I have been an Island Innovation Ambassador since 2019 when the first Virtual Island Summit took place and was delighted that this Spring the team has put the focus on finance with an inaugural Island Finance Forum which took place on 13th-16th April 2021, bringing together senior financiers, development partners, and regulators to share and exchange expertise on sustainable and inclusive financial structures in island communities.
In realising the transition to a sustainable future – global, island communities face unique financing challenges and I thought it would be really interesting to get the perspective of two islanders who are starting out in their green finance careers.
Luca Neil Treskatsch has recently completed his postgraduate studies in Energy, Trade, and Finance with Distinction at Cass Business School, City University of London, and indeed the focus of his MSc dissertation examined the topic of: “Diversification through Green Assets in the Era of Decarbonisation”. This was written in collaboration with the Green Finance Institute, Department for Transport (DfT) and Department for Business, Energy & Industrial Energy (BEIS).
Stephen Snider, a fellow Island Innovation Ambassador, will complete his graduate programme at Harvard University this May. He is pursuing a masters in Global Development Practices and has focused his studies on the Caribbean Region and on Sustainable Finance. His thesis project has been about developing a Climate Resilience Index for Jamaican businesses.
Sangeeta Laudus: Thanks, Luca & Stephen, for taking the time to speak to me. So, what made you decide you wanted to pursue a career in green finance?
Luca Neil Treskatsch: Thank you Sangeeta for having me! When I was perusing my academic journey, I genuinely did not have a single intention of which sector or area I could see myself in. Therefore, I decided to gather some broad experience in a variety of Apprenticeships and completed a BSc in Business Administrations at IE Business School Madrid.
It was during the holidays of July 2018 that I stumbled across a Summer Course in “Environmental Economics and Sustainability” at the London School of Economics and Political Science (LSE). This course sparked my intellectual curiosity for combining Economics and Climate Change. Soon after, I challenged myself on thinking about the possible interconnection between Finance and Sustainability. Moreover, if the world of Finance should play a role in the Energy transition and work towards net-zero.
In 2018 I found my area of excitement in which I want to build a career: working on enabling the transition to a green financial system and mobilising investment in clean and resilient growth.
Stephen Snider: I studied Economics in college and spent 8 years working in corporate banking. While it was engaging work and I was good at it, the work did not give me a sense of purpose. In the spring of 2018, I decided to quit and go back to school to add knowledge of sustainability to my finance career and transition into a career that I could use to make the world better for my community. I wanted an understanding of climate change and the development issues facing the Caribbean region. Sustainable Finance became the logical combination of my career experience, course work, and the area in which I can add value. Similar to Luca I see mobilizing the financial system as driving real impact by realigning our economic system to protect the environment and provide for all members of society.
Sangeeta Laudus: Luca, you live in Mallorca, and Stephen, you are from Jamaica. What would you say have been the most profound changes you have seen recently concerning adopting a more sustainable way of life on your islands?
Luca Neil Treskatsch: Correct, I am originally from Hamburg, but my family moved over to Mallorca when I was young. I am extremely grateful to be able to call Mallorca my home and with adopting a more sustainable way of life on the island, I think it could definitely improve.
To start, Mallorca is of course heavily linked to mass-tourism; being a “holiday island” brings with it a lot of issues regarding the environment. Especially now during the Covid-19 lockdowns, many Mallorquín have never seen the island this “clean” and empty, while the sea quality has improved immensely. Less traffic also means a lot of animals have returned to the forests again from previously crowded places.
Of course, the Balearic Islands cannot survive without Tourism, nevertheless, it made us Mallorquín people realise how much more we have to take care of our surroundings, our produce and the precious nature we too often take for granted. Also, realising the fact that we have to diversify our economy to not entirely depend on tourism only.
Regarding renewable energy on the island, by the end of 2022 around 260 million euros worth of investment will be made in PV (photovoltaic) installations in the Balearics. Enabling 326 Megawatts in generation through 46 solar parks. The Balearics have extensive potential when it comes to renewable energy, having so many hours of sunshine in the summer and strong winds during the winter. Companies such as Solarta Balear SL, Solysia, Endesa and many more are doing a great job at installing solar on the island.
Stephen Snider: For Jamaica, I’ve seen a real awakening among my peers to environmental damages. The Government has made great strides with its ban on plastic and Styrofoam, a push on recycling, and the adoption of renewable energy. Likewise, we’re advocating at the regional and global levels. But a lot still needs to be done as Environmental issues take a back seat to Economic ones and I see them having to go hand and hand. We can’t separate them.
I’m seeing this happening right now as businesses are looking for opportunities to improve their sustainability and incorporate triple-bottom-lined approaches. I’m working for a Jamaican impact investing advisory firm, the Leap Company Ltd. (www.theleapco.com), to develop a framework to measure a company’s climate change resilience. Leap’s framework measures both the risks and opportunities businesses face from climate change and helps them to identify ways they can change their operations, improve reporting, and build resilience in the face of climate change. Like what has happened with Covid-19, companies that are active in identifying risk, addressing climate change, and thinking about the long term will be prepared.
