Sovereign Sustainability-Linked Bonds: Chile Sets A High Bar

In March 2018, as part of its Long Finance initiative, Z/Yen published the first edition of the Global Green Finance Index (GGFI) with the generous support of the MAVA Foundation. Starting with the second edition, the GGFI included a supplement focussing on a particular aspect of green finance. This supplement to the nineth edition of the Index takes as it subject green-bonds, a product which has been credited with turbo-charging the green finance revolution. The particular focus of this report is the advent of a new type of green bond — sovereign sustainability-linked bonds, which have been pioneered by Chile. Sovereign sustainability-linked bonds have been an issue of particular interest to Z/Yen ever since our founder Professor Michael Mainelli, predicted their emergence, back in 2005. We are delighted with the success that Chile has met with this new financial product and believe that it will have a significant impact on sovereign debt markets as other nations join Chile to deliver sustainable growth.

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