Bhutan remains highly exposed to climate change impacts and natural disasters, which pose a significant threat to Bhutan’s economic stability with potential impacts seen to citizen’s livelihoods, particularly those working in the agricultural sector. As Bhutan maintains its carbon-negative status in the face of mounting pressure to accelerate economic growth, the additional burden of climate adaptation and mitigation entails enormous costs. Bhutan is also poised to graduate from its LDC status in December 2023, which will curtail its access to concessional financing and further the need to leverage alternative and innovative sources of finance. The financial system has a vital role to play in supporting the transition towards financing climate adaptation and mitigation initiatives. Notably, thematic bonds (i.e. green, social, and sustainability bonds) have been one option that Sovereigns have turned to mobilize capital towards these goals, and their issuance has been steadily growing over the past decade.
The potential of a thematic bond issuance in Bhutan can support the country in achieving its climate adaptation and mitigation priorities while providing new investment options for local institutional investors, attracting international investment, and supporting green job creation. The United Nations Economic and Social Commission for Asia and the Pacific (ESCAP), at the request of the Debt Management Division of the Ministry of Finance of Bhutan, is supporting the drafting of Bhutan’s Sustainable Financing Framework. The Framework is the base document that the government will adhere to in its issuance of a thematic bond, it ensures that market best practices are upheld, and greenwashing is prevented.
Building on this momentum, ESCAP and the Ministry of Finance will co-host this workshop in an effort to socialize the draft framework and work towards consensus in its finalization. The sessions will take place over two days and will include a range of government stakeholders who will be involved in future thematic bond issuance.
