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Press Release

WTW announces USAID funding for transformative climate finance solution to scale up adaptation investment in vulnerable countries

March 18, 2024

WTW to develop a breakthrough ‘Resilience Wrapper’ pilot facility that will protect and de-risk loans to private enterprises from key climate risks.
Climate|Environmental Risks|ESG and Sustainability|Insurance Consulting and Technology
Climate Risk and Resilience|Insurer Solutions

LONDON, March 18, 2024 — WTW (NASDAQ: WTW), a leading global advisory, broking, and solutions company, today announced that it will receive funding from the U.S. Agency for International Development (USAID) to develop a climate-resilient insurance solution that aims to unlock climate adaptation investment from the private sector.

With USAID funding, the WTW parametric solution will be a game changer for building the financial resilience of communities to extreme weather events.”

Simon Young | Senior Director, Disaster Risk Finance & Parametrics, WTW

With USAID funding, WTW will design a pilot facility to offer a parametric insurance solution (Resilience Wrapper) that protects direct loans to private enterprises from climate-related shocks. Following a triggering event (such as a cyclone, flood, or drought), the subsequent loan repayment will be covered by the insurance payout. The Resilience Wrapper protects the borrowers’ debt servicing obligations from the most impactful climate risks, ensuring that they can remain operational and avoid default following a shock event.

Simon Young, Senior Director, Disaster Risk Finance & Parametrics, WTW, said: “Vulnerability to climate change and disaster risk can have a direct effect on the cost of borrowing, particularly in lower-income countries. This adds additional pressure on debt servicing capacity and increases the likelihood of debt default, which can lead to credit rating downgrades.

“With USAID funding, the WTW parametric solution will be a game changer for building the financial resilience of communities to extreme weather events by helping to unlock much-needed private sector investment in critical adaptation projects in climate vulnerable countries.”

In support of the President’s Emergency Plan for Adaptation and Resilience (PREPARE), the short-term catalytic funding was awarded through the USAID Climate Finance for Development Accelerator’s Adaptation Finance Window initiative. The initiative utilises catalytic grant funding to de-risk the development and scaling of private sector-led climate adaptation approaches in frontier and emerging markets; it also includes an investment from the USAID Enterprises for Development, Growth, and Empowerment (EDGE) Fund.

Gillian Caldwell, USAID Chief Climate Officer, said: "A disaster can bankrupt a business overnight. Innovations like the WTW Resilience Wrapper make communities better equipped to withstand disaster by supporting the local companies they depend on, while incentivising lenders to work in places they might otherwise consider too risky for investment. I commend WTW's leadership in this area as it signals both the need and the opportunity for greater private investment in resilience.”

About WTW

At WTW (NASDAQ: WTW), we provide data-driven, insight-led solutions in the areas of people, risk and capital. Leveraging the global view and local expertise of our colleagues serving 140 countries and markets, we help organisations sharpen their strategy, enhance organisational resilience, motivate their workforce and maximise performance.

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