It’s become unbearably clear that climate change is here and it’s happening right now. Just a quick scroll through your news feed and you’ll likely see reports of extreme weather events happening all around the world — from drought in the Horn of Africa, to wildfires in Chile, to heatwaves across Asia, to flooding in eastern Africa. And that’s just from the first few months of this year.
While you might feel like climate change is a “far away” problem that won’t affect you, in reality, it’s going to impact all of us — and it’s going to happen sooner than you probably think.
But while all of us are at risk of the impacts of climate change, some parts of the world are more at risk than others.
It’s an inequality that became abundantly clear during the COVID-19 pandemic, with some countries able to rapidly access the financing and tools needed to tackle it and quickly bounce back, while others were left behind and continue to struggle with the pandemic’s impacts.
The same thing is happening now with climate change. It’s clear that wealthy countries aren’t immune to the impacts of climate-related disasters. But what sets wealthy countries apart from low-income countries, is that wealthy countries have the resources to respond and rebuild while low-income countries don’t.
Instead, low-income countries are being forced to borrow the money needed to recover from climate-related disasters and are being pushed further and further into debt. In what’s been highlighted as a legacy of colonialism, poor countries actually borrow at a much higher interest rate (about 14%) compared to wealthy countries (around 1-4%).
For low-income and climate-vulnerable countries, as climate-related disasters mount up — and keep growing in strength and frequency — so does the debt.
As the debt mounts up, that in turn means even less money available for responding to climate disasters, building up resilience to future disasters, and for spending on other critical issues like education and health care.
So what do you do about a problem like escalating climate change and mounting debt?
Prime Minister of Barbados Mia Mottley is spearheading a potentially groundbreaking solution to address this systemic problem — it’s called the Bridgetown Initiative.
The idea is to shake up the status quo and completely reform much of how development finance has worked in the past. This reimagined and reformed global financial system would support developing countries as they face escalating climate disasters, and increase the financing available to fight climate change. Win-win.
So let’s dive in — here’s what every climate champion (and all of us to be honest) should know about the Bridgetown Initiative.
What Is the Bridgetown Initiative?
The Bridgetown Initiative — named after the capital city of Barbados, a climate-vulnerable Caribbean nation — is essentially an action plan to reform the global financial system so the world can better respond to current and future crises.
The world is at a crossroads.— Mia Amor Mottley (@miaamormottley) April 29, 2023
A series of crises threaten the lives and livelihoods of millions of people across the globe.
The @GlblCtzn#PowerOurPlanet campaign, which draws from The Bridgetown Initiative, calls for us to act now to save our tomorrow. pic.twitter.com/asgDFF7fJc
The way development finance works today is outdated — unsurprisingly, given that the world’s financial system hasn’t had a refresh since the 1940s — exacerbates inequalities, and is insufficient to respond to the scale of global challenges we now face, including climate change.
The Bridgetown Initiative — unveiled by Mottley last year at the UN Climate Change Conference COP27 — calls for changes and new mechanisms that would provide inclusive, resilient finance to address the climate and development crises.
The Bridgetown Initiative Is Calling for 5 Main Things:
- First, it calls for changes to how money is loaned to and repaid by a country hit by disaster, aiming to prevent countries spiraling into a debt crisis. One example would be allowing for a pause on debt payments so the country has more available money to spend on immediate relief and rebuilding.
- Second, it’s calling on the world’s development banks — like the World Bank and the International Monetary Fund (IMF) — to mobilize an additional $1 trillion to developing nations for climate resilience. It sounds like a whole lot, but this money can be unlocked.
- Third, it’s calling for a new mechanism to be set up to fund climate mitigation and rebuilding in the wake of a disaster. Called the Global Climate Mitigation Trust, it’s believed this could leverage up to $5 trillion from the private sector and up to $500 billion in a special emergency currency called Special Drawing Rights (SDRs).
- Fourthly, “Bridgetown” is calling for a widening of the eligibility for lending below market rates for climate-vulnerable countries investing in resilience in climate-vulnerable countries. In other words, more climate-vulnerable countries would be able to access better lending deals to invest in measures that would help them be more resilient to climate change.
- Fifthly, it calls for a new loss and damage fund that pays out when major climate disasters hit.
How Does the Bridgetown Initiative Help Us End Extreme Poverty?
Global inequality has gotten worse over the last few years and the climate crisis is only exacerbating it.
The richest 1% has grabbed nearly two-thirds of the $42 trillion new wealth created since 2020. Meanwhile, more than 70 million additional people were pushed into extreme poverty in 2020 alone. As climate-related disasters hit countries around the world, developing nations will face growing debt and shrinking funds for education, health, shifting to clean energy, and infrastructure.
Financing has been a major issue for these nations and is a crucial part to ending this cycle of poverty.
The Bridgetown Initiative targets the financing problem by creating more sources from which developing countries can borrow to mitigate and recover from the climate crisis.
With that support, the most vulnerable nations will also have more resources to invest in quality education, better health care, cleaner energy, and stronger infrastructure, all of which are key to ending extreme poverty.
Who Are the Key Players That Can Make More and Better Climate Financing a Reality?
In order to scale and mobilize the financing needed to tackle climate change, wealthy countries and other important actors need to show their support and take action.
French President Emmanuel Macron was the first leader from a high-income country to give his backing by organizing the Summit for a “New Global Financial Pact” set to take place in June 2023. Several other key stakeholders have expressed their support for scaling climate financing, including International Monetary Fund (IMF) Managing Director Kristalina Georgieva, US Special Presidential Envoy for Climate John Kerry, and Bank of America Chief Executive Brian Moynihan.
Wealthy countries can use their influence to urge the World Bank and other development banks to make the reforms necessary to mobilize an additional $1 trillion for climate and development finance.
These countries can also advance the Bridgetown Initiative by keeping their promise to reallocate their SDRs to vulnerable countries, which are reserve assets allocated by the IMF that can be traded between countries in exchange for liquidity.
How Can We Support the Bridgetown Initiative?
Global Citizens, artists, and activists everywhere can join the call on the World Bank, world leaders, philanthropists, and corporate leaders to step up now and make drastic changes to how the world’s financial system operates to tackle the mounting climate and debt crises.
You can do this by taking action right now to support our Power Our Planet campaign — find out more about the campaign and the actions you can take to join the call.
We can all play our part to Power Our Planet, quicken our transition to clean energy, and strengthen our systems to combat climate change and address poverty.