Green bonds are a key tool for governments to raise capital to implement infrastructure plans in line with national climate targets, as governments move to achieve their Nationally Determined Contribution (NDC) targets, as set in the Paris Agreement and the international Sustainable Development Goals (SDGs). A sovereign green bond can provide a strong signal of the country’s commitment to a low-carbon economy, help bring down the cost of capital for green projects by attracting new investors, and mobilise private capital towards sustainable development.
Key highlights of the briefing include:
- Case studies of sovereign green bonds since Poland’s issuance in December 2016. Sovereign bonds from Poland, France, Fiji, Nigeria and Belgium are profiled. At a sub sovereign level green issuance from the Australian State of Victoria, North Rhine Westphalia in Germany, California and Ile De France are also examined.
- The benefits of issuing a sovereign green bond, including providing strategic direction, attracting new investors, creating domestic green markets, mobilising private capital and leading on the international stage.
- A detailed step-by-step guide on how to issue
The process of issuing a sovereign green bond is similar to that of issuing a standard green bond. However, there are some additional steps to consider, given the more complex organisational nature of governments, the type of expenditures they can entail and their debt’s benchmark role in domestic capital markets. The Briefing Paper outlines the seven basic steps (mentioned below) and provides detailed examples of how countries have done this so far.
1. Engage governmental stakeholders
2. Establish a green bond framework
3. Identify eligible green budget items
4. Arrange independent review
5. Issue the green bond
6. Monitor and report
7. Repeat