Green-bond strategies for developing cities
Green bonds are gaining favor among city leaders as a way to finance environmentally conscious projects. But it’s mainly developed cities issuing this form of debt.
Now Padraig Oliver writes for Environmental Finance that despite significant hurdles, cities across the Global South also can tap the green bond market.
With limited access to capital, many emerging cities lack the means to issue bonds on their own. Municipal-based infrastructure development companies that raise funds with the backing of central governments offer a path forward, Oliver writes.
The approach with the most potential may be partnerships with development finance institutions, the article says. Examples include the World Bank, European Investment Bank, Asian Development Bank and Mexico’s Nacional Financiere. These organizations can directly fund urban initiatives or mitigate the risk of green bonds by guaranteeing investors repayment. Another option is for cities to team with corporations or commercial banking institutions through public-private partnerships.
Johannesburg is the first and only city in the Global South to issue a green municipal bond. Learn here about the Green Bonds for Cities project. Click here for Citiscope’s explainer about green bonds and why cities are so excited about them.