ADA publishes a Climate Resilience Finance Operational Taxonomy for Central America and the Dominican Republic
ADA identified the need to adapt national taxonomies to what is applicable to the most vulnerable population and to the financial institutions serving this segment in Central America and the Dominican Republic. The initiative was developed in the context of the projects implemented under the Inclusive Climate Finance Initiative (ICFI).
The region is highly exposed to climate change due to extreme weather events, reliance on climate-sensitive sectors and the persistence of poverty, inequality and environmental degradation. ICFI is striving to enable vulnerable people in the region to adapt to climate change with tailored financial products.
In particular, it was necessary to establish a common definition of climate resilience and to identify how it can be achieved through targeted loans.In response, ADA is now putting forward the Climate Resilience Finance Operational Taxonomy for Central America and the Dominican Republic. This common classification system guides financial institutions, investors, companies, cooperatives, development agencies and public policy makers in directing their capital towards investments that strengthen resilience against climate change.
This classification system, developed with the support of YAPU Solutions, identifies the most relevant climate adaptation solutions for the region in line with national and international standards. Its applications include classification of credit portfolios, design of resilient financial products, labelling of green and sustainable bonds, monitoring of financial flows, and prevention of greenwashing through clear and verifiable technical criteria.
The taxonomy is structured by country – Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua, the Dominican Republic – and by sector prioritised according to its economic, social and climate relevance in the region – agriculture, livestock, trade, services, manufacturing and housing. Additionally, it links the climate adaptation solutions to the five most significant threats for the region - droughts, frosts, floods, storms and heatwaves.