With the increase in climate and disaster risks in the world, strategies and instruments for addressing finance related risks, and building of long-term resilience has become pivotal. To address this need, and to identify key risks and opportunities for risk management in Sri Lanka, key stakeholders of the government and the private sector engaged in discussions to identify interlinkages between climate and disaster risk management. The key outputs highlight the interlinkages between Sri Lanka’s financial security and food security, as well as elements for an enabling environment that could contribute to holistic climate and disaster risk management.
Banking and Finance Sector
Among the key roles identified for the banking and finance sector in climate and disaster risk management include supporting of climate and disaster risk finance accessibility; facilitating and supporting the scaling up financial literacy through collaborative efforts; as well as assisting in setting up appropriate safe guards for activities related to finance and risk management.
Key risks that could contribute to financial insecurity includes the lack of financial literacy, including understanding of banking systems and processes; as well as the attitude change related to loan schemes and financial management is marked as a key priority to be addressed, including the responsibility of loan and insurance receivers.
The finance and banking sector stakeholders further identified as risks, gaps and challenges the disconnect between different groups/sectors in seeking solutions for financial risks in different sectors; lack of horizontal and vertical integration; lack of risk appetite and knowledge how to take informed risks and categorize risks; importance of macroeconomic stability to attract investment.
Among actions needed for scaling up climate and disaster risk finance are capacity building efforts related to climate and disaster risk finance and insurance (CDRFI); platforms and multiple actor partnerships for technical capacity building and knowledge sharing; technical skills related to different financial instruments such as green bonds and strategic interventions such as climate related debt-swamps, and restructuring of exiting climate and disaster risk finance processes was also highlighted.
Food security and agriculture sector
Currently, Sri Lanka is highly focused on food security of its population. And climate and disaster risks could heighten the existing vulnerabilities in the sector. Among key risks identified by the stakeholders are the need for risk management literacy, and technical expertise and know-how to assess and address climate and disaster risk by key stakeholders; the need for enhanced financial literacy among those linked to through livelihoods as well as those working on the agriculture sector.
Additionally, the need for capacity building to scale up the understanding among farmer communities on climate and disaster risk finance insurance and other tools including ways in which farmers could be better informed on CDRFI which could guide them in their decision making related to climate and disaster risk management would play an important role towards inclusive risk management processes. The sector experts highlighted also the creation of models and pilot schemes focused on vulnerable communities and groups, as well as scaling up existing projects and initiatives to integrate SDRFI. The suggestions included special pilots insurance scheme for different areas of the agriculture secto with a special focus on youth, entrepreneurs, women, rural farmer organizations; introduction of CDRFI through index-based agri-insurance.
Additionally, policy amendments and changes could play a key role in creating positive change in the CDRFI landscape in the country, which could provide avenues for enhanced monitoring and evaluation; setting up mechanisms to facilitate loan schemes; actions focused on enhancing financial literacy among the farmer communities were also highlighted by the stakeholders of the sector.
Enabling environment and M&E
Accountable and transparent monitoring and evaluation processes are a key gap identified by stakeholders, which prevents the ability to address instances of misuse funds. The M&E processes could include stakeholder driven platforms where multiple-stakeholders could vet the level of accountability of the mechanisms. Additionally, common indicators for M&E and data collection based on identified indicators could contribute to enhancing the data and information based on which relevant decisions and actions are implemented.
Multi actor partnerships on climate and disaster risk finance could contribute to the cross sectoral communication, identifying key opportunities for CDFRI, as well as strengthening the enabling environment through an inclusive and participatory processes including partnerships between the public and the private stakeholders; youth partnerships for climate and disaster risk management; engagement and inclusion in activities associations from different sectors including banking and finance sector associations, farmer associations and group-based governance entities of the vulnerable groups could contribute to scaling up its accessibility for resilience building efforts of the country’s people and ecosystems.
Note: This article has been published on The Morning as part of the author’s weekly column.
Tags: climate risk management, CDRFI, finance, climate finance, inclusive processes
Vositha is an attorney-at-law specialising in public international law, with a focus on international environmental law, UN human rights law, refugee law and EU law. She has over a decade of experience in working on climate change, at national and international level.