Asian Development Bank proposes SDG bonds to attract finance

The Asian Development Bank (ADB) has launched a new report proposing the use of sustainable development goal (SDG) bonds to help developing countries tap into global capital markets to support sustainable and green recovery from Covid-19

The Asian Development Bank (ADB) has launched a new report proposing the use of sustainable development goal (SDG) bonds to attract international financing for green projects and clean energy schemes.

The “Accelerating Sustainable Development after Covid-19:The Role of SDG Bonds” provides guidance to using SDG bonds and proposes an SDG Accelerator Bond – which it says could assist countries with no track record on bond issuance issue bond.

ADB says in the report that the SDG Accelerator Bond could combine exit guarantees and other credit enhancement structures to assist countries meet SDG targets.

“The COVID-19 pandemic has slowed down the momentum for sustainable and equitable growth in most of developing Asia and many countries are at risk of not meeting their SDG targets in climate resilience, gender equality, and human development,” Ahmed M.Saeed, vice president, ADB, said following the launch of the report. “For countries looking to fund sustainable projects and programs on a large scale, capital markets represent an underused but viable mechanism to bring in SDG investments.”

Southeast Asian countries issued a record $12bn in green, social and sustainability bonds in 2020. However, the financing needs of many countries have risen significantly during the Covid-19 pandemic.

ADB has made a commitment to deliver $80 billion in climate finance between 2019 and 2030, and will ensure that at least 75 per cent of its projects will address climate change mitigation and adaptation by 2030.

Established in 1966, ADB is owned by 68 members – including 49 from the region.