Commonwealth stress tests new financing structure for SIDS

The Commonwealth Secretariat in partnership with the University of Cambridge’s Centre for Resilience and Sustainable Development (CRSD), held a Cambridge Policy Simulation Lab (CPSL) on February 4-5 to stress test the Common Pool Asset Structuring System (COMPASS), a tool which has emerged from the 'Their Future, Our Action' initiative, that focuses on enabling small states to attract sustainable finance.

COMPASS, a result of the collaborative efforts between the Commonwealth and CRSD during the two-year initiative, emerges as a transformative tool to overhaul financial mechanisms tailored for Small Island Developing States (SIDS). Adopting a unified and cross-jurisdictional strategy, COMPASS seeks to simplify and enhance sustainable finance provisions for nations facing escalating environmental and economic challenges exacerbated by climate change.

Speaking at the opening of the workshop, the Commonwealth Secretary-General, the Rt Hon Patricia Scotland said:

“COMPASS can accelerate SIDS’ access to finance by overcoming challenges of scale, risk and complexity, by helping our members work together: pooling resources, expertise and decision-making processes; developing a common language to describe the challenges they share and developing a robust pipeline of funding applications and investable projects.

"This initiative reflects the Commonwealth’s commitment to addressing the unique needs of SIDS through a comprehensive and collaborative approach.”

As the final workshop of the Their Future, Our Action initiative, this week’s event represents the culmination of an extensive engagement process involving over 500 experts, 200 national policymakers, and 5000 citizens from various Commonwealth countries. Participants in the workshop including High Commissions for Commonwealth SIDS heard several presentations on potential pathways for securing funding for SIDS.

The CRSD will distil insights from the collaborative action-research into a final report, integrating three critical outputs: the development of COMPASS, the Political Economic Resilience Index (PERI), and the legal validation of a whole-of-systems approach for identifying investable opportunities to attract blended finance.

The report will offer practical recommendations for the effective use of COMPASS and PERI by SIDS, ensuring that the insights gained contribute meaningfully to advancing sustainable solutions for these nations.

In harnessing existing multilateral and bilateral collaborations and engaging with the impact investment community, the partnership between the Commonwealth Secretariat and CRSD is committed to strengthening the global financial resilience system for SIDS.

The outcomes of this week’s simulation lab present multiple viable avenues for securing funding for SIDS. These findings will be instrumental in the lead-up to the Commonwealth Heads of Government Meeting (CHOGM) in October in Samoa which is the first CHOGM to be held in a Small Island Developing State.