IDEAS home Printed from https://ideas.repec.org/a/bis/bisqtr/2209d.html
   My bibliography  Save this article

Sovereigns and sustainable bonds: challenges and new options

Author

Listed:
  • Gong Cheng
  • Torsten Ehlers
  • Frank Packer

Abstract

The sustainable bond market, comprising green, social and sustainability (GSS) bonds, continues to develop rapidly. Until recently, sovereign issuers played only a minor role, due in part to tensions between the use-of-proceeds earmarking of GSS bonds and the fungibility requirements for many sovereigns. That said, sovereign GSS bond frameworks rely on stringent reporting and verification standards, thus setting goalposts for private issuers to aim for. Sustainability-linked bonds allow an unrestricted use of proceeds and – if based on contractual terms that sufficiently align issuers' incentives with sustainability objectives – can provide sovereigns with new options to make progress towards carbon emission reduction targets.

Suggested Citation

  • Gong Cheng & Torsten Ehlers & Frank Packer, 2022. "Sovereigns and sustainable bonds: challenges and new options," BIS Quarterly Review, Bank for International Settlements, September.
    • Handle: RePEc:bis:bisqtr:2209d
    as

    Download full text from publisher

    File URL: http://www.bis.org/publ/qtrpdf/r_qt2209d.pdf
    Download Restriction: no
    File URL: http://www.bis.org/publ/qtrpdf/r_qt2209d.htm
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Gong Cheng & Eric Jondeau & Benoît Mojon, 2022. "Building portfolios of sovereign securities with decreasing carbon footprints," Swiss Finance Institute Research Paper Series 22-66, Swiss Finance Institute.
    2. repec:oup:ecpoli:v:19:y:2004:i:38:p:165-216 is not listed on IDEAS
    3. Torsten Ehlers & Benoit Mojon & Frank Packer, 2020. "Green bonds and carbon emissions: exploring the case for a rating system at the firm level," BIS Quarterly Review, Bank for International Settlements, September.
    4. Torsten Ehlers & Frank Packer, 2017. "Green bond finance and certification," BIS Quarterly Review, Bank for International Settlements, September.
    5. Marta Domínguez-Jiménez & Alexander Lehmann, 2021. "Accounting for climate policies in Europe’s sovereign debt market," Policy Contributions 42526, Bruegel.
    6. Eduardo Borensztein & Paolo Mauro, 2004. "The case for GDP-indexed bonds [‘World income components: measuring and exploiting risk-sharing opportunities’]," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 19(38), pages 166-216.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Bert Van Roosebeke & Ryan Defina, 2023. "The Role of Climate in Deposit Insurers' Fund Management: More Than a Financial Risk Management Factor?," IADI Survey Briefs 5, International Association of Deposit Insurers.
    2. Richard Schmidt & Pinar Yesin, 2022. "The growing importance of investment funds in capital flows," Aussenwirtschaft, University of St. Gallen, School of Economics and Political Science, Swiss Institute for International Economics and Applied Economics Research, vol. 72(01), pages 1-40, December.
    3. Gong Cheng & Torsten Ehlers & Frank Packer & Yanzhe Xiao, 2024. "Sovereign green bonds: a catalyst for sustainable debt market development?," BIS Working Papers 1198, Bank for International Settlements.
    4. Giusy Chesini, 2024. "Can Sovereign Green Bonds Accelerate the Transition to Net-Zero Greenhouse Gas Emissions?," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 30(2), pages 177-197, May.
    5. Georgeta Ilie, PhD, Researcher III & PhD, Claudia Gabriela Baicu, PhD, Researcher III, 2023. "Green Finance €“ International Initiatives And Relevant Practices In Supporting Global Sustainable Goals," Social-Economic Debates, Association for Entreprenorial Spirit Promotion, vol. 12(1), pages 1-10, octombrie.
    6. Di Tommaso, Caterina & Perdichizzi, Salvatore & Vigne, Samuel & Zaghini, Andrea, 2024. "Is the government always greener?," CFS Working Paper Series 718, Center for Financial Studies (CFS).
    7. Daniel C. L. Hardy, 2022. "Alternatives in the Design of Sovereign Green Bonds," wiiw Policy Notes 62, The Vienna Institute for International Economic Studies, wiiw.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Gong Cheng & Torsten Ehlers & Frank Packer & Yanzhe Xiao, 2024. "Sovereign Green Bonds: A Catalyst for Sustainable Debt Market Development?," IMF Working Papers 2024/120, International Monetary Fund.
