Global climate change has resulted in regions of the world experiencing an increase in extreme weather events. One of the most vulnerable regions is the Arctic. This is where climate change is most evident. However, changing climate patterns used by insurers to assess Arctic risks are driving up insurance costs, making it more expensive for consumers and companies. Emerging dynamics are being added with China’s Arctic engagement, particularly through the integration of the Arctic into its Belt and Road Initiative (BRI). Often referred to as the “Polar Silk Road,” this Arctic extension reflects China’s ambition to participate in developing trade corridors, energy infrastructure, and digital connectivity across the High North. While China brands this expansion as cooperative and win-win, it also reshapes the strategic landscape, prompting both regional and extra-regional actors to revisit their positions and strengthen their foothold. Against this backdrop of environmental vulnerability and intensifying geopolitical interest, this paper examines how sustainable financial instruments, such as Environmental, Social, and Governance (ESG) bonds, climate hedge bonds, and insurance-linked securities, can be used to manage risk and foster resilience in Arctic development. This article examines the prospects for applying sustainable finance approaches within the Arctic BRI to address uncertainties, forced growth in insurance costs, and the growing gap between insured and uninsured assets.