Green Bonds, Sustainable Infrastructure Investment, and Climate Financing

The United Nations and other international bodies continue to issue dire warnings about the detrimental global impacts of climate change and rising temperatures. Meanwhile, capital investment and mobilization of finance to address the imminent crisis continues to lag. That is, money to tackle the pressing challenges facing the world — food security, water scarcity, quality infrastructure, climate change-driven displacement, and the creation of well-paying, sustainable jobs, among others. The World Economic Forum and the International Monetary Fund estimate there remains a $2-4 trillion annual funding shortfall to achieving the Sustainable Development Goals (SDGs), all of which are impacted by the global environmental crisis. Likewise, the G20’s Global Infrastructure Hub forecasts a $15 trillion gap between projected investment and the amount required to provide adequate global infrastructure by 2040.

What has become more evident in recent years is that funding committed by governments and multilateral organizations — at current levels and generated via traditional mechanisms like tax revenues and public debt spending – is simply not enough to address these immense challenges. Governments around the world, multilateral organizations, the private sector, and everyday citizens — at least those with investable income — must be a part of the solution and work to proactively generate the financial resources to not only save the planet, but create a more sound, equitable, and lucrative global economy for all.

One tool is the green bond — a means for governments and private sector companies to procure financing to specifically invest in key environmental, sustainability, and climate-related projects.

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Author: Trey Fields, Lead Consultant at WBD and engaged with the firm’s Private Sector Engagement Support award with the United States Agency for International Development.