With the United States Agency for International Development’s (USAID) portfolio of climate change programs, partnerships, and expertise around the globe, the Agency is well positioned to answer the global call to action for the climate crisis. USAID will work across the intersection of climate and development to reduce emissions, increase resilience, and sustainably develop economies. With climate adaptation and mitigation programs in place, we can limit warming and preserve ecosystems, create jobs, tackle historical inequity, and build stronger communities.
Prioritizing Ocean Health
A healthy ocean is critical to the survival of the planet. The ocean regulates climate, provides natural resources, and supports food security for a large portion of the world’s population. Three out of seven people in the world depend on seafood as their main source of protein, and up to 10 times more carbon is stored in coastal habitats than tropical forests per unit area. Protecting the world’s oceans will play a critical role in tackling climate change, from preserving mangroves and seagrasses that sequester carbon to safeguarding coral reefs that protect coastal communities from storm surge.
Healthy oceans also provide economic benefits. The “blue economy” refers to a broad subset of sustainable economic activities within the overall ocean-based economy—this can include fisheries and aquaculture as well as energy generation, tourism, and shipping. In fact, the oceans and the blue economy provide goods and services that are estimated at around $2.5 trillion annually and support hundreds of millions of jobs. Fifty-nine million people are directly employed in fisheries and aquaculture alone.
However, uncontrolled human activities are undermining the ocean’s health. Overexploitation, habitat destruction, climate change, and pollution pose direct threats to marine biodiversity and the ocean’s capacity to support human well-being, climate adaptation, and climate mitigation—thus putting many communities’ sources of income, food, and safety at risk.
USAID and the Sustainable Ocean Fund
To address these challenges, USAID partnered with the Sustainable Ocean Fund (SOF), to make pioneering impact investments into marine and coastal projects and enterprises. The $132 million Fund invests in projects across Latin America and the Caribbean, Africa, and Asia and the Pacific that aim to build resilience in coastal ecosystems and create sustainable economic growth and livelihoods in the blue economy.
Launched in 2018, the Fund provides private debt and equity investments for companies focused on sustainable seafood, the circular economy, and marine conservation. The SOF has a $50-million USAID sponsored U.S. International Development Finance Corporation loan portfolio guarantee to support debt investments in companies. The guarantee acts as a de-risking measure and catalyzes growing interest from investors on coastal conservation investments, making it easier for the SOF to raise capital and make impactful debt investments. Investors previously wary of the unknown risks are now entering projects in coastal regions to build employment and entrepreneurial opportunities for the communities that are at the heart of achieving global climate ambitions.
With its final close in 2020, the SOF received more than $132 million in funding commitments from investors like the European Investment Bank, Axa Investment Managers, and the Inter-American Development Bank. Financial support provided by the SOF has enabled portfolio companies to expand and employ more people, achieving significant human impact through increased incomes and sustainable livelihoods. By the end of 2020, the SOF had created 303 jobs—34 percent of which are held by women—and it is expected to support an additional 30,000 waste pickers—individuals who make a living collecting, sorting, recycling, and selling materials that someone else has thrown away—through its circular economy projects as well as an additional 1,000 jobs from other enterprises.
The Fund also has expected climate mitigation impacts. Through its support of recycling technologies, the SOF is expected to save up to 117,000 tons of carbon dioxide per year by reusing plastics and diverting them from incineration. By supporting sustainable fishing practices, the SOF also helped to deploy 80 SafetyNet Technologies, which use light-emitting devices to help fishers catch the right type of fish, reducing overfishing and protecting endangered species.
Mobilizing Climate Finance
By providing catalytic funding and technical assistance, USAID has been instrumental in the success of the SOF by crowding in private capital. However, support to the SOF is just one of the many ways by which the Agency is mobilizing finance for climate action. In October 2021, USAID INVEST and Dalberg released the Catalyzing Private Finance for Climate Action: Learning Brief and a series of Case Studies, including a profile of the SOF, that draws upon both USAID’s experience, as well as the experience of other donors, on how to effectively intervene by providing support through investment opportunity assessments, fund and financial instrument structuring support, technical assistance, transaction advisory services, catalytic capital, and guarantees and risk insurance. Through these measures, USAID and other donors can scale and impact climate finance interventions.
By working together with the private sector through funding mechanisms like the SOF, USAID can advocate for healthy oceans and convene a diverse team of private and public sector actors seeking similar sustainable outcomes that improve the lives of millions.
The Global Innovation Lab for Climate Finance 2022 call for ideas is now open. The Lab is looking for innovative climate finance solutions from three thematic streams (zero carbon buildings, sustainable food systems, and climate adaptation) and three regional programs (Brazil, India and Southern Africa), plus one wildcard slot for the best idea regardless of the sector or geography. The deadline is Wednesday, December 22nd, 2021, at 17:00 PST.
Jennifer Kane is a Senior Biodiversity and Natural Resources Advisor in the Biodiversity Division of USAID’s Center for Environment, Energy, and Infrastructure. She helps lead efforts to integrate climate change and biodiversity at USAID, including nature-based solutions and climate-resilient biodiversity programming, especially in the marine context. She also provides leadership on fisheries and food security, as well as promoting equity and inclusion in the environment sector. Jenny holds a Master of Science in Sustainable Development and Conservation Biology and a Master of Public Policy in Environmental Policy from the University of Maryland College Park, a graduate certificate in science communication from the University of California Santa Cruz, and a Bachelor of Science in Biology and Visual Art from Brown University.
Sashi Jayatileke is a Senior Climate Finance Advisor with USAID’s Center for Environment, Energy, and Infrastructure. She leads the Agency’s Climate Finance Plan in coordination with the interagency. Previously, she was a Managing Director with USAID’s Private Sector Engagement Hub and provided technical and strategic advice to USAID Missions on development finance, impact investing and entrepreneurship. Sashi brings 18 years of experience in the design, development, and implementation of projects focused on private sector development, impact investing, women's economic empowerment, and financial inclusion. She holds a MSc from the London School of Economics, and a BA from Vanderbilt University.