi-country programmes. Many Caribbean countries’ NDCs and GCF Country Programmes. To
countries are grappling with common needs the extent possible, CDB will also work with BMCs
and challenges. These can often be addressed to ensure priority programmes and projects (i.e. those
in a cost-effective manner through multi- outlined in the ‘Indicative Programming’ section of
country programmes that balance (a) this Entity Work Programme) are directly included in
investment and other activities at the national relevant BMCs’ GCF Country Programmes to the
2
Some indicative projects may require an upgrade in the accreditation programmes. In the event that the GCF Board decides that this limit
type (e.g. environmental and social safeguards, fiduciary standards should also apply to the total size of programmes, CDB may ultimately
and/or size category). apply for an accreditation upgrade in due course (i.e. from small size to
3
CDB expects that multi-country programmes will play an increasingly medium size). However, the Bank will first focus on developing and
important role in delivering support to the Caribbean at a scale that is delivering the initiatives in its initial pipeline before considering such an
commensurate with the magnitude of the challenges that these countries upgrade. This may require undertaking modest adjustments to the funding
face. CDB had understood that its current accreditation scope would be envelope envisaged for some of these initiatives to ensure they remain
conducive to this, as its Accreditation Master Agreement indicates that aligned with the latest GCF policy in this regard.
the USD 50 million limit will apply to projects and activities within
GCF Entity Work Programme | 4
extent possible. At the same time, CDB recognizes CDB considers that the GCF has a crucial (and
that specific pipeline plans – both those of CDB and irreplaceable) role to play in supporting such
those outlined in its BMCs’ Country Programmes – initiatives. In particular:
are constantly evolving in response to changing
circumstances and priorities. CDB will therefore (i) The GCF can provide much needed
adopt a flexible approach to GCF pipeline concessional resources that other partners
management, ensuring its plans reflect the priorities cannot. CDB and other stakeholders within
of its BMCs while also constituting a rational way the region have very limited concessional
forward for CDB as an Accredited Entity. This Entity resources at their disposal, and the resources
Work Programme should therefore be regarded as a that are available must be used to address a
‘living document’, whereby the core principles and wide range of sustainable development needs.
over-arching priorities will remain constant while This leaves a significant gap in the
specific pipeline plans are subject to change. CDB availability of concessional financing that is
management has been closely involved in defining often needed to deliver the types of crucial
the priorities and pipeline outlined in this document, climate-related investments and other
and will remain closely involved in any/all decision- activities described above. The GCF has an
making regarding the Bank’s evolving GCF pipeline. important role to play in this regard,
Individual pipeline management decisions will be including by ensuring financing is provided
made based on a number of factors, including those at rates and terms that make investments
outlined above, as well as the technical, operational viable and attractive to the prospective
and financial feasibility and merits of the envisaged recipients/borrowers (and thus feasible).
initiatives. Indeed, this latter point will be of critical
importance in the next few years, as public
Added value of the GCF and private indebtedness across the
Caribbean has become significantly more
As outlined in Section 1, CDB expects that pronounced as a result of the COVID-19
programmes and projects will often balance ‘soft pandemic. The prospects for climate action
support’ (i.e. for policies and plans, enhancing will therefore be tied in part to the degree of
governance, establishing and operating systems) with concessionality that can be provided.
critical investments in infrastructure and other areas.
The combination of these types of support is generally (ii) The GCF can bear risks that other partners
most conducive to directly achieving significant cannot. CDB is willing to take risks in order
climate change adaptation and/or mitigation impacts to facilitate much-needed investments in
while also laying a foundation for the type of BMCs, but is limited by the need to maintain
paradigm shift and broader sectoral transformations a strong credit rating in order to ensure it can
that are so urgently needed. Indeed, CDB considers continue to borrow and lend at favourable
that no single programme or project can directly rates. This affects the degree of credit risk the
transform a particular sector, even in smaller Bank can bear, as well as its ability to manage
Caribbean countries. Transformation is rather a other risks associated with launching and
medium/long-term process in which broader sectoral scaling up new and innovative approaches to
dynamics (including public and private investment supporting climate change adaptation and
patterns) are redirected and reshaped toward low- mitigation. The GCF does not grapple with
emissions and/or climate-resilient development similar constraints and is thus better
pathways. CDB therefore considers it of the utmost positioned to bear such risks. Partnerships
important that GCF programmes and projects address between CDB, the GCF and other regional
key barriers that are inhibiting broader public and/or and national stakeholders are therefore of
private investment in climate action, and equip paramount importance.
national stakeholders to sustain and scale up the
process of transforming a particular sector after
programme/project closure. This understanding will Potential Work Programme with GCF
guide all CDB-led programmes and projects to be
submitted to the GCF, which will aim to catalyse
Focus areas
transformational change. More information about
how each of the pipeline programmes and projects
In line with its Strategic Plan (2020-24), Climate
will do so is included in the ‘Indicative Programming’
Resilience Strategy (2019-24), and the Private Sector
section of this document.
