Step taken to foster private capital for green and resilience building initiatives in Bangladesh

Accelerating Sustainable Finance: Green and Resilient Debt Platform Initiative in Bangladesh

February 29, 2024

Key stakeholders discuss strategies to mobilize private capital for green and resilient initiatives at the National Consultation Workshop on the Green and Resilient Debt Platform in Dhaka.

©UNDP Bangladesh

A National Consultation Workshop on the Green and Resilient Debt Platform (GRDP) was organized by the United Nations Development Programme (UNDP) at a hotel in Dhaka on February 28, 2024, focusing on mobilizing debt capital for sustainable initiatives through innovative financial instruments.

The workshop aimed to inform key stakeholders, including financial institutions, potential bond issuers, large corporates, academia, CSOs, policymakers, regulators and investors about the GRDP, a collaborative vehicle of the European Investment Bank (EIB), Nordic Development Fund, UNDP and the Green Climate Fund (GCF) that aims to boost impact financing for green and resilient initiatives by creating a coordinated international mechanism channeling investments into green, resilient, and blue bonds.

Experts highlighted the escalating need for climate finance in light of growing climate crisis and Bangladesh’s national and international commitments on climate actions. Despite a global increase in climate finance to $940 billion in 2021, there remains a significant gap in reaching the most vulnerable nations. In response, the European Investment Bank (EIB) and the Nordic Development Fund, in collaboration with UNDP, are launching a multi-country project proposal to the Green Climate Fund (GCF) called the Green and Resilience Debt Platform (GRDP).

Stefan Liller, Resident Representative of UNDP Bangladesh, addresses participants, emphasizing the critical role of private sector engagement in climate finance and sustainable development initiatives during the National Consultation Workshop on the Green and Resilient Debt Platform.

©UNDP Bangladesh

"The Green and Resilience Debt Platform represents a critical step forward in our efforts to address the impacts of climate change and promote sustainable development in Bangladesh," said Stefan Liller, Resident Representative, UNDP Bangladesh. "It is essential to enhance private sector engagement in climate finance, exploring mechanisms like climate risk insurance, green bonds and carbon trading to finance our sustainable development ambitions and for that we must cultivate an enabling regulatory environment, incentivize SDG-aligned investments, and encourage shifts towards sustainable markets.”

Shahriar Kader Siddiky, Secretary of the Economic Relations Division (ERD), shares insights on Bangladesh's financial landscape and expresses optimism about unlocking international private finance for green and resilience-building initiatives at the National Consultation Workshop on the Green and Resilient Debt Platform.

©UNDP Bangladesh

Shahriar Kader Siddiky, Secretary, Economic Relations Division, expressed optimism about the initiative, stating, " Bangladesh’s LDC graduation will change the country’s financial landscape where majority of the funding for sustainability needs to come from national and international private sectors. We have a good sovereign credit history. The Government of Bangladesh has never failed to repay the debts. I am hopeful that the GRDP platform will enable the country to unlock international private finance to advance our green and resilience journey".

The funds to establish the GRDP will be unlocked through a multi-country GCF proposal for ten countries, including Bangladesh, working to unlock climate finance by facilitating the issuance of green and resilient bonds. These bonds, to be issued by sovereign, sub-sovereign, and corporate entities, aim to stimulate a substantial impact of EUR 15-20 billion at the project level. The project aligns with the European Union's Global Green Bond Initiative (GGBI) and involves a guarantee-backed investment fund of EUR 1.5 to 2 billion, supported by seven development finance institutions (DFIs). In addition to facilitating green bond investments, the GRDP will focus on enhancing investment readiness and financial de-risking to attract a diverse range of investors. The initiative is expected to have a transformative impact on key sectors such as health and well-being, food and water security, climate-resilient infrastructure, and low-emission transport.

From the regulatory aspect, Dr. Shaikh Shamsuddin Ahmed, Commissioner stated “There has been increasing interest in islamic instruments such as Sukuk in Bangladesh. Green Islamic products such as Sustainable Sukuk can be introduced which will generate sufficient market interest.” He added, “There are sufficient funds available for investment in Green Bonds. The rural economy generates sufficient savings which can be mobilized for investment in green bonds. There is a growing interest of the capital market for sustainable and other thematic bonds. It’s now time to move ahead with actual delivery of these bond products for achieving the Vision 2041.

Enamul Huque, Managing Director, Standard Chartered Bank emphasized on the importance of having sustainable finance taxonomy and sustainable bonds standards that are aligned with international bond standards to attract wider group of investors including international capital providers. “Technical assistance and sustainable project preparation are particularly important factors to build an ecosystem for sustainable bonds”, he added.

Among the key experts, Dr. Suborna Barua, PhD, Professor, Department of International Business, University of Dhaka and Chairman, Investment of Corporation of Bangladesh stressed on having a de-risking mechanism for the international investors borrowers, particularly for foreign exchange risk and default risk.

The stakeholders from the corporate organizations, issuers and investor highlighted the necessity of relevant capacity on managing impact funds and reporting impact. Concerns were raised by the stakeholders on lower confidence of the investor on debt capital market in the country, scarcity of bankable projects and lack of awareness among the investors on green and sustainable bonds. 

Charles (Chongguang) Yu, CFA, Technical Specialist, Climate Finance and Investment, UNDP, presented snapshots of Sustainable Finance and the Green and Resilient Debt Platform, while Dr. Maliha Muzammil, Programme Specialist – Climate Change, UNDP presented the current state of Sustainable Finance in Bangladesh.

Unlocking Private Capital for a Sustainable Future: Join us in catalyzing climate action and resilience-building initiatives through innovative financial instruments at the Green and Resilient Debt Platform National Consultation Workshop.