The Green Finance Centre organized a Capacity Building Workshop on Sovereign Thematic Bonds with technical speakers from the World Bank and the International Finance Corporation (IFC) in Port Moresby. The workshop focused on how Sovereign Thematic Bonds can help Papua New Guinea (PNG) tackle climate change and support sustainable development. It was a closed session hosted for Bank of Papua New Guinea (BPNG), Department of Treasury, Climate Change Development Authority (CCDA) and Securities Commission of PNG. The goal was to explore innovative financing options to address the country’s pressing climate and development needs.

Thematic bonds, such as green, social, and sustainability bonds, are financial instruments that attract private sector investments for projects focused on sustainability goals, including clean energy, healthcare, and education. These bonds are similar to traditional bonds but are dedicated to funding specific environmental and social projects. PNG faces unique climate challenges, including rising sea levels and extreme weather events. Thematic bonds offer a way to raise necessary funds for climate-related projects without overburdening the country’s existing debt. It will also help PNG attract global investors while demonstrating the country’s commitment to achieving its climate and development goals.

The workshop focused on three main topics: Firstly, understanding climate risks where World Bank experts explained how extreme weather events could threaten PNG’s economic stability and public finances. Secondly, exploring Sustainable Finance: The session conducted by an IFC expert offered insights into global trends in sustainable finance, with potential solutions PNG can adopt. And lastly, Introduction to Thematic Bonds: the senior public officials learnt how the different types of thematic bonds that could help fill the financing gap for PNG’s climate and development goals, such as meeting its Nationally Determined Contributions (NDCs) and Sustainable Development Goals (SDGs).

To make thematic bonds a reality, PNG will need to:

1. Develop a Thematic Bond Framework to develop clear voluntary process guidelines that recommend transparency & disclosure and promote integrity in development of a Thematic Bond Market.
2. Appointing a high-level Steering Committee in order to oversee Sovereign Thematic Bond issuance – PNG would need to appoint Senior public officials from critical government agencies such as Department of Treasury (issuer), Bank of Papua New Guinea (coordinator) and government agencies that will carry out implementation of green and social projects, such as the Climate Change Development Authority (CCDA), National Energy Authority (NEA) etc.
3. Identifying a pipeline of projects from sectors that form part of PNG’s Green Taxonomy – such as Energy, Transport, Water, Land use and Marine Resources, Industry, Waste, ICT and Buildings

The workshop was an important step towards developing a sustainable financing strategy for PNG. By adopting thematic bonds, the country can address its climate vulnerabilities, create green jobs, and achieve its long-term development goals. PNG has the potential to lead by example, showing how small nations can innovate to achieve both environmental sustainability and economic growth. At the end of the workshop, the parties involved in the discussions were of consensus that GFC will coordinate with IFC and Securities Commission of PNG (SCPNG) to explore developing a thematic bond framework for local capital markets. In terms of a Sovereign Green Bond, experts from World Bank suggested for more workshops and capacity building at Treasury, BPNG and other relevant government agencies in order to develop a Sovereign Thematic Bond Roadmap.

In closing the workshop, Governor for BPNG, Mrs. Elizabeth Genia said “our discussions have highlighted the immense potential that Sovereign Thematic Bonds hold for Papua New Guinea. These bonds present a unique opportunity to mobilize capital in a way that directly supports our climate and development goals, while building the resilience of our economy”. She thanked the World Bank Country Manager for PNG, Mr. Khwima Nthara for bringing international experts to provide valuable insights of the various possibilities in sustainable finance for PNG. She added, I am pleased to confirm that on behalf of the Bank of Papua New Guinea, Mohinesh Prasad, the Director of Green Finance Centre, will continue to support the Department of Treasury in pursuing thematic bonds and exploring innovative financing solutions that align with our national priorities”.

Participants also dialing in remotely for the workshop.

An engagement during the session.