London, March 20, 2018 – Emerging markets
and other sovereign nations are becoming a significant new force in the
global green bond market attracting millions of dollars to help combat
climate change by reaching a new class of investors through sovereign green
bonds, according to a new report by IFC, a sister organization of the World
The report, Guidance
for Sovereign Green Bond Issuers,
focuses on lessons from Fiji’s historic making move in being the first
emerging economy to issue a sovereign green bond. In recognition of that
leadership, Fiji has just been awarded a prestigious Green Bond Pioneer
Award at the Climate Bonds Initiative’s conference in London. And in another
first, Fiji will debut its first Fijian dollar bond on the London Stock
Exchange next month.
“We are seeing clear momentum building following
Fiji’s bond with other emerging market economies moving to create a new
market for climate finance through sovereign green bonds,” said Alzbeta
Klein, IFC’s Director for Climate Business. “These new players from emerging
markets could be gamechangers for the green bond market, which will hit
new record highs this year. The bonds can also help countries demonstrate
national leadership on the green agenda and deliver on their commitments
under the Paris Climate Change Agreement.
The Guidance for Sovereign Green Bond Issuers,
developed by IFC, says there’s significant appetite for international
issuances of green bonds from environmental, social and governance focused
investors, as well as institutional investors.
“Fiji’s sovereign green bond attracted interest
from both local and international investors, with the foreign investor
participation a first for Fijian dollar denominated bonds,” said the Governor
of the Reserve Bank of Fiji, Ariff Ali. “Fiji has shown that small economies,
under threat from climate change, can deliver effective, credible and innovative
ways to finance climate work, and it’s hoped other nations will learn
from Fiji’s experience that it’s possible to pursue new markets for climate
The report says while there are additional
costs involved for international issuances of sovereign green bonds, compared
to standard government bonds, they do allow countries to reach new classes
of investors. It says transparency at every step of the process is critical
to the success of the green bond market, so resourcing and expertise needs
to be applied to both monitoring and reporting on the use of proceeds.
And in what could be a potential plus for
emerging economies, the report says an increasing number of millennials
are now attracted to investments delivering a positive impact.
As a pioneer issuer, the report says Fiji
sought to set high standards for other nations to follow suit and was supportive
of the establishment of a robust and transparent process. The report provides
a step by step roadmap for other sovereign nations to follow when considering
issuing their own green bond.
At the request of Fiji’s Reserve Bank, IFC
led World Bank Group support to provide technical assistance to assist
the government in issuing a sovereign green bond. This collaboration took
place under a broader, three-year Capital Markets Development Project supported
by the Australian Government.
IFC, a member of the World Bank Group, is the largest global development
institution focused on the private sector in emerging markets. Working
with more than 2,000 businesses worldwide, we use our capital, expertise,
and influence to create markets and opportunities in the toughest areas
of the world. In FY17, we delivered a record $19.3 billion in long-term
financing for developing countries, leveraging the power of the private
sector to help end poverty and boost shared prosperity. For more information,
About DFAT-IFC Fiji Partnership
Technical support for Fiji’s green bond forms part of a capital markets
development project under the Fiji Partnership. Australia and IFC are working
together through the Fiji Partnership to stimulate private sector investment,
promote sustainable economic growth and reduce poverty in the Pacific.
About the Green Bond Pioneer Awards
The Green Bond Pioneer Awards recognise financial institutions and government
bodies and individuals who have led the development of green finance and
green bond markets in the past year and through their pioneering initiatives
have provided positive examples of climate resilient and low carbon investment.
For more information please visit www.climatebonds.net.