Development Policy and Strategy 2017-2020, CDBGCF Entity Work Programme | 5
will work toward the ‘vision’ outlined in Section 1 these more stringent and climate-informed
(above) by developing and delivering a series of building codes.
programmes and projects in partnership with its
BMCs and (where appropriate) other regional and 2) Leveraging the private sector: The Bank will
internanational partners. Guided by its ongoing continue working with the private sector in the
discussions with BMCs and further assessments of Caribbean to scale up investment in climate action.
where/how climate finance is most needed and can be CDB expects to work with private sector partners to
used most effectively, the Bank expects to support scale up investment in a range of different areas,
projects and programmes in the following areas. 4 including: distributed RE and EE measures (e.g.
rooftop solar PV, solar water heating, LED lighting);
1) Public sector: CDB will support public sector low-emissions transportation options (e.g. e-
stakeholders in its BMCs to access concessional mobility); climate-resilient agricultural production
financing to scale up investment in sectors/areas (e.g. drought-tolerant varieties); resilience-enhancing
characterized by significant vulnerability, and which building retrofits; and water. To do so, CDB will
have been prioritized by BMCs in their NDCs. This work with/through local partners (e.g. Development
includes: Finance Institutions) to address a range of barriers
initiatives geared toward safeguarding water that are currently inhibiting private sector investment
security in a changing climate, through which in climate action, including: lack of awareness of
the Bank will support BMCs to enhance the climate change risks and/or climate-related
resilience of their water infrastructure and investment opportunities; limited capacity of
water supply, as well as improve water sector banks/lenders to appraise climate change projects and
governance; price their services accordingly; high indebtedness
initiatives geared toward scaling up the and limited creditworthiness of some local businesses
deployment of renewable energy (RE) and and homeowners; and lack of access to affordable
energy efficiency (EE) technologies and financing. CDB therefore expects to develop and
practices, through which the Bank will deliver initiatives for the private sector that combine
support investment in such measures: in capacity building and technical assistance with
public sector facilities; at utility scale; and improved access to concessional credit. CDB is also
among households and businesses, both by developing a programme that specifically focuses on
providing (or enabling the provision of) unlocking private sector investment in distributed
affordable financing and by improving energy resources through the Integrated Utilities
enabling environments for RE/EE; Services (IUS) model. This programme is indicative
initiatives geared toward enhancing of the ways in which CDB aims to identify and pursue
resilience of vulnerable people and innovative means of addressing the barriers (financial
livelihoods, through which the Bank will and otherwise) that are currently inhibiting private
support communities to adopt climate- investment in climate action. Beyond these two key
resilient agriculture practices (e.g. soil and private sector-oriented programmes, CDB will also
water conservation measures, heat-, drought- explore other private sector initiatives in partnership
and/or salt-tolerant crop varieties, use of with its BMCs, donors and other partners over the
wind breaks) and ecosystem-based coming years.3) Capacity Building: In addition to
adaptation/nature-based solutions (e.g. full-scale programmes and projects, CDB will also
mangrove, reef and seagrass restoration, river continue to enhance the capacity of its BMCs to
bank stabilization measures), as well as work with the GCF, including through the GCF
maximize the positive co-benefits between Readiness and Preparatory Support Programme.
these two types of interventions; and Indeed, CDB considers it of the utmost importance
initiatives geared toward enhancing the that its BMCs be better equipped to take a leading role
resilience of the building stock and other in advocating for their needs, shaping their pipelines,
physical infrastructure, through which the and ultimately be able to pursue ‘direct access’ to
Bank will support BMCs to strengthen GCF resources. Part of this capacity building will aim
building codes to account for the latest to help countries develop strong concept notes and
climate change projections, as well as interface directly with GCF. CDB will also support
facilitate the flow of financing to projects to NDAs to strengthen their capacities, coordinate
actively enable/incentivize compliance with
4 Note that these focus areas are subject to change as a result of
further discussions between CDB and its BMCs, and as
countries’ needs and priorities may evolve.GCF Entity Work Programme | 6
country programming, and engage other stakeholders (and benefit from) the implementation of such
to develop more robust project pipelines. initiatives; and (iii) all consultations that are
organized during the design and preparation
It is important to enhance BMCs’ overall knowledge processes for these initiatives are inclusive of
of the GCF (including its policies, procedures, women and men from marginalized and
standards and expectations) and improve their vulnerable groups and communities.
