CAF issues first resilience bond for Latin America and the Caribbean with support from UNDRR

The bond, 100 million and aligned with the Climate Bonds Resilience Taxonomy, will finance resilient infrastructure aimed at reducing vulnerabilities to climate hazards and ensuring the continuity of essential services in Latin America and the Caribbean. The first projects identified are in Brazil, the host country of COP30.

UNDRR acted as technical coordinator in the selection of the projects and verification of their eligibility, based on the Climate Bonds Resilience Taxonomy Methodology (2024) and the document "Designing a Ranking 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, and reflects CAF's commitment to mobilize 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 Diaz-Granados, CAF's executive president.

"CAF's resilience bond accelerates investment to reduce disaster risk and directs it to where people are most protected, with resilient infrastructure that keeps water, energy and mobility services operating in the face of events. UNDRR is proud to partner with CAF to mobilize financing that contributes to safer communities and stronger economies," said Kamal Kishore, Special Representative of the UN Secretary-General for Disaster Risk Reduction and Head of UNDRR.

Investing in Resilience

The resilience bond is a debt instrument that mobilizes capital market resources for projects that strengthen the resilience of critical infrastructure, protecting essential services and people's well-being.

The bond's resources will be allocated to water and sanitation, drainage and flood control, waste management, distributed energy for critical services, nature-based solutions and safe mobility projects, with priority given to local investments that contribute to strengthening critical infrastructure and essential services.

Projects should demonstrate reduced exposure and vulnerability, operational capacity during extreme events, and shorter recovery times.
The approach aligns 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 shows a sustained 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 a limited proportion of their budget to disaster risk reduction and official development assistance for prevention is minimal. Resilience bonds can help close part of this gap by directing capital to projects that reduce losses, protect livelihoods and boost urban resilience.

Lhe 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.