Mauritius is famous for its great Indian ocean sunsets, but it also serves as an important financial hub for the African continent. The country is well positioned to play an important role for scaling up the green economy.
I recently travelled to the island of Mauritius, on invitation by the United Nations Environment's Finance Initiative (UNEP FI), to talk to investors at the stock exchange about green bonds.
Making the transition to a low-carbon and climate-resilient future is important for Mauritius, since it is one of the countries that is most vulnerable to climate change and sea level rise.
Locals told me that they had not seen the sun at Mauritius for a month when I arrived. There had not been this much rains for 50 years. Indeed, it was reaning heavily every day while I was there.
I saw small roads destroyed by rainwater. The owner of the hotel, where I stayed, told me that these roads had to be re-built last year too. He also had to fix last year’s wooden terrace floor at the hotel again, because parts of it were rotten already. Maintenance becomes more challenging due to heavy rainfall.
It had been raining heavily for a month. Small roads were destroyed by rainwater. The wooden terrace floor, built only last year, was rotten.
As many other places in the world, there is a need to improve climate resiliency in Mauritius. They also need investments in new, zero-emissions transport infrastructure. The government has awarded the contract for a new light train line, connecting several towns on the island. 50 years after they closed their railway network. A network that had been in operation since 1860 and was a key factor in the early social-economic development of Mauritius.
This is great news for the climate. The hotel owner, however, was skeptical. He showed me pictures of old trees surrounded by flowers laid down by protesters. Very old trees that will be cut to build the railroad tracks. On an island where, due to historical deforestation, less than two percent of the forest now is primary forest, cutting down old trees trigger negative feelings. Green projects often include tradeoffs of divergent environmental impacts.
The aim of our trip to Mauritius was to build an ecosystem for green bonds. Green bonds are about reducing emissions and building a climate-resilient future, while at the same time minimizing negative impacts on the local environment.
We talked to investors, potential issuers and brokers about the opportunities in the green bond market, and explained how organisations like CICERO ensure the environmental quality of the market through independent reviews.
Green bonds are loans where the borrower reports on environmental risks to investors. Investors across the world are becoming more concerned about these risks, demanding more transparency before investing. For them it is about securing profit, but they also want to contribute to scaling up much needed sustainable investments.
While the global green bond market has almost doubled for two years in a row, Africa remains so far the continent with least issuances, despite huge investment needs. I hope that we will soon see many green bond issuances on the Stock Exchange in Mauritius.