understanding of programme/project design and • Proper environmental and social risk mitigation
development requirements through trainings and and management are critical to the Bank’s
workshops. CDB is ideally suited to provide this operations. Guided by its Environmental and
support (including as a GCF Delivery Partner) Social Review Procedures (ESRP), the Bank will
because the Bank: is trusted by stakeholders leverage the expertise of its Environmental
throughout the region; has a strong track record of Sustainability Unit and Social Sector Division to
delivering high-quality technical assistance and ensure environmental and social risks and
capacity-building projects; has considerable in-house impacts are duly identified, assessed, mitigated
technical expertise that can be availed to support the and managed throughout its GCF funded
development and delivery of such projects; and has activities.
the requisite administrative and operational policies • As an entity that regularly collaborates with other
(and capacity to apply them systematically). partners in the region, CDB aims to ensure that
GCF-financed programmes and projects are
In addition, CDB considers it important to have complementary to, and coherent with, the
dedicated funds to support capacity building efforts, programmes, projects and other efforts being
including for the development of GCF concept notes. pursued by other entities – including (but not
CDB’s experience to date is that BMCs will need limited to) those financed by the GCF. CDB will
early and considerable hands-on support to develop therefore ensure that all Bank-led
strong project concepts. CDB can provide such programmesand projects duly account for the
support to a limited number of BMCs, but does not baseline conditions (including the baseline
possess sufficient human or financial resources to do programmes/projects) in the participating BMCs,
so at a scale that is commensurate with the needs of and are informed and guided by the good
the region. External financial and technical assistance practices and lessons learnt from such initiatives.
are therefore of paramount importance, particularly at
the project idea and concept note stages. Having such CDB comparative advantage
dedicated resources will allow CDB to assist a greater
number of BMCs to develop strong programme and The proposed focus areas for public and private sector
project ideas and concepts – the types of initiatives initiatives have been selected not only because of
that can be endorsed by the GCF Secretariat, and their relevance in responding to the needs and
ultimately secure the GCF Project Preparation priorities of BMCs, but also because CDB possesses
Facility (PPF) resources needed to develop an a strong track record and considerable technical
approvable funding proposal. expertise in these areas. Indeed, the Bank has been
developing and delivering programmes and projects
Throughout the three above-described focus areas, of comparable size (i.e. USD 40-50 million and above)
the Bank will ‘mainstream’ certain principles, in all of these sectors (i.e. public sector investment in
standards and approaches to ensure they are water, agriculture and RE/EE, as well as lending and
systematically integrated in all CDB-led programmes capacity building for the private sector) throughout its
and projects. 50 years of operations. As a result, CDB also has
• Gender and social inclusion are priorities for the considerable experience working with key
Bank and embedded in its operations. Guided by stakeholders in these areas, including (inter alia)
its new Gender Equality Action Plan (2020-24), water utilities, electric utilities, DFIs and other local
CDB will ensure that: (i) gender and social financial institutions, as well as relevant ministries
inclusion considerations are fully mainstreamed responsible for water, agriculture, infrastructure,
in all of the GCF-financed programmes and finance and economic development, among others.
projects it leads; (ii) guided by a robust gender Furthermore, the staff of the Bank possess a wealth of
assessment and Gender Action Plan, each GCF- technical expertise, valuable in-country experience
financed programme/project will endeavour to and strong relationships with key national and
address gender- and socially-based based barriers regional stakeholders. Staff from the Bank’s
that are inhibiting climate action, and ensure Economic Infrastructure Division, Environmental
women and men from vulnerable and Sustainability Unit, Renewable Energy and Energy
marginalized groups can adequately participate in Efficiency Unit and Private Sector Development UnitGCF Entity Work Programme | 7
(among others) will be brought to bear to support the collaborative efforts and partnerships have also given
development and delivery of the envisaged initiatives. CDB clarity on where/how it can best add value
relative to other development partners in the region –
CDB is also well equipped to lead these initiatives information that has guided the selection and
because its robust set of policies and procedures prioritization of programmes and projects within the
enable the Bank to manage GCF resources in GCF pipeline. In particular, CDB has considerable in-
accordance with the Fund’s standards. Indeed, the house technical expertise and a strong track record
Bank’s own policies are fully aligned with supporting investments in the water sector, all of
international standards on procurement, financial which will be brought to bear on the pipeline
management and accounting, anti-money laundering/ programmes and projects that aim to help adapt this
countering the financing of terrorism (AML/CFT) sector to the impacts of climate change. Similarly,
and other prohibited practices. CDB systematically CDB has a long history of collaborating with DFIs in
