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

      Sustainalytics Podcast

      What’s Happening in Sustainable Finance: Innovative Finance Instruments Breaking Ground, Use of Proceed Bonds Back in Vogue, and More

      Could innovation help the sustainable finance market rebound in 2023? Will scrutiny of linked instruments continue to push investors back to use of proceed transactions? We tackle these topics and more in our latest episode.

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

      What’s Happening in Sustainable Finance: On the Horizon for 2023, Reporting on Financed Emissions for Sovereign Debt, and More

      Despite ending 2022 on a low note, there is optimism for the global sustainable finance market in 2023 as sustainability is still a key issue for investors, issuers and governments and remains closely tied to capital markets.

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

      Climate change and adaptation are high on the international agenda. Listen to learn how the outcomes from COP27 and COP15 could influence sustainable finance markets and get a rundown of recent notable market transactions.

      Sustainalytics Podcast

      The Sustainalytics Podcast | Cybersecurity and Data Privacy in Focus: Cyberattacks and ESG

      In this episode of the Sustainalytics Podcast, our experts explore cybersecurity and data privacy trends, how cyberattacks affect bottom lines, and why companies should invest in robust cybersecurity and data privacy policies.