Promoting Sustainable Finance and Capital Markets

IBRD has mobilized finance for middle-income client countries for more than 75 years, raising over $1 trillion from private investors since its first bond in 1947. IBRD engages with investors on special development themes, helping connect their investing to the Sustainable Development Goals. Investors are increasingly interested in supporting investments that incorporate environmental, social, and governance considerations, including for topics such as health, education, gender, climate, and clean water. The World Bank Treasury publishes an annual impact report for investors, which summarizes results achieved by IBRD-financed projects; highlights of the Treasury’s issuance activities in fiscal 2022 are also outlined here.

In fiscal 2022, IBRD drew on its triple-A rating and strong standing in the markets to raise about $41 billion in sustainable development bonds, which were issued in a variety of structures and maturities. IBRD is the largest issuer of sustainable development bonds and uses the funds raised from capital markets to support development activities.

Since its capital market debut in 2018 with a $1.5 billion bond in U.S. dollars, IDA has been building its market presence to support a larger funding program by issuing bonds in various maturities and currencies, including the euro, British pound, Swedish kronor, and Norwegian kroner. IDA’s triple-A rating enables it to issue sustainable development bonds that leverage shareholder contributions to help low-income countries address their most pressing issues. In fiscal 2022, IDA issued almost $10 billion.

Supporting climate action and conservation through capital markets

In fiscal 2022, IBRD engaged with bond investors about the Bank’s efforts to mainstream climate action and integrate climate and sustainability throughout all of our operations and sectors. IBRD executed five benchmark and larger issuances as well as numerous smaller transactions for a total of over $12 billion equivalent. We also engaged with investors on development priorities such as water, gender equality, nutrition, and health.

In March 2022, we launched the first-ever Wildlife Conservation Bond, an outcome-based bond that channels private capital to finance rhinoceros conservation efforts in two protected areas in South Africa while providing environmental and social benefits to local communities. The bond includes a potential performance payment funded by the Global Environment Facility. Its structure transfers project risk from donors to investors, creating an opportunity for private investment in conservation that is supported by quantifiable metrics and models.

The Pilot Auction Facility for Methane and Climate Change Mitigation uses auctions and price guarantees to leverage private sector investment in climate action. Since it started in 2015, about $55 million has been paid to investors in exchange for carbon credits representing over 21 million tons of CO2 equivalent. The facility issued the final bond payment in December 2021.

Developing sustainable capital markets

IBRD pioneered the green bond market, having issued the first-ever labeled green bond in 2008; it has since issued almost $18 billion. For green bonds, IBRD allocates equivalent amounts to eligible activities that address climate change. The Bank has expanded our approach to issue sustainable development bonds that support all our activities. The Bank also helps countries reach their climate and environmental goals with technical assistance to develop greener and more sustainable capital markets and financial systems, facilitate market-based solutions, and drive private sector capital toward environmental and social priorities. In fiscal 2022, we facilitated the issuance of Colombia’s sovereign green bond and helped the country develop a national green taxonomy to identify projects and activities that can be financed with green bonds. We also prepared post-issuance impact reports for Egypt and Indonesia, as well as for the state-owned enterprise, PT Indonesia Infrastructure Finance.

Informing countries about financial products and solutions

In January 2022, the Bank started the transition process from LIBOR to new reference rates. We are helping countries make informed decisions about their financing and risk management options under the new financial terms; efforts include communication campaigns, online training for borrowers and staff, and bilateral engagement. We have also performed more than $7 billion in interest rate fixings to mitigate the anticipated financial risk of the transition.

We are also advising countries on financing solutions as they continue to face resource constraints, limited fiscal space, and rising public debt. In fiscal 2022, we customized repayment terms to reduce Botswana's debt service and Kazakhstan’s debt constraint, provided a blended financing solution for Rwanda, helped expand access to local currency for Mexico, and optimized countries’ financial terms for fast-disbursing operations.

Managing disaster risks through global capital markets

The Bank helps countries increase financial resilience against disasters by improving their access to the reinsurance and capital markets. Our Treasury works with governments to prepare and execute risk transfer transactions before a catastrophic event occurs. As of June 2022, we have helped countries transfer $5.1 billion of disaster risk to international markets; of this amount, $843 million in IBRD-issued catastrophe bonds—which address earthquake and hurricane risks in Jamaica, Mexico, and the Philippines—are outstanding in capital markets. In October 2021, we organized an event with the APEC Business Advisory Council, the Asia Pacific Financial Forum, and the Hong Kong Insurance Authority that looked at how catastrophe bonds can help transfer natural disaster risks to international investors.

Building human capital in public sector asset management

The World Bank Treasury’s Reserve Advisory and Management Partnership (RAMP) delivers demand-driven capacity building and asset management services to official sector asset managers. It helps central banks, international financial institutions, pension funds, and sovereign wealth funds build capacity and strengthen investment operations through advisory missions, technical workshops, and global conferences. RAMP now serves 73 institutions, including six in low-income countries and six in countries affected by fragility, conflict, and violence (FCV). The RAMP Trust Fund extends membership to central banks and other public sector institutions in IDA countries or those affected by FCV and that could not otherwise afford to participate.

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