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Info Service on Biodiversity and Traditional Knowledge (Aug23/02) Green bonds – a just response to the ecological and debt crises? Green bonds have been identified in Target 19 of the Kunming-Montreal Global Biodiversity Framework (KMGBF) as one of the ‘innovative schemes’ that should be stimulated to increase financial resources for biodiversity action. This is also reflected in the strategy for resource mobilization for the KMGBF, with green bonds identified as financial tools to increase both international and domestic biodiversity-related financial resources. Yet, are green bonds without risk and will they really address indebtedness in the Global South? A Briefing Paper, ‘Green Bonds’, published by the Climate and Community Project, addresses some of these issues. Amongst the world’s oldest financial instruments, bonds allow governments to crowdsource credit from individuals and institutions, spreading the risk among many lenders. Green bonds are like any other form of bond, except borrowers promise to use the funds to pay for environmentally-aligned projects, like renewable energy or ‘green’ public transportation. They are financed by International Financial Institutions (IFIs), other official lenders and private financiers. The focus of enabling green borrowing in the Global South has push and pull factors: they need finance to respond to climate change and biodiversity loss, and; until recently, lenders in the Global North were searching for high return investments in a world of ultra-low interest rates. After 2008, a number of frameworks and financial products were rolled out to (ostensibly) respond to those demands. Among the most lauded, and clearest in linking debt to ‘green’ development, has been the green bond. Unfortunately, most green bonds typically underpin projects with a clear path to generating profit, like the sale of renewable energy. This makes them less useful in the Global South, where climate adaptation or biodiversity conservation measures – whose benefits are not easily monetized – are critical. Whether green bonds (which are susceptible to ‘greenwashing’) add to sovereign debt through direct borrowing or on-lending to the World Bank, the result is the same; namely, over-indebtedness that sends public resources to investors in advanced economies, while the countries that hold the least responsibility for the climate and biodiversity crises bear the worst impacts. As the paper concludes, in a global economy that structurally disadvantages the Global South, expanding lending through green bonds does little to rectify long-standing and ongoing structural imbalances via ‘innovative’ forms of debt. With
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