Climate Action’s Post

In light of the current International Monetary Fund spring meetings, a key focus is how Development Finance Institutions plan to tackle climate change and debt sustainability effectively. Debt-for-Nature and Debt-for-Climate swaps emerge as promising solutions, as evidenced by a recent report highlighting how these instruments could unlock crucial climate finance: https://lnkd.in/epwZg4Vs   These swaps involve voluntary debt cancellations in exchange for commitments to nature and climate goals. They create fiscal space for addressing environmental and debt challenges in developing countries, unlocking funds for climate projects and offering benefits like improved repayment capacity and reduced borrowing costs. Moreover, they go beyond debt relief, helping mitigate socio-economic and environmental impacts of debt distress.   Depending on the parties involved, swaps can take different structures, such as liability management with commercial creditors or partial debt cancellation with bilateral creditors. While not new, these transactions have a history dating back to the 1980s, with nearly 150 conducted globally, showcasing varying levels of success.   At HCBL, we are actively engaged in advancing these swaps, identifying success factors, and addressing barriers. Our objective is to ensure these innovative financial mechanisms fulfil their potential in addressing climate change, debt sustainability, and fostering biodiversity. Join us in driving meaningful impact and sustainability in global finance! 🌍🌱   #DebtForNature #ClimateAction #SustainabilityLeadership

In light of the current International Monetary Fund spring meetings, a key focus is how Development Finance Institutions plan to tackle climate change and debt sustainability effectively. Debt-for-Nature and Debt-for-Climate swaps emerge as promising solutions, as evidenced by a recent report highlighting how these instruments could unlock crucial climate finance: https://lnkd.in/epwZg4Vs   These swaps involve voluntary debt cancellations in exchange for commitments to nature and climate goals. They create fiscal space for addressing environmental and debt challenges in developing countries, unlocking funds for climate projects and offering benefits like improved repayment capacity and reduced borrowing costs. Moreover, they go beyond debt relief, helping mitigate socio-economic and environmental impacts of debt distress.   Depending on the parties involved, swaps can take different structures, such as liability management with commercial creditors or partial debt cancellation with bilateral creditors. While not new, these transactions have a history dating back to the 1980s, with nearly 150 conducted globally, showcasing varying levels of success.   At HCBL, we are actively engaged in advancing these swaps, identifying success factors, and addressing barriers. Our objective is to ensure these innovative financial mechanisms fulfil their potential in addressing climate change, debt sustainability, and fostering biodiversity. Join us in driving meaningful impact and sustainability in global finance! 🌍🌱   #DebtForNature #ClimateAction #SustainabilityLeadership

With the Investment Summit near, we wrote this column on the need to look beyond equity. This focuses on the possible issues in this route. The next piece (to be published after a week) will attempt to provide solutions while answering debt sustainability related concerns. https://lnkd.in/dg8EY_fM

Elo adopts an active approach when investing in hard currency debt, and expects the same approach from external managers handling local currency debt, says Eero Ketola, CFA, Elo´s Head of Fixed Income. “We conduct thorough region and country analyses when making investments ourselves, and we expect the same of our external managers,” stresses Ketola. Elo has incorporated its responsible investment philosophy, including environmental, social, and governance (ESG) considerations, into its investment process. As a result, Elo’s team closely monitors how managers incorporate ESG factors into their investment decisions. “We have the traditional financial macroeconomic analysis as our foundation, and combined with that, we integrate responsible investment principles on the E, S, and G side,” explains Ketola. In addition to monitoring green initiatives aimed at addressing pollution and mitigating global warming, on the social side, Ketola and his team assess “the stability of the economy, adherence to human rights, and other related factors, including equality and educational issues.” According to Ketola, governance is also a major consideration, highlighting the importance of governmental and institutional stability in enhancing living standards. Whether investing directly or through external managers, Elo’s goal is to identify “stories and investments that are on a sustainable path to prosperity,” Ketola concludes. Read further on HedgeNordic.com: https://lnkd.in/gi6Uvunw

I am pleased to share a T20 Policy Brief entitled "Mobilizing Innovative Sources of Finance: Lessons from the Resilience and Sustainability Trust (RST)" co-authored with colleagues Sara Ahmed from the V20, Fahmida Khatun from the Centre for Policy Dialogue (CPD), and Rishi Bhandary from Boston University Global Development Policy Centre. This policy brief makes three specific recommendations on the Resilience and Sustainability Facility to the G20. The G20 should call on the IMF to: (i) remove the qualifying requirement that countries must have a concurrent Fund program in place to access RST concessional funding; (ii) programmatically have the RSF play a much stronger catalytic role in mobilizing private finance support by focusing on a few ambitious, high-depth reforms; and (iii) deploy RSF resources to help create fiscal space for climate action through debt relief solutions that are timely, fair and effective. Given the demand and pace of existing commitments, G20 members should commit more resources to the RSF. In addition to these RSF reforms, the G20 should also help countries address liquidity challenges by issuing a new round of SDRs, encourage the IMF to fully integrate climate investment needs and shocks into its debt sustainability assessment methodologies, and commit to increasing the supply of concessional finance to enable countries scale up investments for climate-positive development. Thanks for a great collaboration dear co-authors !!! SARA JANE A. Dr. Fahmida Khatun Rishikesh Ram Bhandary