Sangeeta Laudus: Do you see green finance options being different for island communities? And if so what are the main differences?
Stephen Snider: In the Caribbean, we have a much smaller market and it isn’t as developed as more mature markets in the US or Europe. There is a lot of interest though in the topic and I believe that unique applications of financial products can be made for the local context. The focus will be much more on climate change mitigation and adaptation as we face the brunt of hurricanes. For example, the Jamaican Stock Exchange is exploring green bonds, the Caribbean Climate-Smart Accelerator is directing funding to innovation, and the public is demanding new products. The future is very bright for green finance and the sector is sure to grow.
Luca Neil Treskatsch: Stephen is totally right here. For Mallorca it is almost exactly the same. We have definitely obtained a much smaller market for Green Finance up until now. Nevertheless, we can observe a clear increasing pattern of customers looking to buy properties on the island, being more environmentally cautious than ever. Questions regarding the sourcing of materials (for the infrastructure) and green energy creation are more frequent. In my opinion, changing customer preferences are one aspect that will ultimately drive this change forward.
Sangeeta Laudus: What opportunities does The Blue Economy and natural capital offer to mitigate climate change across island communities?
Stephen Snider: For Jamaica, more than 30% of our economy is based directly on tourism. So, protecting our beautiful beaches, rivers, and mountains will ensure we still have a product to offer. By focusing on the Blue Economy and the preservation of our natural resources we are investing in the future of the island. When we look at the UN SDGs, Jamaica has come up short on SDG #14 – Life Below Water. Overfishing and pollution and climate change have caused major damage to our coral reefs and put at risk our famous “product” of Sun, Sand, and Sea. I’m encouraged by the increased awareness of these issues where we see the private sector participating in beach clean-ups, funding restoration projects, and engaging with the public on education and awareness. More needs to be done to actively protect and ensure the future of these “assets” and that is where the blue economy plays an important role in demonstrating its monetary value. Enterprising individuals and start-ups are developing business models that go beyond the old way of simply extracting resources and using natural capital to those that work with nature and protect it. Sustainable finance has an important role here where business and government need to direct money towards these projects if Jamaica is to continue to protect its resources.
Luca Neil Treskatsch: As previously mentioned, Mallorca is also profoundly dependent on its Tourism sector. To preserve our environment, projects such as “Green Hysland” in the Balearic Islands valued at 10 million euros will contribute vastly to generating green hydrogen to the Mediterranean country. Moreover, I would have to mention the incredible work done by “Mar de Fondo” in Mallorca, which is a project that raises awareness of the human impact on the earth, cleaning up the seas through ocean support and land support after the tourism seasons. Unfortunately, there is still a large proportion of tourists coming to the island and not thinking about their impact on Mallorca’s environment, which affects us inhabitants throughout the whole year.
Mallorca’s government targets for 2050 are to reduce emission by 90%, increase efficiency in energy consumption by 40% compared to 2005 levels and to use 100% renewable energy.
Sangeeta Laudus: The tourism sector has been severely affected by the global pandemic, what is the effect of this on financing opportunities for island communities and do you think that a mixture of private and public funding is needed?
Luca Neil Treskatsch: Unfortunately, due to the global pandemic, at the end of 2020, there were almost 110,000 unemployed people in the Balearics. Which is a 75.2% rise from the 2019 figures. Like in Jamaica, major chains have barely survived the economic crisis while a multitude of small shops have shut down completely. A majority of hotel service personnel have suffered from immense job cuts, losing their homes and now have to queue at Mallorca’s food banks. The government has promised an additional aid package for small businesses to survive the global downturn, and these cash packages cannot come soon enough. The local government must act sooner rather than later.
Now that the island has opened up its borders again for Tourists over Easter, Mallorca has been rehabilitated over the recent weeks. On the other hand, simultaneously our Covid-19 numbers have surged again. Now it is in our hands to follow the road to prosperity and green recovery. By each one of us doing his or her part to help protect the beautiful areas situated in the South-west part of the island.
Stephen Snider: Sadly similar to Luca’s story, Jamaica has also seen tourism severely impacted and this has really hurt those individuals who are dependent on these sectors. While major chains have still been able to attract visitors, I worry about the small vendors, eco-tourism, and supporting sectors that have fared the worse. Developing the market so that it is less concentrated on foreign brands and large corporations will help with driving money into the hands of those that need it the most.
Sangeeta Laudus: I would like to thank both of you for taking the time to talk with me today. We have gathered some really insightful commentary and it has been interesting to explore the idea of regional opportunities not fully realised. This seems to hold true for both Jamaica and Mallorca.
However, island states are still in need of a framework to better assess and manage the financial risks associated with climate change and need to shift capital flows away from activities with negative social and environmental consequences. It will be interesting to see whether the changing preferences of tourists and investors can severely drive this change forward, toward a sustainable future for islands where their natural capital is at the core of the decision-making. Wishing you both lots of luck as you start out in your green finance careers.
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