CAF issues the first resilience bond for Latin America and the Caribbean with support from UNDRR
CAF – Development Bank of Latin America and the Caribbean – in partnership with the United Nations Office for Disaster Risk Reduction (UNDRR), announced at COP30 the first resilience bond in Latin America and the Caribbean to finance resilient infrastructure that reduces vulnerabilities to hazards and ensures the continuity of essential services.
The bond, for USD 100 million and aligned with the Climate Bonds Resilience Taxonomy, will finance resilient infrastructure aimed at reducing vulnerabilities to climate-related hazards and ensuring the continuity of essential services in Latin America and the Caribbean. The first identified projects are located in Brazil, the host country of COP30.
UNDRR acted as technical coordinator for the selection of projects and the verification of their eligibility, based on the Climate Bonds Resilience Taxonomy Methodology (2024) and the document Designing a Classification Framework for Climate Resilience (2023), jointly developed by UNDRR and Climate Bonds Initiative (CBI).
“This is the first resilience bond for Latin America and the Caribbean, and the second in the world. It reflects CAF’s commitment to mobilizing large-scale resources to finance critical infrastructure that will enable the region to adapt to the climate crisis and reduce the vulnerability of its populations to extreme events,” said Sergio Díaz-Granados, Executive President of CAF.
“CAF's resilience bond accelerates investment in disaster risk reduction. It mobilizes capital before disasters losses occur and puts it where it can protect people the most, with resilient infrastructure that keeps water, energy and mobility operating in the face of hazards. UNDRR is proud to partner with CAF to mobilise financing for safer communities and stronger economies,” explained Kamal Kishore, Special Representative of the UN Secretary-General for Disaster Risk Reduction and Head of UNDRR.
The resilience bond is a debt instrument that mobilizes resources from the financial market for projects that strengthen the resilience of critical infrastructure, protecting essential services and people’s well-being.
Investment in resilience
The resilience bond is a debt instrument that mobilizes resources from capital markets for projects that strengthen the resilience of critical infrastructure, protecting essential services and people’s well-being.
The bond proceeds will be allocated to projects in water and sanitation, drainage and flood control, waste management, distributed energy for critical services, nature-based solutions and safe mobility, with priority given to local investments that help strengthen critical infrastructure and essential services.
The projects must demonstrate reduced exposure and vulnerability, the capacity to remain operational during extreme events, and shorter recovery times. The approach is aligned with Priority 3 of the Sendai Framework for Disaster Risk Reduction, Article 2.1(c) of the Paris Agreement, and Sustainable Development Goals 11 (Sustainable Cities and Communities) and 13 (Climate Action).
Latin America and the Caribbean has seen steady growth in thematic instruments, but direct investment in resilience remains lower than spending on response and recovery. According to the Regional Assessment Report on Disaster Risk in Latin America and the Caribbean (RAR), countries allocate only a limited share of their budgets to disaster risk reduction, and official development assistance for prevention is minimal. Resilience bonds can help close part of this gap by channeling capital towards projects that reduce losses, protect livelihoods and strengthen urban resilience.
The partnership between CAF and UNDRR marks a milestone in mobilizing resources for resilience in Latin America and the Caribbean. With the resilience bond, more cities will be better prepared, essential services will continue to function when they are needed most, and local economies will be able to recover more quickly.