applies these standards (and ensures borrowers do so its BMCs to improve access to credit for local private
as well) when administering its own Ordinary Capital sector actors – experience upon which the Bank will
Resources (OCR) and Special Development Fund build directly for the Transforming finance to unlock
(SDF) resources, but also when administering loans climate action in the Caribbean programme. In
on behalf of other international financial institutions addition, CDB has been a key actor in supporting the
(e.g. EIB and IDB) and when administering grants on transition to sustainable energy systems in recent
behalf of bilateral partners (e.g. Global Affairs years, and has a dedicated unit (the CDB Renewable
Canada, DFID, GIZ). In particular, CDB’s Strategic Energy and Energy Efficiency Unit) that will apply
Framework for Integrity, Compliance and this experience and expertise when supporting such
Accountability includes the Integrity and Ethics investments in partnership with the GCF, including in
Policy (which covers fraud and corruption), the context of the Scaling up the deployment of
Compliance Policy (which covers AML/CFT and Integrated Utilities Services (IUS) to support energy
Financial Sanctions) and the Whistleblower Policy sector transformation in the Caribbean programme
(which covers whistleblowing and protection from (among other initiatives). CDB has also delivered
retaliation), all of which address the standards the community-based support to over three million
Bank applies with regards to integrity and ethics, with Caribbean residents through the Basic Needs Trust
zero tolerance for fraud, corruption and similarly Fund (BNTF) over the past few several decades, and
corrosive conduct. Many of the entities with which has experience delivering such support for climate
CDB plans to partner on the pipeline initiatives change adaptation and disaster risk reduction through
included in this Entiy Work Programme (including the recently-concluded Community Disaster Risk
DFIs, electric utilities, water utilities) have Reduction Fund (CDRRF) initiative – experience that
experience complying with these CDB policies, and will also guide the Bank as it aims to scale up such
also have their own relatively robust policies and support to additional countries in partnership with
procedures with respect to compliance-related issues. GCF.
In addition, CDB will conduct an initial assessment
of potential compliance risks when undertaking the 3. Indicative Pipeline
design, feasibility and other preparatory work for
each GCF programme and project. CDB will also In line with the above-described vision (Section 1),
carry out capacity assessments and due diligence of strategy (Section 2) and priorities (Section 3), CDB is
all prospective Executing Entity/ies when developing actively working on the following programmes and
proposals. Such assessments will be guided by best projects for its BMCs, which are briefly summarized
practices that will review the entities’ operational below and described in more detail in the subsequent
policies and procedures, their track record in ‘Indicative Programming’ section.
applying/adhering to them, and their track record on
compliance issues when implementing other projects Programmes
financed by CDB and other MDBs.
• Regional DFI/private sector programme:
As a regional development bank, CDB has forged This programme aims to help unlock the
strong partnerships with other development entities in private sector investment needed to transform
the region, such as the Caribbean Community Caribbean productive sectors and energy
Climate Change Centre (CCCCC), as well as key systems by catalysing a transformation of the
international partners (e.g. EIB, IDB). CDB financial services sector. The programme
collaborates with these entities on normative issues will increase lending and investment aimed at
and technical assistance, as well as on investment reducing greenhouse gas (GHG) emissions
programmes and projects to support BMCs. These and enhancing resilience to the incrementalGCF Entity Work Programme | 8
risks/challenges associated with climate water security in a changing climate. CDB
change. It will also equip Caribbean financial expects to develop and deliver the
service providers and local private sector programme in two phases, starting with a
actors with the knowledge and capacity modest number of BMCs under Phase 1
needed to enable the continued flow of (tentatively Jamaica, St. Kitts & Nevis and St.
financing for climate action investments after Lucia) and subsequently scaling up to reach
programme closure. These are common additional BMCs through Phase 2. This
needs across several BMCs, and as such the multi-phase programme approach stems from
programme will work with DFIs and other recognition of the fact that climate change
financial sector stakeholders in Belize, will negatively affect water supplies, systems
Jamaica and St. Lucia to further develop and and security throughout the Caribbean, and
deliver this initiative. A concept note and that almost all countries also have high levels
PPF application for this programme were of leakages that must be addressed as part of
submitted in June 2020 and endorsed by their efforts to safeguard water security in a
the GCF Climate Investment Committee changing climate. This programme is still in
(CIC) in July 2020. CDB aims to submit a the early design stage, and is in the process of
funding proposal for this programme by being discussed with prospective partner
Q2/3 2021. countries. CDB is tentatively aiming to
complete a concept note and PPF
• Regional programme on scaling up application for this programme by Q3/4
distributed RE, EE and other DERs 2020, and complete and submit a funding
through the Integrated Utilities Services proposal by Q4 2021 or Q1 2022.
