The “Nature and Climate Sovereign Bond Facility” proposed in a report by Finance for Biodiversity aims to build on investor interest in green debt and create nature-performance bonds and other instruments that align payments with environmental outcomes.
The said proposal has been developed in consultation with a “Working Group on Nature and Debt” including, among others, the Centre for Sustainable Finance at SOAS University of London (one of the institutional partners in the DRGR project), the Climate Bonds Initiative, the Inter-American Development Bank, the United Nations Development Programme and the World Bank.
It highlights the unique opportunity for sustainable development given the global crisis and refers to the demands of the DRGR proposal:
“For the first time in history, there is serious policy debate about an ‘inclusive, green debt relief’ round. Such a progressive conditionality comes with many challenges, whilst offering the potential to leverage the crisis in accelerating the transition to sustainable development. […] [T]he Debt Relief for a Green and Inclusive Recovery Initiative has called on G20 members to tie debt relief to low-and middle-income countries with commitments to pursue green and inclusive recovery.”
Then the report argues for a “Nature and Climate Bond Facility” which would supposedly “enable a robust scaling of nature-and climate-linked sovereign debt across diverse policy environments, contexts, actors and needs”
For more details, read the whole report here.