Small island developing states are particularly vulnerable to climate change, natural disasters, and external economic shocks. Sustainable development and combating climate change require islands to take an integrated approach, one that promotes economic diversification, energy independence and increased use of renewables, a sustainable tourism industry, and a blue economy. Innovative financing instruments, such as blue and green bonds and blended financing, can help fund climate adaptation, resilience building, and sustainable development. Expanding marine and coastal activities and tapping into the “blue economy” will help diversify tourist-reliant economies, making them more resilient to future shocks.