COP27 AIIB Session: Role of Capital Markets in Mobilizing Finance for Climate-resilient Infrastructure

Climate change has a profound impact on infrastructure assets, as well as economic and social implications. Adapting our existing infrastructure to such shocks requires effective deployment of trillions of dollars mobilized from all available sources of finance, relying on public funding alone is not enough. A growing number of institutional investors, investment funds, and credit institutions have shown interest in climate change and sustainability. In order to attract more capital in resilient infrastructure financing, there is a need for innovative financial instruments or tailored products, such as bonds or other asset-backed securities.

Green bonds are one of the most important types of climate-related bonds, representing one-half of the global total issuances of climate-related bonds. Tapping into existing green bond market can be an effective way to bring the needed capital to support resilient infrastructure financing, as investor demand for thematic bonds has been increasing, with resilience and recovery being of particular interest post COVID-19.