Fiji has become the first emerging market to issue a sovereign green bond, raising FJD$100 million or US$50 million, to support climate change mitigation and adaption.
Green bonds are fixed income, liquid financial instruments that are used to raise funds dedicated to climate-mitigation, adaptation, and other environment-friendly projects. This provides investors an attractive investment proposition as well as an opportunity to support environmentally sound projects.
At the request of Fiji’s Reserve Bank, the World Bank and the International Finance Corporation (IFC), a member of the World Bank Group focusing on private sector, provided technical assistance to assist the government in issuing a sovereign green bond. This collaboration took place under a broader, three-year Capital Markets Development Project supported by the Australian Government. Through this partnership, Australia and IFC are helping stimulate private sector investment, promote sustainable economic growth and reduce poverty in the Pacific.
Projects financed from the Fiji green bond will follow the internationally developed Green Bond Principles, and will focus primarily on investments that build resilience against the impacts of climate change. Sustainalytics US (Sustainalytics), a provider of environmental, social and governance research and analysis, evaluated Fiji Sovereign’s green bond transaction and its alignment with the Green Bond Principles. Fiji will also use bond proceeds for projects supporting its commitment to achieve 100% renewable energy and reduce its CO2 emissions in the energy sector by 30 percent by 2030.
Fijian Prime Minister and President of COP23 Frank Bainimarama said: “The Fijian people, along with every Pacific Islander, live on the front lines of climate change. The rising seas, changing weather patterns and severe weather events are threatening our development, our security and the Fijian way of life, along with the very existence of some of our low-lying neighbors. I have made access to climate finance a key pillar of our upcoming COP23 Presidency, and we are proud to set an example to other climate-vulnerable nations by issuing this green bond to fund our work to boost climate resilience across Fiji. By issuing the first emerging country green bond, we are also sending a clear signal to other nations that we can be creative and innovative in mobilising funds and create win-win outcomes for countries and investors in adapting to the serious effects of climate change.”