This report sets out a proposal to establish a ‘Nature and Climate Sovereign Bond Facility. It provides governments and investors with the tools to recognise nature’s contribution to long-term sustainability and economic performance, at the same time providing urgent solutions to the debt crisis.
This briefing sets out a proposal to accelerate the timely and effective integration of nature and climate into sovereign debt markets. It sets out the core design for a practical mechanism to support sovereign issuers and their investors to address the short-term sovereign debt crisis in ways that drive a green, inclusive recovery, while embedding over the long-term nature- and climate-related risks and opportunities in sovereign debt markets.
The Nature and Climate Sovereign Bond Facility builds on recent experience in establishing collaborative platforms to support green and sustainability bonds. Such platforms have provided services to creditors and debtors in advancing nature- and climate-linked debt agreements, including technical assistance, performance assessment, credit enhancement and other financial services. All of these are crucial to rapidly mobilise public and private finance to support economic recovery and scale up funding for investments in nature and climate.
The proposal has been developed in consultation with a Working Group on Nature and Debt that includes:Agence Française de Développement, Centre for Sustainable Finance at SOAS University of London, Children’s Investment Fund Foundation, Climate Bonds Initiative, Inter-American Development Bank, Institute for International Finance, International Finance Corporation, International Institute for Environment and Development, Global Environment Facility, The Nature Conservancy, Paulson Institute, United Nations Development Programme, World Bank, and World Wide Fund for Nature.
To promote a green and socially just recovery worldwide, public debt problems need to be urgently addressed to enable all governments to have the fiscal space to finance key health and social spending and invest in a green, resilient and inclusive recovery.