REPORTS & DATA

Financial firms seeking to make more green finance available in emerging markets face an array of challenges including regulatory gaps, and poor incentives for local firms to adopt more ambitious climate goals. This IFC report looks at how to overcome obstacles and meet the needs of emerging market companies seeking access to sustainable finance.

The hard-to-abate industries produce materials that are essential to economic growth and development, including steel, cement, plastics, and chemicals. A dramatic reduction in these industries’ carbon footprint will be essential to achieving the Paris Agreement goal of limiting global temperature increases to 1.5 Celsius. This series on sustainability in industry explores the opportunities and challenges facing various sectors and look at the role that IFC and other stakeholders can play to support industry efforts to achieve more sustainable manufacturing practices and contribute to a greener planet.

Construction value chains, including the construction and operation of buildings as well as production of materials such as steel and cement, account for approximately 40 percent of energy and industrial-related CO2 emissions globally. The report provides a comprehensive analysis of the challenges of reducing carbon emissions from construction value chains in developing countries, as well as important recommendations on financial instruments, standards, and technologies to channel more financing into green buildings and materials.

The sustainable finance market has seen a steady development in the last decade, experiencing a phase of exponential growth. The increasing severity, frequency, and impacts of climate change have put more pressure on financial institutions to recognize their role in catalyzing a more sustainable and low-carbon future. Issued by Crédit Agricole CIB and the Alliance, the paper expounds a “Five-Step-Approach” to guide the process of transformation towards green banking, inspired by Crédit Agricole CIB's own experience in setting up the strategy and governance in its transition towards green banking, as well as supporting clients in their transition journey. The paper also reveals the core elements of green banking practices and the relevant key practices of the Crédit Agricole CIB, drawing references from international advocacy groups, regulatory guidelines, and the experiences of market leaders.

India will need an estimated US$10.1 trillion in climate finance to get to net-zero by 2070. Public investment alone will be insufficient to tackle India’s adaptation and mitigation targets, so financing that can bring in private sector investment is vital to scaling climate solutions with urgency. This report provides clarity on blended finance models to promote differentiated capital flows for climate mitigation, and share examples of projects across sectors, including energy, agriculture, and housing, that can be replicated in the Indian context.

Micro, small and medium enterprises (MSMEs) are essential in the transition to a more sustainable economy. However, MSMEs' access to finance in emerging markets remains severely constrained, restricting not only business growth but also their sustainability efforts. Financial institutions (FIs) have an important role in bridging the MSME finance gap while enabling their green and just transition. The Sustainable MSME Finance Reference Guide sets out a practical approach for FIs in emerging markets on how to implement sustainable finance for MSMEs.

The Blue Economy encompasses economic activities that rely or impact on the use of coastal and marine resources. Like the broader concept of the Green Economy, of which the Blue Economy forms a part, it advocates sustainable use of these resources to minimize negative impacts on the marine environment. Investing in the Sustainable Blue Economy (SBE) recognizes the criticality of the ocean and its resources, and the increasing threats to the marine environment from climate change, overexploitation, and marine pollution. This voluntary Guidance is for broad use by the market to provide issuers with guidance on the key components involved in launching a credible “blue bond” and to aid investors by promoting availability of information to evaluate the environmental impact of their “blue bond” investments. This Guidance is a result of collaboration between the Asian Development Bank (ADB), International Capital Market Association (ICMA), International Finance Corporation (IFC), United Nations Environment Programme – Finance Initiative (UNEP FI), and United Nations Global Compact (UNGC).

There is an urgent need to grow green bonds and other debt instruments that promote sustainability to give emerging economies the financing they need to meet climate targets. The fifth edition of the ‘Emerging Market Green Bonds Report’ reviews key green, social, sustainability, and sustainability-linked (GSSS) bond market trends in 2022 and outlines the expectations for 2023 and beyond. It also discusses the implications for the asset class of recent developments in policy, regulation, and technology.

Emerging market issuers make up approximately 12% of all sustainable bonds issued. Among them, six countries - Kazakhstan, Pakistan, Poland, Romania, Türkiye, and Uzbekistan - have issued 59 bonds worth almost US$21 billion. However, emerging markets are arguably in most need of capital for sustainable development and many emerging market countries are vulnerable to the effects of climate change. The report examines the potential for sustainable bond issuance in six countries focusing on three key sectors, with benchmark chapters that analyze each target sector globally.

Nearly all types of natural capital—the world’s stock of resources provided by nature—are in decline. Combining cutting-edge, integrated natural science and economic models with an extensive new global dataset, the report offers a novel approach to address the foundational challenges of sustainability to find that economic development and poverty reduction do not need to come at the cost of a livable planet.