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Scaling Sustainability-linked Sovereign Debt
A viable market for sustainability-linked debt can address the triple challenge of public debt distress, climate shocks and nature degradation. This paper charts out building blocks, use cases and possible pathways for scaling sustainability-linked sovereign debt. Pathways explored include credit enhancement, catalytic financing, standardisation, capacity building, regulation, fiscal frameworks, and nature market linkages. Barriers to achieving scale are also addressed, from data and technology shortfalls to restrictive accounting practices and coordination failures among key stakeholders. As a way forward, the paper calls for coordinated, ambitious interventions by key stakeholders across the sustainable sovereign financing universe.