What’s Happening in Sustainable Finance: Climate on the International Agenda, New Instruments to Support Emerging Markets, and More

Posted on February 2, 2023



Listen on your favorite player:


Episode Summary


  • Nicholas Gandolfo, Vice President, Corporate Solutions
  • Aditi Bhatia, Senior Regional Sales Manager, Corporate Solutions

In this episode, our hosts Nick and Aditi discuss the recently held COP27 and COP15 conferences and what their outcomes could mean for green and social financing globally. They also touch on the concept of blended finance and how that might be used to support climate adaptation in emerging markets. Increasing activity among sovereigns is also discussed, as countries come to market more frequently with sustainable debt. Lastly, Nick and Aditi share a rundown of other notable sustainable finance transactions. 

Climate High on the International Agenda 

Given the current climate crisis, expectations were high for COP27. From an environmental standpoint, the final agreement was seen as a disappointment by some observers. However, the conference closed with a ground-breaking agreement to set up a loss and damages fund, which aims to provide financial assistance to countries vulnerable to, or impacted by, the effects of climate change.

COP15, the United Nations Biodiversity Conference, also concluded late last year with a landmark agreement that includes measures to halt and reverse nature loss – such as putting 30% of the planet and 30% of degraded ecosystems under protection by 2030. The plan also includes a target of mobilizing at least US$200 billion per year from public and private sources for biodiversity-related funding.

Finally, the G20 conference in Bali also turned its attention to issues around climate change, low-carbon transition, and climate adaptation. 

Innovative Solutions to Fund Sustainable Development 

With an estimated US$9.2 trillion needed to meet global climate and environmental goals,1 private and public sectors are looking for more ways to funnel money to finance mitigation and conservation efforts. To address this need, market participants are discussing innovative solutions like blended finance, which is the strategic use of development finance (such as public or philanthropic capital) and private investment capital to fund sustainable development projects in developing countries.2 

A new crop of instruments is also emerging to offer potential solutions. This includes instruments like debt-for-nature swaps, a financial mechanism that allows portions of a developing country’s foreign debt to be forgiven, in exchange for commitments of investment in biodiversity conservation and environmental policy measures.3 We anticipate seeing more variety in the types of instruments being developed to support conservation and climate adaptation in countries most vulnerable to climate change. 

Check Out Our Special Episode on Sustainable Finance in the Metals and Mining Sector 

In case you missed it, we recently took a deep dive into the sustainable and transition finance opportunities within the metals, mining and commodities sector. Our panel discussed key considerations for banks, issuers and investors interested in using sustainable finance instruments to help fund improvements across the sector and mitigate potential risks. The sector is incredibly important because of its crucial role in the global transition to a low-carbon economy. However, these companies face numerous environmental and social challenges, which if not managed effectively could negatively impact their access to capital. Listen here: Sustainable Finance Insights: Special Episode on Sustainable Finance in the Metals, Mining and Commodities Sector


Key Moments

0:00:51 Market overview
0:01:38 COP27 insights
0:03:48 G20 Summit
0:04:35 COP 15 insights
0:05:00 State of the bond market and outlook for 2023
0:05:56 Sovereigns’ ambitions in sustainable finance
0:06:33 Social taxonomy update
0:06:52 Green bond tokenization
0:07:12 Emergence of blended finance
0:08:02 More activity in transition finance market
0:08:19 Market scrutiny of SLBs
0:10:08 ICMA paper on sustainable repos
0:10:34 Food security as social use of proceeds
0:10:54 More activity around carbon markets globally
0:11:15 PCAF publishes second version of Global GHG Account and Reporting Standard
0:11:48 CBI principles for transitioning agriculture sector
0:12:23SLB and SLL overview
0:17:39Audience questions
0:23:26Green bonds overview
0:26:51Green loans overview
0:28:50Social bonds and loans overview
0:31:04Labeled products, transition bonds and regulatory updates


Links to Select Resources



1Roston, E. 2022. “McKinsey Pegs the Price Tag for a Livable Climate at $9.2 Trillion a Year.” Bloomberg. January 25, 2022. https://www.bloomberg.com/news/articles/2022-01-25/mckinsey-pegs-price-tag-of-livable-climate-at-9-2-trillion-a-year

2 See OECD: https://www.oecd.org/development/financing-sustainable-development/blended-finance-principles/ and Bank of America: https://about.bankofamerica.com/en/making-an-impact/blended-finance

3 See Earth.org: https://earth.org/debt-for-nature-swaps/



      Recent Content

      ESG in Conversation: What Does It Take To Be a Sustainability Leader in 2023 and Beyond?

      What Does It Take To Be a Sustainability Leader in 2023 and Beyond? Discover the trends sustainability professionals need to lead into the future.

      Sustainalytics Podcast

      ESG In Conversation: How do Businesses, Governments and Investors Fit into the Circular Economy?

      How do businesses, governments, and investors fit into the circular economy? Learn about the challenges and opportunities of a circular economy in this episode of ESG in Conversation.

      Listen to the latest episode of the Sustainalytics Podcast | Aligning Executive Action to Strategy With Sustainability-Linked Compensation

      What’s Happening in Sustainable Finance: Green Bond Standards on the Horizon and Much More

      In this month’s round up of sustainable finance deals and developments, we look at what the EU Green Bond Standard could mean for the market, innovations in use of proceeds, and the ongoing diversification of industries tapping the market.

      What’s Happening in Sustainable Finance: GSSS Market Rebounds, Sovereign Sustainable Debt, and Much More

      Get caught up on developments in the global sustainable finance market. This month, we discuss market performance for the first part of the year, continuing scrutiny of SLBs, and the growing group of sovereigns exploring sustainable debt opportunities.