Market-based climate financing instruments for subnational governments

Farah Imrana Hussain

Chapter 15 in Decentralized Governance and Climate Change, 2025, pp 294-311 from Edward Elgar Publishing

Abstract: The issuance of the first labeled green bond by the World Bank in 2008 sparked a revolution in the capital markets that has created a $4 trillion plus thematic bond market, leveraging investor interest in environmental, social, and governance criteria in investment decisions and support for sustainable investments. The COVID-19 pandemic has further highlighted to investors the importance of addressing key social and environmental vulnerabilities and helping build resilience for future shocks. This investor demand presents significant opportunities for local governments as they face growing pressure to implement decarbonization and resilience strategies for large-scale infrastructure and the provision of essential public services. This chapter provides a description of financing instruments to finance climate-smart and resilient infrastructure beyond the banking system and central government on-lending, focusing on green bonds, sustainability-linked bonds, and catastrophe bonds.

Keywords: Climate finance; Subnational finance; Private capital mobilization; Environmental finance; Climate investment; Municipal finance (search for similar items in EconPapers)
Date: 2025
ISBN: 9781035356379
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