Zimbabwe is seeking accreditation with the Global Climate Fund to enable it to float ‘green bonds’ as it looks towards developing debt instruments to finance climate friendly projects.
“We are going through the accreditation process,” Infrastructure Development Bank of Zimbabwe chief executive Thomas Sakhala told The Herald Business yesterday.
“Once we are accredited, we do have projects that we believe qualify for green funding.”
IDBZ is the designated national implementing entity of the green bonds and anyone seeking funding from various recognised climate funds or to float the green bonds would do it in collaboration with the bank.
The GCF is a global fund created to support the efforts of developing countries to respond to the challenge of climate change. GCF helps developing countries limit or reduce their greenhouse gas (GHG) emissions and adapt to climate change. It promotes a paradigm shift to low-emission and climate-resilient development, taking into account the needs of nations that are particularly vulnerable to climate change impacts.
It was set up by the 194 countries, which are parties to the United Nations Framework Convention on Climate Change in 2010, as part of the convention’s financial mechanism.
CGF also aims to deliver equal amounts of funding to mitigation and adaptation, while being guided by the Convention’s principles and provisions. When the Paris Agreement was reached in 2015, the GCF was given an important role in serving the agreement and supporting the goal of keeping climate change well below 2 degrees Celsius. Zimbabwe is a signatory to the Paris climate change accord.
“These special climate funds have very strict templates within which we have to work,” said Mr Sakhala adding IDBZ was hoping to be accredited by September this year.
“It is a very rigorous and detailed process and we hope we will make it.”
Both, developed and developing countries face rising financial challenges from climate change and green bonds have been viewed as perfect tools to finance railways, roads, airports, buildings, energy and water infrastructure, while at the same time achieving positive returns for the environment and society.
Launched by multilateral institutions including the World Bank and European Investment Bank, the green bond market was originally viewed as a niche.
But not so now.
In the first half of 2017, about $55 billion worth of bonds labelled green notes were issued, an increase of 38 percent year-on-year from the $40 billion issued in the first six months of 2016.
The Climate Bond Initiative estimates that the total amount of green bonds issued in 2017 could reach $150 billion. All the projects financed from green bonds have positive, climate-friendly spillovers and mitigating the downside risks of traditional fixed income instruments.
Since green bonds have a high degree of transparency, investors can also quantify the benefits of investing in them using accessible metrics.
Climate change has serious effects to the environment, chief among them sea levels rising and oceans becoming warmer, intense droughts that threaten crops, wildlife and freshwater supplies, posing threats to animal species and people’s livelihoods.
To that effect, World Wide Fund for Nature is working hard to advance policies to fight climate change, engage with businesses to reduce carbon emissions and help people and nature adapt to a changing climate.