(IUS) model. This programme aims to work
with electric utilities in a selection of BMCs • Regional programme on community-led
(tentatively Barbados, Belize, Guyana and climate change adaptation: This
Jamaica) to support them in adopting the IUS programme aims to scale up adaptation
approach as part of their core bsiness models, measures in agricultural and coastal
and reach a critical mass of residential and communities in targeted BMCs to deliver
commercial customers (sub-projects that will tangible adaptation benefits for a large
invest in distributed RE and EE measures) by number of direct beneficiaries, while also
implementing their respective IUS schemes laying a foundation for a broader
at scale. The programme will address key transformation toward community-led CCA
barriers that are currently inhibiting utilities that is rooted in climate-resilient agricultural
from adopting and implementing the IUS practices and nature-based solutions. CDB
model, as well as those that are inhibiting expects that this programme will include a
businesses and households from investing in grant facility that will disburse funds for
distributed RE and EE. In so doing, the small-scale sub-projects led by rural
programme will respond to common agricultural communities (e.g. to support
challenges with which many BMCs are adoption of soil and water conservation
grappling, notably the difficulties they have measures, heat-, drought- and/or salt-tolerant
encountered in trying to scale up deployment crop varieties, use of wind breaks) and
of RE and EE, particularly among (often coastal communities (e.g. to support
highly leveraged and risk averse) households mangrove, reef and seagrass restoration). The
and businesses. The concept note and PPF programme responds to needs and challenges
application for this initiative are currently that are common throughout most Caribbean
under development and expected to be countries, including the impacts of climate
submitted in Q3/4 2020. CDB therefore change on the lives and livelihoods of
expects to submit a funding proposal for members of poor and under-served
this programme by Q3/4 2021. communities. This programme is still in the
early design stage, and is in the process of
• Regional programme on safeguarding being discussed with prospective partner
water security in a changing climate: This countries. CDB is tentatively aiming to
programme aims to support key stakeholders complete a concept note and PPF
(notably water utilities) to reduce leakages application for this programme by Q2/3
and improve leakage management as an 2021, and complete and submit a funding
effective and efficient means of safeguard proposal by Q2/3 2022.GCF Entity Work Programme | 9
Projects insecurity that may warrant more immediate
investments in infrastructure that may only
• ‘Climate resilience of the water sector in be required in the medium run in other
the Bahamas’ project: This project aims to Caribbean countries. Core design elements of
support The Bahamas (led by the Water and this project idea are still being discussed with
Sewerage Corporation, WSC) to enhance the the government and GCF Secretariat. The
resilience of the water sector to safeguard the Government of SKN has made a formal
country’s water security in a changing request to the GCF for technical support to
climate. The project will accomplish this by: finalise the concept note. The specific
(i) strengthening the foundations for more timeline for revision and re-submission of
evidence-based policy- and decision-making the concept note are not yet clear.
on climate change and the water sector; (ii)
supporting relevant stakeholders to apply this • ‘Grenada – Leapfrog to Energy Efficiency
knowledge to the development and Project’: This project proposal was
implementation of a more coordinated and developed to support public and private
coherent policy and governance framework; stakeholders in Grenada to scale up the
and (iii) scaling up investment on highly deployment and use of RE and EE, and
vulnerable islands to enhance the resilience thereby reduce greenhouse gas emissions
of the water system and services. CDB and from the energy sector. It aims to help to
WSC are proposing to deliver this support bring about an end to inefficient practices and
through a single-country project in part due products in the energy sector. A revised
to the country’s relatively unique funding proposal for this project was
circumstances (e.g. hydrological features) submitted to the GCF Secretariat in January
and needs (e.g. particularly pronounced 2020, but was ultimately not endorsed by the
vulnerability, important progress on leakage- CIC. CDB is therefore working with the
reduction already achieved), as well as the Government of Grenada to assess
need to deliver support to the country as whether/how to resdesign certain elements of
quickly as possible in light of the repeated this project to respond to GCF feedback and
impacts of major hurricanes over the past few suggestions. As such, a specific timeline for
years, which have had a significant effect on the further development and resubmission
the country’s water supply, system and of this project is not yet clear.
security. A revised concept note and PPF
application were submitted to the GCF All CDB-led programmes and projects build
Secretariat in June 2020, and are expected directly on the priorities and experiences of the
to be reviewed by CIC in Q3 2020. CDB is Bank, BMCs and other stakeholders in the
aiming to complete an submit a funding Caribbean region, and aim to draw/build on
proposal for this project by Q2/3 2021. lessons learnt from past and ongoing initiatives.
At the programme/project level, CDB will
• ‘Building resiliency in the water supply undertake thorough reviews of baseline
sector in St. Kitts and Nevis’ project: This conditions to ensure design reflects on-the-
project aims to support key stakeholders in St. ground needs and circumstances, and accounts
Kitts and Nevis (SKN) to respond to the for good practices from other relevant initiatives
increasing impacts of climate change on the (i.e. baseline programmes/projects).
country’s water supply, including by scaling
up investment in reliable means of generating Other potential GCF programmes & projects
water resources such as seawater desalination.
