The views expressed in this presentation are the views of the author and do not necessarily reflect the

views or
policies of the Asian Development Bank Institute (ADBI), the Asian Development Bank (ADB), its Board of Directors,
or the governments they represent. ADBI does not guarantee the accuracy of the data included in this paper and
accepts no responsibility for any consequences.

Green finance trends and connecting

green/climate finance to projects

Antony Sprigg
Sustainable Infrastructure Advisor
antonysprigg@gmail.com
Green Finance Advisor
China City Development Foundation
Antony.sprigg@ccdf.org.au
Agenda

1. Apologies – lots of words!

2. What is “green”/”climate” finance and how does it work
3. Green finance trends
4. Risks and opportunities
5. How can the PIC’s benefit
6. Green finance to green projects – bridging the gap
Green Finance
Green finance refers to any financial instrument or investment
– including equity, debt, grant, purchase & sale or risk
management tool (for example: investment guarantee,
insurance product or commodity, credit or interest rate
derivative, etc.) – issued under contract to a firm, facility,
person, project or agency, public or private, in exchange for
the delivery of positive environmental externalities that are
real, verified and additional to business as usual, whereby
such positive externalities result in the creation of
transferrable property rights recognised within international,
regional, national and sub-national legal frameworks.
http://climatemundial.com/whatisgreenfinance/
 Green Finance …
Green finance comprises, the financing of public and private green investments
(including preparatory and capital costs) in the following areas:
 environmental goods and services (such as water management or protection of
biodiversity and landscapes)
 prevention, minimization and compensation of damages to the environment and to
the climate (such as energy efficiency or dams)
 the financing of public policies (including operational costs) that encourage the
implementation of environmental and environmental-damage mitigation or
adaptation projects and initiatives (for example feed-in-tariffs for renewable
energies)
 components of the financial system that deal specifically with green investments,
such as the Green Climate Fund or financial instruments for green investments (e.g.
green bonds and structured green funds), including their specific legal, economic
and institutional framework conditions.
https://www.cbd.int/financial/gcf/definition-greenfinance.pdf
 The rapid emergence of …
Green Bonds: A Bridge to SDGs - Focus on SDG 6, 7, 9, 13, 11 & 15
Climate mitigation and adaptation underpin meeting the UN Sustainable
Development Goals
 Proliferation of thematic labels
 Alongside the rapid growth of green bonds, new thematic bonds are appearing in
the market. These include social bonds, sustainability bonds, Environmental Social
and Governance (ESG)-bonds and the latest addition, Sustainable Development
Goal (SDG)-bonds.
 All of these replicate the green bond model by introducing disclosure and reporting
requirements for the issuer to connect investors with assets that deliver a positive
sustainability impact.
 The UN SDGs specify the global sustainability targets that are critical for our future
societies and economies. Core to the 2030 Agenda, the SDGs is a list of 17 goals
that cover both green and social themes.
Green Finance trends
Green Finance Trends – Green Bonds
The Green bond label allows for consistent tracking across markets, data sets and geographies.
The size of the global bond market has been estimated as a total of $90 trillion, with $694 billion
climate-aligned bonds, of which $118 billion are labelled as green bonds (17 percent)
https://www.ifc.org/wps/wcm/connect/70725d70-b14a-4ffd-8360-
cb020258d40a/Green+Finance_Bottom+up+approach_ConsultDraft.pdf?MOD=AJPERES

 Pros
• Green bonds can foster greater transparency in the use of proceeds from a bond and help to
ensure that the climate impact of fixed income investments is reported.
• Green bonds can play a positive role in raising awareness and building expertise among
investors on green and climate issues.
• Lower interest rates.
• Green bonds can raise large amounts of financial resources to support environmental projects
for which funding might otherwise not be available.
• Green bonds can facilitate the establishment of public-private partnerships that might accelerate
the pace of green investment and lead to the adoption of new technologies.
Cons
• The lack of consensus regarding what constitutes a green bond is a source of uncertainty when
assessing long-term investment options.
• Transparency and reporting are weak in the green bond market, which still relies on voluntary
reporting. As the market grows, transparency will emerge as an increasingly important issue.
• Retail investment is still limited because green bonds are not yet well integrated into
mainstream funds, indices and other products. The cost of issuing green bonds might be lower
in the future.

Risks

• The main risk of debt is the default of the issuer.

• Variability in transaction costs and issuance fees, particularly in developing countries.

• Variability in the taxation of debt market instruments.

• When bonds labelled as green issued by others are found not to be "green", remain high and
can have an impact on investors’ trust.
http://www.undp.org/content/undp/en/home/blog/2017/9/12/The-pros-and-cons-of-ethical-debt-
instruments.html
Readiness (Capacity) …
While no definition of readiness has achieved broad consensus, it is generally
understood as the process of enhancing the capabilities of developing countries to
receive and spend climate finance wisely, as well as report on its transformative
impacts. Readiness has become a common currency of the global climate finance
discourse, because it is regarded as the pre-requisite for access to predictable and
quality climate finance.
http://www.mdpi.com/2071-1050/10/4/1192
Who is who in the green finance world …

https://www.adb.org/sites/default/files/publication/357156/catalyzing-green-
finance.pdf
A new financial instrument which could be
useful for the PIC’s
The Seychelles will aim to raise $15 million from its first blue bond in 2017 with
financial support provided by the World Bank and Global Environment Facility. This is
particularly important for emerging economies, where significant investment in
sustainability is needed but little financing has been made available.
The key challenge for SIDS in general is that countries need to source technical
expertise — which increases costs — and obtain co-financing/credit guarantees in
some cases.
How do we resolve these impediments to unlock blue bonds for the PIC’s?
A model designed to resolve the numerous
capacity, project, capital, additionality and
assurance challenges
 Local project identification and readiness champions
 Connect projects to capital
 Design and establish bespoke special purpose vehicles relative to:
 Scale, capacity, maturity, risk, additionality, asset type, asset management and
revenue streams (or not).
 Connect between each GFA and share expertise, case studies, data
 Partner with MDBs and Funds
 Cut out the politics and layers of bureaucracies incumbent in many of the
current facilities with respect to connecting and financing projects
 Establish sustained local facilities, capacity and readiness
 Unpacking the GFA support further
connect green projects to green capital

Urban development Sovereign wealth funds

Green Infrastructure Green fund of funds
Clean energy Clean energy investment capital
Agricultures Environmental investment funds
Green buildings Institutional capital
Green technologies Green bonds
Rail transports Political risks insurance（facilitator）
Green community projects Green ratings（facilitators)
 (simplified version)

World Bank MIGA and others Domestic Banks

Sovereign Funds
guarantee for investments
political risk insurance
www.miga.org
guarantee for project quality
and progress
Guarantee
1
CBI Climate Bonds Initiative
www.climatebonds.net
International LPs Domestic LPs Capital
2
GFA Fund（International） GFA Fund（Domestic） Operation
3
Overseas
N Projects
3 2 1
Overseas China
Green Infrastructure Finance
Accreditation GIFA
Accreditation
4
Global Infrastructure Infrastructure sustainability
Investment Coalition GIIC
www.giicoalition.org
Council of Australia ISCA
www.isca.org.au
SOEs China
Contracting firms
Contracting
5
2/4
Lets attract green finance to our Pacific
Islands …

 Readiness and capacity

 Local facility to scope opportunities
 Establish partnerships
 Explore appropriate special purpose vehicles and procurement models
 Explore if you can raise your own bonds
 Lets start a conversation and include our communities