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Timothy N.J. Antoine is governor of the Eastern Caribbean Central Bank and member of the board of directors of the Toronto Centre, which trains financial supervisors and regulators from developing economies.

In a little-reported event at the COP28 United Nations Climate Change Conference last week, leading countries and financial institutions joined Canada in embracing financial reforms that support those who are vulnerable to climate change.

Such progress shows that Canada can be a leader in the response to the climate crisis – and also that it can do even more.

As the Governor of the Eastern Caribbean Central Bank, I am bearing witness to a brutal reality that demands such global attention. The climate crisis, a stark and present danger for small island developing states like those in the Caribbean, is a clear warning to the world about the urgent need for action.

The Eastern Caribbean Central Bank is the monetary authority for eight island economies: Anguilla, Antigua and Barbuda, Dominica, Grenada, Montserrat, St. Kitts and Nevis, Saint Lucia, and Saint Vincent and the Grenadines. For these island states, climate change is a constant battle against hurricanes, rising sea levels and potential economic instability. We face natural disasters at a frequency seven times higher than the global average, with losses that are devastatingly disproportionate to our minimal contribution to global greenhouse gas emissions.

For context, in 2017 Hurricane Maria caused the equivalent of 226 per cent of Dominica’s GDP in damages. To put this in perspective, it would be the equivalent of Canada suffering losses of more than $4-trillion.

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For Canadians (two million of whom visited the Caribbean last year), the relevance of the Caribbean’s plight might not be immediately apparent, but the recent wildfires, heat waves and floods across Canada are stark reminders of the shared threat we face. Climate change respects no borders, and its effects on one region can have cascading effects globally – economically, environmentally and socially. As a country known for its commitment to human rights and environmental stewardship, Canada has both the capacity and the moral responsibility to take a leadership role in combatting this global crisis.

The need for innovative financial reforms in the face of this challenge cannot be overstated. Traditional financial mechanisms fall short in addressing the scale of the climate crisis. One response is the use of Climate Resilient Debt Clauses (CRDCs), which provide debt relief in the wake of climate disasters.

Canada has been a pioneer and advocate in the development of CRDCs. And at the COP28 meeting in Dubai last week, Britain, France, the World Bank, Inter-American Development Bank, European Investment Bank, European Bank for Reconstruction and Development and African Development Bank announced new commitments to expand CRDCs.

Canada’s commitment to financial innovation in response to climate effects was underlined by Deputy Prime Minister and Minister of Finance Chrystia Freeland last October at the annual meeting of the Development Committee of the World Bank. Ms. Freeland announced that Canada will offer CRDCs in all new sovereign lending. “We call on all creditors to do the same in their new sovereign lending,” she said, further suggesting that the World Bank consider applying CRDCs to existing loans as well.

Canada’s actions and advocacy are commendable. But they are just the beginning.

There is a critical need for new pathways in climate-related financing, incorporating private-sector investments through de-risking strategies and public-private partnerships. Canada, with its globally respected financial sector, is well-positioned to spearhead these efforts.

This involvement is not just a matter of altruism; it aligns with Canada’s constructive self-interest. The unaddressed climate crisis will inevitably lead to global instability, affecting trade, migration and even national security – concerns that directly impact Canada. Therefore, Canada’s investment in climate resilience is not merely an investment in the well-being of vulnerable nations such as those in the Caribbean, but also a strategic move to safeguard its own future.

The Caribbean’s continuing battle with climate change offers valuable lessons on the urgency of the crisis. Canada, as a global leader, must continue to rise to the occasion, not only to fulfill a moral duty but to protect and preserve a livable planet for future generations, including its own citizens. Through innovative financial solutions and a shared commitment to sustainability, we must build a resilient world for all.