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FEATURE STORYApril 10, 2023

From India to Indonesia, Green Bonds Help Countries Move Toward Sustainability

Aerial view the city of Sorowako in South Sulawesi, Indonesia, at night.

Aerial view of the city of Sorowako in South Sulawesi, Indonesia.

Photo: Putu Artana/Shutterstock


  • Developing countries are increasingly raising money for climate action by issuing green and sustainability bonds.
  • Colombia, Egypt, India, and Indonesia are among 19 emerging-market countries funding renewable energy and mass transit from the proceeds of green bonds.
  • The World Bank assists countries that want to issue their own green and sustainability bonds to finance sustainable development.

What do a wind farm in Indonesia, a public transit system in Egypt, and plans for clean energy and biodiversity in Colombia have in common?

All are being supported by green or sustainable bonds – an increasingly popular way of reaching investors interested in financing sustainable development and the fight against climate change through their investments. Since 2016, 19 emerging market governments from Chile to Uzbekistan have issued green, social, and sustainability bonds to help fund climate action, promote a just transition from fossil fuels, and deliver on their Sustainable Development Goals (SDGs), including goal #7 – clean energy.

India joined this group in early 2023, launching its first green bond to raise about $2 billion for projects that contribute to climate change mitigation, adaptation, environmental protection, resource and biodiversity conservation, and net zero objectives.

“Emerging markets are not just trend followers. They are leading innovation,” said Farah Imrana Hussain, who heads the World Bank Sustainable Finance and ESG (environmental, social and governance) Advisory Services. “India’s green bond will have a huge impact, not only contributing to its nationally determined contribution (NDC) to the Paris Agreement, but also encouraging other countries to raise private capital for environmental priorities.”


Financing Climate Action and the SDGs

Countries began turning to green and sustainable bonds to fund sustainable development after both the Sustainable Development Goals (SDGs) and the Paris Agreement on climate change were adopted in 2015. In 2016, Fiji became the first emerging market to issue a green bond, raising $50 million for climate resilience.

In 2016, Fiji became the first emerging market to issue a green bond, raising $50 million for climate resilience.  


In 2020, Egypt’s $750 million sovereign green bond was the first in the Middle East and North Africa. It also raised funds for investments in clean transportation and sustainable water management. A key project is the Cairo Monorail, which will have the capacity to carry more than a million passengers a day. The system will reduce carbon emissions and road traffic while cutting traffic deaths and injuries and is projected to create up to 4,000 jobs during construction and 450 permanent jobs. The bond also financed investments in sustainable water and wastewater management projects benefiting 16.9 million people.

In 2021, a sustainability bond in Indonesia is supporting the Sidrap Wind Farm in South Sulawesi – one of the largest islands in the Indonesian Archipelago. The project, which runs through 2028, will install 30 wind turbines and send enough renewable energy to the South Sulawesi national grid to power over 70,000 homes. The bond was issued by a non-bank financial institution, PT Indonesia Infrastructure Finance,  established by the Government of Indonesia, the World Bank Group, Asian Development Bank and other multilateral institutions. The project is part of a plan to increase the amount of renewable energy in Indonesia’s power grid while reducing coal and diesel.

Colombia, recognized for its efforts to green its economy, issued Latin America’s first green bond in a local currency (Colombian pesos) in 2021. The $511.4 million-equivalent bond was named sovereign green bond of the year by Environmental Finance's Bond Awards 2022 and supports 27 investment projects in sustainable water management; ecosystem services and biodiversity protection; renewable energy; and clean and sustainable transport, including funding for the first line of the Bogotá metro.

Colombia, recognized for its efforts to green its economy, issued Latin America’s first green bond in a local currency (Colombian pesos) in 2021.


Green bonds are also helping to finance green projects in the Islamic world. A $481.9 construction project in Kuala Lumpur, Malaysia, is funded in part by a green sukuk, an interest-free bond that generates returns to investors without infringing the principles of Shari’ah (Islamic law).  The project backs energy-efficient construction of 83 floors of office space and is the first in Malaysia to qualify for triple platinum green building accreditation.

All these transactions were facilitated by technical assistance from the World Bank’s Sustainable Finance and ESG Advisory Services.


Green Bonds Have Raised $2.5 Trillion Globally

As of January 2023, green bonds have raised $2.5 trillion globally to support green and sustainable projects. Emerging market governments have raised $74 billion, representing 2% of total green, social and sustainability bonds issued globally.

The potential for growth is significant. By way of context, green bonds were developed in 2008 in response to growing concern about climate change and sustainability. A group of Swedish pension funds approached the World Bank seeking a liquid, tradeable, fixed income product that would support climate-friendly solutions. That moment paved the way for the first green bond issued by an institution – the World Bank -- and today’s green bond market. The processes used by the World Bank to issue more than 200 green bonds in 25 currencies are now international best practices, known as the Green Bond Principles, and have been adopted by the financial markets.

As of January 2023, green bonds have raised $2.5 trillion globally to support green and sustainable projects.


As the market for these bonds has grown, investors have become more conscious of the overall impact of their investments.

“Investors are not going to buy a green bond that has a negative impact on the community -- or they’re not going to buy a social bond that is going to harm the environment,” said Hussain. “These are really great instruments because they give the issuer the opportunity to make sure they are financing things that have a positive impact on the environment plus in the surrounding communities.”

Lupin Rahman, global head of sovereign markets at Pacific Investment Management Company (PIMCO), explained the advantages of these bonds this way: “Emerging market green bonds are an attractive and growing opportunity for fixed income investors, as issuers are distinguishing their sustainability credentials with enhanced targets and clear frameworks to tackle climate transition and climate risks, as well as broader sustainability goals.”


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