“While the availability of climate finance has increased, banks have faced technical capacity limitations”

Marios Vitos, Chargé d’Affaires of the EU Delegation.

Speaking at the Sustainable Finance Conference in Mauritius, Marios Vitos, Chargé d’Affaires of the EU Delegation, and José Maria Troncoso Perera, Head of Cooperation, underscored the urgency of addressing technical and regulatory gaps within the banking sector. While the EU has played a leading role in aligning financial strategies with sustainability objectives, local institutions require enhanced technical capacity to effectively deploy green finance. The evolution of the SUNREF III program reflects this shift, prioritizing capacity-building within the Bank of Mauritius and commercial banks to integrate climate risks and ESG principles into financial decision-making.

Marios Vitos, Chargé d’Affaires of the EU Delegation, highlighted the urgent need for climate-conscious financial solutions, pointing to recent environmental disasters as a call to action. Speaking at the Sustainable Finance Conference in Mauritius, he reiterated the EU’s commitment to channelling public and private investments towards climate-neutral projects and underscored the importance of aligning financial regulations with sustainability goals. José Maria Troncoso Perera, Head of Cooperation at the EU Delegation, further detailed the shift in SUNREF III’s focus towards capacity-building and regulatory reinforcement, ensuring more effective implementation of green finance in Mauritius. Their addresses set the tone for a strengthened collaboration in fostering a more sustainable financial ecosystem.

The SUNREF (Sustainable Use of Natural Resources and Energy Finance) program has been a cornerstone of sustainable finance initiatives in Mauritius for over 15 years. The EU’s participation in the initiative, in collaboration with AFD and Business Mauritius, has provided crucial support for businesses seeking to implement climate adaptation and mitigation strategies.

In his opening speech on February 4, Marios Vitos, Chargé d’Affaires of the EU Delegation to Mauritius, emphasized the pressing need for sustainable financial solutions. “Climate change is a reality we witness daily, whether through rising temperatures or extreme weather events. The devastating floods in Mauritius in January 2024 are a stark reminder of the urgency to act,” he stated.

Highlighting the EU’s leadership in shaping a sustainable finance strategy that aligns economic growth with environmental objectives, he noted that “the European Union has pioneered a Sustainable Finance Strategy aimed at channelling both public and private investments towards climate-neutral and sustainable projects.”

He also underscored the importance of harmonizing regulatory frameworks to facilitate the transition towards sustainable finance, pointing out that “the EU’s green taxonomy and Environmental, Social, and Governance (ESG) rating standards can serve as an inspiration for partner countries, while adapting to their specific needs.”

Addressing the Mauritian government’s push for private sector adoption of ESG principles, Marios Vitos assured that “the EU stands ready to support Mauritius in this endeavour, as evident in today’s conference.”

He also pointed out the broader implications of sustainable finance, emphasizing the role of finance in both maintaining environmentally friendly investments and transitioning towards better performance over time. “Sustainable finance means funding what is already environmentally friendly while also enabling a transition towards improved sustainability in the long run,” he explained.

He also acknowledged the EU’s ongoing discussions on simplifying and aligning sustainability reporting requirements within its regulations, including the European green taxonomy, the Corporate Sustainability Reporting Directive (CSRD), and the Corporate Sustainability Due Diligence Directive. “We understand the challenges businesses face in adapting to these new regulations and remain committed to facilitating this transition through harmonized approaches,” he added.

On the second day of the conference, José Maria Troncoso Perera, Head of Cooperation at the EU Delegation, reflected on the evolution of the SUNREF program. “SUNREF III has been instrumental in accelerating access to climate finance in Mauritius. However, our assessment revealed limitations due to technical constraints within banks and an incomplete regulatory framework for sustainable finance,” he explained.

Recognizing these challenges, the EU and AFD decided to shift SUNREF III’s focus towards strengthening regulatory institutions and technical capacity. “With this new orientation, we are enhancing the capabilities of the Bank of Mauritius to integrate climate risk in its operations. Additionally, we are providing technical assistance to the Mauritius Bankers Association to support financial institutions in implementing the new green finance framework,” José Maria Troncoso Perera elaborated.

He highlighted the challenges faced by banks in Mauritius in accessing climate finance, stating that “while the availability of climate finance has increased, banks have faced technical capacity limitations, preventing them from fully utilizing these funds.”

The regulatory framework also needed improvement to better support sustainable finance initiatives, and solve the issue of underutilization of available green credit lines.

“We are embarking on a new partnership, focusing on sustainable finance for the next two years”

“The new direction of SUNREF III is designed to address these issues without compromising its initial goals,” he assured. “By equipping the financial sector with the necessary knowledge and regulatory tools, we are ensuring a more effective and impactful use of available funds.”

The EU official also emphasized the broader impact of this initiative, stating that “a stronger sustainable finance framework in Mauritius will facilitate the deployment of the EU’s ‘Global Gateway’ strategy, promoting investments in transformative sectors such as digitalization, energy, transport, climate resilience, health, and education.”

José Maria Troncoso Perera emphasized the potential for alignment between Mauritius’ sustainable finance regulatory framework and EU standards, which would create opportunities for investment and enhance the country’s financial sector’s regional impact. “A harmonized approach will boost investment potential, including a regional multiplier effect, given Mauritius’ role as a financial hub beyond its borders,” he noted.

Both EU representatives underscored the importance of collaboration between governments, regulatory bodies, financial institutions, and businesses in ensuring a successful transition to sustainable finance. “We are embarking on a new partnership, focusing on sustainable finance for the next two years,” Marios Vitos remarked, acknowledging the vital role of AFD as a key EU partner under SUNREF.

José Maria Troncoso Perera reinforced this sentiment, highlighting the EU’s comprehensive approach. “We are addressing sustainable finance at three levels, the Bank of Mauritius, the Mauritius Bankers Association, and Business Mauritius. This integrated approach ensures meaningful progress,” he said.