The project will combine such investments • In addition to the aforementioned core
with support to improve governance and the priority programmes and projects, CDB will
enabling environment in the water sector continue to respond to its BMCs’ requests for
with a view to ensuring resources can be assistance in identifying and developing
sustainably managed over the medium term additional initiatives on an as-needed basis.
as the impacts of climate change continue to This may result in additional project ideas
mount. CDB and the government are being developed, particularly if countries
considering to deliver this support as a single- have needs in focus areas that cannot be
country project in part because of the fact that addressed through the above-described
the country is already confronting programmatic approaches. CDB will consult
particularly pronounced water deficits andGCF Entity Work Programme | 10
closely with the GCF Secretariat at the climate-resilient building codes. This
earliest possible stages if/when such requests project will cover multiple countires.
are received, and take GCF feedback into A sponsoring NDA has not yet been
consideration when determining identified.
whether/how to proceed with such additional • Overall, CDB will adopt a two-pronged
project ideas. approach to developing GCF readiness
proposals over the coming years:
Readiness Support o CDB will proactively work with its
BMCs to develop and deliver
• In addition to supporting the development readiness proposals that address
and delivery of full-scale GCF programmes common needs and challenges across
and projects, CDB is also acting as a delivery the region, and do so, preferably,
partner to support its BMCs to develop and through regional readiness proposals
deliver projects under the GCF Readiness that achieve economies of scale.
and Preparatory Support Programme. CDB will identify and develop such
• The Bank is already serving as the delivery proposals based on its understanding
partner on three readiness projects approved of BMCs’ needs/priorities and
by the GCF Secretariat in 2019: discussions with key regional and
o A USD 298,000 project in Belize national counterparts, and do so in
geared toward enhancing private close consultation with NDAs and
sector engagement in climate action. other stakeholders. Such proposals
This project is expected to be are more likely to be geared toward
implemented between Q3/4 2020 addressing key technical issues and
and Q3/4 2021. associated capacity gaps in the
o A USD 590,000 project in St. Kitts & region. The aforementioned regional
Nevis geared toward strengthening readiness proposal on climate
NDA capacity and supporting resilient development in urban areas
pipeline development. This project is through complementarity and
expected to be implemented between coherence, as well as the regional
Q3/4 2020 and Q4 2021 / Q1 2022. proposal on climate-resilient
o A USD 318,000 project in Suriname building codes, are examples of these
geared toward strengthening NDA types of initiatives. When identifying
capacity and supporting country and developing such regional
programming. This project is readiness projects, CDB will also
expected to be implemented between collaborate closely with other key
Q3/4 2020 and Q1/2 2022. regional stakeholders (e.g. CCCCC,
• CDB is also working with its BMCs to the OECS Commission, the
support the development and eventual CARICOM Regional Organisation
delivery (as Delivery Partner) of other for Standards and Quality (CROSQ),
readiness proposals, including (inter alia): and the Caribbean Meteorological
o A project geared toward Organization) and may also explore
strengthening the capacity of the opportunities to partner with
Development Finance Corporation international actors (e.g. UNDP,
(DFC) of Belize to gain accreditation UNEP). In the short run, CDB
to the GCF. expects to focus primarily on
o A regional readiness project on developing and delivering the
promoting climate resilient regional readiness proposals
development in urban areas through described above. Once CDB gains
Complementarity and Coherence experience implementing these
among funding sources This project projects, the Bank may use this
will cover five countries, and is being experience to inform the
developed with particular support development and delivery of
from the NDA in Jamaica and the additional regional readiness
GCF regional desk. projects.
o A regional readiness project geared o CDB will continue responding to
toward supporting the development requests for support from its BMCs
and implementation of regional to assist them to improve their GCFGCF Entity Work Programme | 11
readiness on a case by case basis. before the pandemic and have had to borrow further
CDB is of the opinion that single- to sustain themselves. Numerous businesses have also
country readiness projects should be decided to shut down altogether, in part because of
originated by the NDAs, as they are the combined effects of local lockdowns, short-term
most familiar with the needs and declines in tourism and significant uncertainty about
circumstances in their respective the prospects for a rebound in tourism in 2020-21.
countries. CDB will therefore
maintain a dialogue with the NDAs As a result of the above, the prospects for climate
in its BMCs and respond to requests action over the next few years will depend in part on
for support if/when they are made the level of concessionality being offered – a key
(subject to there being sufficient consideration that CDB will keep in mind when
capacity in CDB to manage such developing the programmes and projects included in
requests). its GCF pipeline. Indeed, many BMCs recognize that
there is significant potential to catalyse post-COVID
economic recovery through climate action, but unless
Impacts of COVID-19 international support is forthcoming, many
governments may struggle to make such investments
The COVID-19 pandemic has had a significant due to the need to reduce expenditures and
impact on the people and economies of countries investments to manage their deficits and debts.
