REPORTS & DATA

To meet climate and development goals, low- and middle-income countries need to transform their power sector infrastructure at a scale and pace that is unprecedented. The World Bank framework “Scaling Up to Phase Down” maps out steps to support developing countries, with the help of development partners, to scale up affordable, secure, and reliable clean energy and phase down coal-fired electricity generation.

The investment decisions made by financial institutions play a crucial role in achieving the goals of the Paris Agreement, and yet quantifying the greenhouse gas (GHG) impacts of investments and presenting the results in a transparent and comparable way is no easy task. This publication is a compilation of publicly available sources concerning the methodologies and tools available to guide financial institutions assess, set targets, and disclose GHG emissions.

When a financial intermediary receives financing from lenders/investors, such lenders/investors may prescribe environmental and social requirements, typically resulting in requirements for the financial intermediary’s own clients which are then reflected in legal documentation. This publication provides an overview of common environmental and social contractual provisions and sample language for such provisions.

Sustainability-Linked Bonds—an innovative debt product that incorporates incentivized sustainability targets—are becoming increasingly popular to encourage issuers to improve their sustainability performance. However, existing Sustainability-Linked Bond structures allow issuers to weaken the link between sustainability and financial outcomes, rendering Sustainability-Linked Bonds less effective. This policy research working paper examines two potential structural loopholes on this front: late target dates and call options. The results show that Sustainability-Linked Bonds with coupon step-up penalties, which constitute the majority and benefit most from such features, are more likely to have later target dates and call options embedded. Larger penalties are associated with a greater likelihood of late target dates but not call options, which instead tend to be favored primarily by speculative-grade issuers. The paper also provides evidence that issuers with high carbon dioxide emissions are more likely to resort to such structural loopholes. These findings suggest that Sustainability-Linked Bonds, despite incentivized targets, may be prone to greenwashing.

There is a growing focus on the need to effectively and rapidly shift capital toward sustainable solutions. However, key questions remain as to how investors, stakeholders, and decision-makers alike can best assess which companies, activities, or financial products are truly sustainable. And how can this information best be standardized across various contexts? IFC and CDP, a not-for-profit which runs the global environmental disclosure system, prepared a report analyzing the current state of best practices in environmental disclosure, examining more than 100 disclosure practices across developed and developing economies. The report, which was developed in consultation with the United Nations Sustainable Stock Exchanges Initiative (UN SSE), also highlights practical examples for developing high-quality regulation that addresses market needs and investor demands, helping to mobilize private capital flows towards sustainable solutions.

Unlocking opportunities to create a sustainable cooling strategy can help India in its post-COVID recovery by boosting investments, creating jobs, reducing emissions, and securing the supply chains of medical care products, health infrastructure as well as food. Anticipating the complex cooling energy trends and challenges facing India, in 2019, the government of India launched the India Cooling Action Plan (ICAP) to help provide sustainable cooling and thermal comfort for all. This study focused on ICAP’s thematic cross-sectoral areas including space cooling in buildings, cold chain and refrigeration, transport air-conditioning and refrigerants. The analysis identifies eight key clustered opportunities where concessional finance can play a significant role in advancing the goals of ICAP and sustainable cooling in India.

The World Bank Group’s Country Climate and Development Reports (CCDRs) are new core diagnostic reports that integrate climate change and development considerations. CCDRs build on data and rigorous research and identify main pathways to reduce GHG emissions and climate vulnerabilities, including the costs and challenges as well as benefits and opportunities from doing so. As public documents, the reports inform platforms for governments, their citizens, the private sector, and partners to engage on the development and climate agenda, supported by better coordination at the country level. ​CCDRs can also signal high-impact actions that may attract funding from concessional and commercial financing from development financiers, including non-traditional donors, and the private sector.

While climate change causes many types of natural disasters, including biodiversity loss, landslides and wildfires in Africa, this study focuses on the most frequent and economically damaging to infrastructure and livelihoods, namely floods and droughts. Among the 43 African countries analyzed, all of which experienced at least one drought or flood since 1990, the study finds that there are up to $100 billion in total in potential upfront adaptation investment opportunities, or $5 billion a year, between now and 2040. This is an upper-bound estimate, contingent on the investment being commercially viable with the necessary technologies available and a favorable investment climate.

Clear incentives for investors, transparent carbon markets, the backing of a partner with real financial or business clout. These are some of the features IFC believes will make a successful outcome more likely for issuers of ‘forests bonds,’ debt issued to raise money for tackling deforestation where interest rates are tied to the borrower meeting predetermined targets. The conclusions contained in this article are based on the lessons learned from IFC’s role in the first-ever forests bond, issued in 2016 that matured five years later. With 10 million hectares of forest lost every year worldwide1, triggering desertification, erosion and reducing the earth’s natural ability to absorb carbon dioxide, the need to raise funds is becoming ever more urgent.

This report is the OECD’s fifth annual assessment of progress towards the UNFCCC goal. As a continuous progress analysis of global climate finance developments, this report presents the evolution of total annual levels of climate finance provided and mobilised by developed countries for developing countries over 2013-2020. For 2016-2020, it includes an overview by climate theme, sector, financial instrument and regions.