    2. Alessandro Moro, 2021. "Can capital controls promote green investments in developing countries?," Temi di discussione (Economic working papers) 1348, Bank of Italy, Economic Research and International Relations Area.
    3. Michela Scatigna & Dora Xia & Anna Zabai & Omar Zulaica, 2021. "Achievements and challenges in ESG markets," BIS Quarterly Review, Bank for International Settlements, December.
    4. Dahlen, Niklas & Fehrenkötter, Rieke & Schreiter, Maximilian, 2024. "The new bond on the block — Designing a carbon-linked bond for sustainable investment projects," The Quarterly Review of Economics and Finance, Elsevier, vol. 95(C), pages 316-325.
    5. Gong Cheng & Eric Jondeau & Benoît Mojon, 2022. "Building portfolios of sovereign securities with decreasing carbon footprints," Swiss Finance Institute Research Paper Series 22-66, Swiss Finance Institute.
    6. Daniel Ramos-García & Carmen López-Martín & Raquel Arguedas-Sanz, 2023. "Climate transition risk in determining credit risk: evidence from firms listed on the STOXX Europe 600 index," Empirical Economics, Springer, vol. 65(5), pages 2091-2114, November.
    7. Liebich, Lena & Nöh, Lukas & Rutkowski, Felix Joachim & Schwarz, Milena, 2021. "Unconventionally green: A monetary policy between engagement and conflicting goals," Working Papers 05/2021, German Council of Economic Experts / Sachverständigenrat zur Begutachtung der gesamtwirtschaftlichen Entwicklung.
    8. Danilo Liberati & Giuseppe Marinelli, 2024. "Was Covid-19 a wake-up call on climate risks? Evidence from the greenium," Questioni di Economia e Finanza (Occasional Papers) 832, Bank of Italy, Economic Research and International Relations Area.
    9. Drudi, Francesco & Moench, Emanuel & Holthausen, Cornelia & Weber, Pierre-François & Ferrucci, Gianluigi & Setzer, Ralph & Adao, Bernardino & Dées, Stéphane & Alogoskoufis, Spyros & Téllez, Mar Delgad, 2021. "Climate change and monetary policy in the euro area," Occasional Paper Series 271, European Central Bank.
    10. Pietsch, Allegra & Salakhova, Dilyara, 2022. "Pricing of green bonds: drivers and dynamics of the greenium," Working Paper Series 2728, European Central Bank.
    11. John Caramichael & Andreas Rapp, 2022. "The Green Corporate Bond Issuance Premium," International Finance Discussion Papers 1346, Board of Governors of the Federal Reserve System (U.S.).
    12. Guido Sandleris & Filippo Taddei, 2007. "Indexed Sovereign Debt: a Survey and a Framework of Analysis," Carlo Alberto Notebooks 66, Collegio Carlo Alberto.
    13. John FitzGerald & Philip Lane, 2016. "Fiscal Policy and Financial Distress: A Balance Sheet Perspective," Trinity Economics Papers tep0216, Trinity College Dublin, Department of Economics.
    14. Diana Pop & Caroline Marie-Jeanne & Régis Dumoulin, 2023. "Socialium or the Financial Price of Social Responsibility [« Socialium » ou le prix financier de la responsabilité sociale]," Post-Print hal-04120305, HAL.
    15. K. Thomas Liaw, 2020. "Survey of Green Bond Pricing and Investment Performance," JRFM, MDPI, vol. 13(9), pages 1-12, August.
    16. Chamon, Marcos & Mauro, Paolo, 2006. "Pricing growth-indexed bonds," Journal of Banking & Finance, Elsevier, vol. 30(12), pages 3349-3366, December.
    17. Emre Arat & Britta Hachenberg & Florian Kiesel & Dirk Schiereck, 2023. "Greenium, credit rating, and the COVID-19 pandemic," Journal of Asset Management, Palgrave Macmillan, vol. 24(7), pages 547-557, December.
    18. Ugo PANIZZA, 2015. "Debt Sustainability in Low-Income Countries - The Grants versus Loans Debate in a World without Crystal Balls," Working Papers P120, FERDI.
    19. Tiwari, Aviral Kumar & Aikins Abakah, Emmanuel Joel & Adekoya, Oluwasegun B. & Hammoudeh, Shawkat, 2023. "What do we know about the price spillover between green bonds and Islamic stocks and stock market indices?," Global Finance Journal, Elsevier, vol. 55(C).
    20. Larcker, David F. & Watts, Edward M., 2020. "Where's the greenium?," Journal of Accounting and Economics, Elsevier, vol. 69(2).

    More about this item

    JEL classification:

    • H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • Q01 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - Sustainable Development
    • Q50 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bis:bisqtr:2209d. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Martin Fessler (email available below). General contact details of provider: https://edirc.repec.org/data/bisssch.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.