Small island economies (SIEs) are at the forefront of climate change. Their economies and livelihoods are already impacted by the effects of a changing climate due to rising sea levels, increasingly frequent and more powerful storms, reduced access to drinking water and damage to ecosystems.

This spotlight edition of the KPMG net zero readiness series highlights SIEs and how they can attract private capital on their journeys toward net zero. It assesses 36 countries and territories on their relative preparedness and ambition to achieve net zero, and their ability to attract private capital to fund the transition to a sustainable economy — while highlighting examples of practices that are already being deployed.

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The capital markets can play a key role in funding the net zero ambitions of SIEs. Survey participants — comprised of decision makers at 24 large institutional investors and pension plans together managing USD28.7 trillion in assets — have provided insight into the reasons global investment portfolios are underweight in SIEs and the actions SIEs may take to create change.

Key takeaways

Small Island Economies (SIEs) are working to respond to the threat of climate change, yet funding remains a challenge for many...

The global capital markets could help to provide SIEs with a solution, though action is needed to enhance their appeal...

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Net zero readiness spotlight: Islands

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