MÁLAGA – Green, Social, Sustainability and Sustainability-linked (GSSS) Bonds are gaining traction and attention as important tools that can help bridge the Sustainable Development Goals (SDGs) and climate financing gap. Taking decisive action is more crucial now than ever. As UN Secretary-General António Guterres highlighted at the 2023 SDG Summit during UNGA 78, most of the SDGs are "woefully off-track" with their 2030 targets. While this bond market has grown significantly in recent years to reach $3.8 trillion, only 15% are issued in developing countries, where the needs are greatest.
To help identify opportunities for growth of the GSSS bonds market in these countries, the Global Steering Group for Impact Investment (GSG) has released a report that explores the fast-growing body of research on GSSS bonds and the most effective ways of harnessing their full potential.
The report, ‘Financing SDGs in emerging markets: The role of Green, Social, Sustainability and Sustainability-Linked Bonds,’ delves deep into the key trends and drivers in the GSSS bonds market and its potential to generate significant social and environmental impact. It also offers important recommendations to issuers, private sector investors, policymakers, development finance institutions, and other market builders on how to scale up GSSS bonds in developing countries supporting the growth of the market.
All stakeholders have a part to play in creating an ecosystem approach that enables the growth of the investments necessary to significantly contribute to closing the SDGs funding gap, which
increased by at least 60% to 70% as compared to 2014, to about $4 trillion.
Paul Horrocks, Head of the Private Finance for Sustainable Development Unit at the OECD Development Co-operation Directorate, commented:
“Delivering the SDGs and transitioning economies onto sustainable pathways requires significant funding. The debt capital markets are the biggest and most liquid source of finance available, which increasingly want ESG and SDG exposure. Green, Social, Sustainability and Sustainability-linked Bonds are an important conduit through which developing countries can access sustainable aligned capital and investors can increase their exposure to these emerging sustainable markets.”
Rémy Rioux, AFD CEO and FiCS Chairman, said:
“AFD has given priority to sustainable bond issuances for its own financing and in support of key partners in developing countries. AFD’s success in this market reflects its action geared towards just ecological transitions, in line with the Group's 100% Paris Agreement alignment and 100% socially responsible commitments. Looking forward, GSSS bonds are a very powerful and innovative tool to leverage sustainable finance for the SDGs.”
Fabienne Michaux, Director SDG Impact, UNDP Sustainable Finance Hub, remarked:
“GSSS bonds have the potential to direct capital at scale to where it’s needed most and lift the level of ambition in terms of contribution to solutions and the SDGs.”
Carmen Correa, Chief Executive Officer of Pro Mujer said:
“Gender bonds play a key role towards the SDGs as they incentivise financing women-led businesses and generate a cultural change towards gender equality.”