Market integrity: Principles & standards:
This category of policy tools works on ensuring a robust green market by supporting the market development of green definitions and standards, verification, certification and enforcement systems.
Strategic issuance: Sovereigns, cities, development banks, other public entities
This area provides examples and a “how to”-guide for other potential green bond issuers; prove that there is demand for green bonds and improve liquidity of the market by increasing the volume of green bonds issued:
- Green City Bonds
- Green bonds from Green banks and development banks
- Green sovereign bonds
Market development: Aggregation, securitization, covered bonds
Works to overcome the barrier of scale and risk that prevent a large share of low-carbon investments to access bond markets. This includes:
- Developing standards for loan contracts, installation processes, operations and management
- Green warehousing
- Green covered bonds
Improving risk-return profile: Increasing returns and reducing risks
This category of policy tools works on improving the risk-return profile of climate investments, by either reducing risks or increasing returns for low-carbon investments relative to high-carbon investments. Policy support here includes:
Increasing returns through public policies in the real economy such as feed-in-tariffs and carbon pricing
Reducing risks through public financing tools such as guarantees, first-loss provisions and insurance
Tax incentives for issuers and investors
Focused on improving the risk-return profile of climate investments by improving real returns to investors, or by making it cheaper for issuers to issue green bonds.
Boosting demand: Mandates for domestic funds, quantitative easing
This category follows a “green bond pull” strategy, as creating demand for green bonds will make it more attractive for issuers to issue green bonds.
- Green bond mandates for domestic funds: Sovereign wealth funds, development banks
- Green quantitative easing directly into green infrastructure bonds