101 Sustainable Finance Policies for 1.5°C

The document argues that while the costs of climate action are high, the costs of inaction are higher, noting that physical climate risk has already increased the cost of capital for V20 countries by USD62bn over 10 years. It proposes a three-pillar policy framework: providing clarity on green investments via taxonomies, tilting investment toward green opportunities through de-risking and carbon pricing, and building green investment pipelines. Key mechanisms suggested include the use of junior capital by development finance institutions to mobilize private investment, the removal of fossil fuel subsidies, and the implementation of carbon border adjustment mechanisms (CBAMs). The summary concludes with a list of 101 specific policy ideas across sectors including energy, transport, and agriculture to be detailed in a full report.

• Climate inaction poses significant financial risks; for example, physical climate risk exposure has increased the cost of capital for V20 countries, resulting in USD62bn in higher external interest payments over a decade.
• Sovereign credit ratings are being impacted by fossil fuel dependency, with the 20 nations having the highest ratio of net fossil fuel exports to GDP seeing a median net downgrade of 1.6 notches between 2015 and 2020, and two experiencing defaults.
• To meet the 1.5°C goal, new investments in fossil fuels must stop immediately, and existing plants should undergo early retirement, though short-term energy crises may necessitate temporary fossil fuel use.
• Blended finance and the use of junior capital by development finance institutions (DFIs) and governments can mobilize private investment for higher-risk projects in emerging markets by absorbing the highest-risk portions of debt.
• Central banks can mitigate climate-related financial stability risks by adjusting collateral frameworks and risk weightings for capital and reserve requirements, as demonstrated by Hungary's preferential capital requirements for green mortgages.
• Effective carbon pricing requires high and stable prices, the removal of free allowances, and the use of carbon border adjustment mechanisms (CBAMs) to prevent the relocation of high-carbon activities to countries without such schemes.

APA

Burge, L. (2022). 101 Sustainable Finance Policies for 1.5°C. Climate Bonds Initiative. https://www.climatebonds.net/files/documents/publications/101-sustainable-finance-policies-for-1.5%C2%B0C_2025-02-17-162921_hlzz.pdf

Chicago

Burge, Lily. 101 Sustainable Finance Policies for 1.5°C. Climate Bonds Initiative, 2022. https://www.climatebonds.net/files/documents/publications/101-sustainable-finance-policies-for-1.5%C2%B0C_2025-02-17-162921_hlzz.pdf.

Wikipedia

{{cite report |last1=Burge |first1=Lily |title=101 Sustainable Finance Policies for 1.5°C |publisher=Climate Bonds Initiative |date=October 2022 |url=https://www.climatebonds.net/files/documents/publications/101-sustainable-finance-policies-for-1.5%C2%B0C_2025-02-17-162921_hlzz.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{burge2022101, author = {Burge, Lily}, title = {{101 Sustainable Finance Policies for 1.5°C}}, institution = {Climate Bonds Initiative}, year = {2022}, month = oct, url = {https://www.climatebonds.net/files/documents/publications/101-sustainable-finance-policies-for-1.5%C2%B0C_2025-02-17-162921_hlzz.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }