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Climate Risks Are Wake-Up Call for Sovereign Bonds

  • Governments need to sell sustainability-linked bonds: report
  • Chile is first nation to do so this week, focuses on ESG sales
A solar thermal plant in the Atacama desert, Antofagasta region, Chile.

A solar thermal plant in the Atacama desert, Antofagasta region, Chile.

Photographer: Cristobal Olivares/Bloomberg
Updated on

The government bond market needs to wake up to climate-related risks, according to a report calling for more countries to follow Chile’s lead in issuing debt linked to sustainability targets.

Current efforts to value natural capital and price sovereign risks are ad-hoc, fragmented and small scale, according to research group Finance for Biodiversity (F4B). Use of sustainability-linked bonds would connect environmental outcomes to the cost of national debt.