throughout the Caribbean. This is in part because of Similarly, many local businesses will have to de-
the direct public health consequences of the leverage over the coming years, forcing them to
pandemic, but (for the time being) the economic forego capital investments that are needed to mitigate
consequences of the pandemic have arguably been and/or adapt to climate change. As a result, when
even more severe for many countries in the further developing the initiatives in the above-
Caribbean. Public debt-to-GDP ratios were already described pipeline, CDB will assess what level of
high across the region before COVID-19, with CDB concessionality is needed not only to make a
data indicating that its BMCs had an average public particular investment viable, but also that which is
debt burden of just under 62% of GDP in 2019, with needed to make the investment attractive to the
several above or close to 100% of GDP. The public partner/beneficiary and thus feasible in practice. In
fiscal situation has only become more challenging as addition, to help address this challenge CDB will:
a result of the pandemic. Many governments have had - reinforce in discussions with governments and
to increase spending precisely as their (heavily other partners that post-COVID recovery and
tourism-dependent) revenues have declined steeply. climate action are not mutually exclusive, and
Estimates of the magnitude of the economic impact that well-targeted investments in climate action
vary and are regularly being updated, and the final can deliver precisely the types of income and
impacts will ultimately depend on public health employment gains that countries need;
measures and other policy decisions implemented - work with BMCs to identify climate change
over the coming months, but all credible assessments adaptation and mitigation investment areas that
indicate that the impacts have been significant and produce robust returns (e.g. addressing leakages
severe. For example, recent CDB estimates suggest in the water sector) to ensure they can more easily
that real GDP in most of its GCF-eligible BMCs will repay the debts incurred for such programmes
decline by between 6-20%, with variations among and projects;
countries attributable in part to their dependence on - design programmes/projects that aim to unlock
tourism. This is consistent with recent projections by investment among private sector stakeholders
the Eastern Caribbean Central Bank, which suggest and channel financing through entities (e.g. DFIs,
that most eastern Caribbean countries will experience electric utilities) whose borrowing is not affected
an economic contraction of 10-20% in 2020, with an by public debt levels; and
average decline of around 15%. Partly as a result of
- aim to be flexible on what is required to secure
these economic contractions, fiscal deficits have
loans (i.e. not necessarily requiring government
increased significantly and the average public debt-
guarantees for all programmes and projects, and
to-GDP ratio has increased to around 72% (from 62%
being open to allowing DFIs and others to borrow
in 2019) – an average that masks considerable
based on the strength of their balance sheets), and
variation within the region, as some countries have
thus take more risk as a Bank.
experienced increases of at least 15-20% in their
public debt-to-GDP ratios. The pandemic has also
The COVID-19 pandemic is also affecting the
affected household savings and the balance sheets of
timelines for developing and submitting funding
private firms. Many were already highly leveragedGCF Entity Work Programme | 12 proposals. Some standard aspects of design and manner – developments that may require some feasibility work may no longer be feasible (e.g. in- modest adjustments to the project budgets, but which person consultations with large groups of could also give rise to potential innovation and stakeholders) and thus alternative solutions may have efficiencies that (if proven effective) could be applied to be found – alternatives that could lead to delays. to future readiness proposals as well. The timelines for the programmes and projects in the CDB pipeline (as outlined above) therefore account for these potential complications and delays. In particular, the above-described timelines been extended relative to ‘standard’ proposal development timelines to account for those complications (and associated delays) that are already known and envisaged and others that may arise even if they are not yet known. Similarly, the COVID-19 pandemic will affect the implementation plans for some approved readiness projects over the coming months The above-described pipeline not only has to account for potential complications of the COVID-19 pandemic, but also provides an opportunity to support countries to mount a ‘green’ and sustainable post- COVID recovery. CDB will therefore aim to maximize economic and employment creation co- benefits when designing all programmes and projects to be submitted to the GCF. CDB will assign particular important to such efforts, which are consistent with the Bank’s overall mission of “reducing poverty and transforming lives through sustainable, resilient and inclusive development.” In addition, CDB is building into its risk mitigation for Readiness projects the GCF policy to extend implementation by 6 months if required. The COVID-19 pandemic may also force CDB and its BMCs to pursue alternative approaches to programme design and development that could ultimately lead to efficiency gains. This could include organizing digital/remote consultations that minimize the need for costly international travel. CDB is currently planning to explore such options when developing the programmes and projects described in the ‘Indicative Programming’ section, which will be determined on a case-by-case basis depending on (inter alia) the current state of the pandemic in the participating country/ies and the associated COVID protocols. It is important to note that the merits and cost-benefit of such ‘alternative’ approaches are still being assessed – for example, site-specific visits and consultations main still be the most robust approach for some initiatives (e.g. infrastructure investments) – yet the pandemic has nevertheless forced all stakeholders to re-examine ‘standard’ ways of operating and doing business, and could ultimately lead to more efficient ways of working. Similarly, the pandemic will prompt CDB and its BMCs to pursue innovative ways of ensuring that the implementation of approved readiness projects can proceed in a timely
