Redefining credit ratings to support investment in climate resilience

The world’s Small Island Developing States (SIDS) are uniquely vulnerable to the impacts of climate change, particularly tropical storms, flooding, erosion and rising sea levels. As climate change progresses, the unpredictability of extreme weather events is increasing.

The current global credit rating system downgrades these small nations for the intense risks they face, undermining their ability to invest in disaster preparedness and economic growth. This focus on risk makes it less possible for SIDS to seize opportunities for change and contributes to a downwards spiral of indebtedness and a lack of resilience.

This briefing outlines ways to reform the methods and mechanisms for determining credit ratings, to promote greater investment in climate resilience and sustainable development in SIDS and other vulnerable countries.