Linking sovereign debt to climate and nature outcomes


This report from UK think tank the IIED provides a guide for debt managers and environmental decision makers.

As countries grapple with the triple crisis of debt, climate change and nature loss, compounded by the impacts of the COVID-19 pandemic, multiple innovative solutions in sustainable finance are beginning to gain traction. These innovations towards an inclusive green recovery offer substantial benefits for developing countries looking to increase their fiscal space, adapt to climate change, reduce their emissions and protect their natural environment. This guide presents these innovations in an actionable plan that links sovereign debt to climate and nature outcomes. Seven practical steps outline ways for governments to complete a debt transaction linked to their sustainability goals for climate and nature. Aimed primarily at debt managers and environmental decision makers, the guide also serves as an operational pathway for creditors, international institutions, and nongovernmental organisations to work together, using these emerging financing innovations to improve debt sustainability and increase climate and nature investment in the most climate-vulnerable and biodiversity-rich countries.

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