1. Indicative Programming Overall indicative submission timeline
GCF Entity Work Programme | 14 Endorsed by CIC2 Order: Expected to be 1st funding proposal submission under this EWP Expected CN submission: Submitted in June 2020; endorsed by CIC2 in July 2020 Expected FP submission: Q2/3 2021 Non-disclosure* ☐ Public ☐ Board ☐ NDA Project/programme title*∆: Regional – Transforming Finance to Unlock Climate Action in the Caribbean Project/programme description*∆: The programme aims to unlock the private sector investment needed to transform Caribbean productive sectors and energy systems by catalysing a transformation of finance. In so doing, the programme aims to: (1) achieve tangible results during its implementation period, both with regards to (a) increasing lending and investment as well as (b) reducing/avoiding greenhouse gas (GHG) emissions and enhancing resilience to the incremental risks/challenges associated with climate change; and (2) equip Caribbean financial service providers and local private sector actors with the knowledge and capacity needed to enable the continued flow of financing for climate action investments after programme closure. The programme will offer sub-loans for investments in a variety of areas, including: distributed renewable energy, energy efficiency and low-emissions transporation; resilient agriculture, fisheries and land use; and resilient infrastructure and buildings (e.g. retrofits for industrial, commercial and residential structures to better withstand the impacts of increasingly intense extreme weather events). The GCF is requested to provide a concessional line of credit and grant financing to support the implementation of this programme. The concessional line of credit will be used to reduce the (currently high) cost of borrowing for many households and businesses, thereby addressing a key barrier that is inhibiting them from investing in climate action. Meanwhile, the grant financing will contribute to strengthening the enabling environment for climate-informed lending, as well as building the capacity of the participating DFIs and other financial institutions to better identify and assess climate change risks and opportunities, and factor this into their portfolios. When developing and implementing this programme, CDB will collaborate closely with the NDAs in the participating countries, the Development Finance Corporate (DFC) of Belize, Development Bank of Jamaica (DBJ) and St. Lucia Development Bank (SLDB), as well as the United Nations Development Programme. Result area(s) *∆: Check the applicable GCF result area(s) that the proposed project/programme targets. Indicate for each checked result area(s) the estimated percentage of GCF contribution to it. The summed percentage should be equal to 100%. Mitigation: Reduced emissions from: Adaptation: Increased resilience of: ☒ Energy access and power ☒ Buildings, cities, industries and appliances: 25% ☒ Most vulnerable people, communities and regions: 25% ☒ Infrastructure and built environment: generation: 25% ☐ Forestry and land use: Enter number% ☐ Health and well-being, and food and water security: Enter 25% ☐ Low-emissions transport: Enter number% ☐ Ecosystems and ecosystem services: number% Enter number% Alignment to country(ies) priorities*∆: The proposed programme is closely aligned with the priorities identified in the NDCs submitted by the partner countries that are expected to be involved in this programme: Belize, Jamaica and St. Lucia. All three countries assign considerable importance to scaling up investment in renewable energy and energy efficiency in order to meet their mitigation targets. In addition, all three countries have prioritized adaptation support for areas such as agriculture, fisheries, coastal and marine resources, as well as infrastructure and human settlements. The proposed programme will therefore make important contributions to achieving countries’ NDC targets and priorities, as well as those stipulated in the national policies, strategies and plans that underpin their NDCs. Paradigm shift potential: This programme will support the process of transforming finance in the Caribbean to shift toward climate-informed lending, and in so doing, catalyse broader transformations of the productive sectors and energy systems. Given the magnitude of this challenge and the number of stakeholders that must be involved, transformation must be seen as a more medium/long-term process – one that the programme cannot achieve on its own. Instead, the GCF programme will focus on setting these transformation processes in motion, and equipping stakeholders to sustain and scale up these processes after programme closure. There are three ways in which the programme will accomplish this: (i) by raising awareness among private sector stakeholders about the need for climate action and the associated investment opportunities; (ii) by enabling DFIs to finance a critical mass of sub-projects in each country, further increasing awareness of (and interest in) such investment opportunities among private sector sub-borrowers and financial service providers; and (iii) by strengthening the capacities of DFIs and local private sector actors to sustain and scale up the flow of financing for climate action investments, and thus continue the process of transforming the productive sectors and energy systems in their respective countries.
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