A host of re/insurance solutions providers have expressed their support of the ‘Joint Declaration Regarding Credit Enhancement of Sustainability-linked Sovereign Financing for Nature and Climate’ launched at COP28.
During the annual climate change conference in the UAE, an array of the world’s top multilateral development banks and other international organisations signed a Joint Declaration and launched a global Task Force to boost sustainability-linked sovereign financing for nature and climate.
According to reports, this Joint Declaration and subsequent establishment of a Task Force aims to respond to the needs of Global South countries by providing long-term fiscal solutions, avoiding short-term debt relief that relies solely on international development assistance.
Soon after the announcement at COP28, Alliant, AXA, Gallagher Re, Howden, Mosaic Insurance, Munich Re, and WTW pledged to collaborate with the Task Force and work with the governments to reduce borrowing costs for developing countries.
They also expressed their willingness to support the issuance of sustainability performance-linked sovereign debt instruments addressing the threefold crisis of debt, climate and nature.
A statement of intent signed by the aforementioned firms said, “There is an urgent need for ambitious action to reduce the cost of capital for developing countries and to combat the impacts of nature loss and climate change.
“Increasing the issuance of sovereign sustainability-linked debt and scaling the use of sustainability KPIs in debt refinancing and blended finance structures are all plausible solutions to help sovereigns finance their economies in the wake of a triple debt, nature, and climate crisis.
“Successful transactions will require collaboration between public and private sector actors willing to structure shared risk solutions. These solutions should facilitate access to affordable capital, encourage investing in nature-positive initiatives and improve socio-economic conditions. Our organizations are committed to supporting the Joint Declaration and working with the Task Force.
“By working together, and with sovereigns, we can enable greater investment in nature, communities, and businesses.”
The Taskforce is set to hold its first meeting in January 2024 and will be led by Inter-American Development Bank (IDB) and United States International Development Finance Corporation (DFC).
