Sustainability-Linked Finance: Mobilizing Capital for Sustainability in Emerging Markets

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Sustainability-linked finance is designed to incentivize the borrower’s achievement of environmental, social, or governance targets through pricing incentives. Launched in 2017, it has now become the fastest-growing sustainable finance instrument, with over $809 billion issued to date in sustainability-linked loans and bonds. Yet these instruments are still nascent in emerging markets, which represent only 5 percent of total issuance to date. This note shares examples of recent sustainability-linked financing, including several involving IFC in various roles, to highlight how investors can utilize these new instruments in emerging markets and mitigate greenwashing risks
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de la Orden, Raquel; de Calonje, Ignacio. 2022. Sustainability-Linked Finance: Mobilizing Capital for Sustainability in Emerging Markets. EMCompass;Note 110. © International Finance Corporation, Washington, DC. License: CC BY-NC-ND 3.0 IGO.
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