Fiscal Policy and Sustainable Finance

The report argues that fiscal policies—including roadmaps, tax incentives, guarantees, and subsidies—are essential to bridge the net-zero investment gap in the ASEAN+3 region. It identifies critical barriers such as a lack of suitable project pipelines, regulatory uncertainty, and the predominance of MSMEs. The document recommends a holistic approach combining these fiscal tools with non-fiscal policies like green taxonomies and mandatory climate disclosures to steer the financial sector toward sustainable development goals.

• To maintain a 1.5°C pathway, global climate finance must increase six-fold to exceed $4 trillion annually by 2030.
• Sustainable finance policy roadmaps are identified by market participants as the most critical tool for unlocking sustainable investment, as they provide certainty and coordinate stakeholders.
• In the ASEAN+3 region, the GSS+ (green, social, sustainability, and sustainability-linked) market has grown rapidly since 2019, with the People's Republic of China leading in both the number of issuers and total issuance volume.
• The primary barriers to sustainable investment in ASEAN include a lack of suitable project pipelines, technical knowledge gaps, and regulatory uncertainty.
• The high proportion of micro, small, and medium-sized enterprises (MSMEs) in ASEAN, which contribute 45% of GDP, creates a structural barrier as these entities typically cannot access international capital markets.
• Green sovereign guarantees are recommended to lower the cost of capital by de-risking innovative technologies or projects in emerging markets, though they require careful balance sheet management.
• Sovereign GSS+ bond issuance serves as a catalyst for local markets by demonstrating pricing benefits (such as the 'greenium') and providing a benchmark for corporate issuers.
• The report emphasizes that fiscal policies must be supported by non-fiscal measures, specifically the development of science-based green taxonomies to prevent greenwashing and provide clear investment definitions.
• National development banks are uniquely positioned to support the transition by providing anchor investments and targeting MSMEs, provided their mandates are shifted away from fossil fuel expansion.

APA

Climate Bonds Initiative (2024). Fiscal Policy and Sustainable Finance. https://www.climatebonds.net/files/documents/publications/Fiscal-Policy-and-Sustainable-Finance-Enhancing-the-Role-of-the-Financial-Sector-in-Achieving-the-Sustainable-Development-Goals.pdf

Chicago

Climate Bonds Initiative. Fiscal Policy and Sustainable Finance. 2024. https://www.climatebonds.net/files/documents/publications/Fiscal-Policy-and-Sustainable-Finance-Enhancing-the-Role-of-the-Financial-Sector-in-Achieving-the-Sustainable-Development-Goals.pdf.

Wikipedia

{{cite report |author=Climate Bonds Initiative |title=Fiscal Policy and Sustainable Finance |date=June 2024 |url=https://www.climatebonds.net/files/documents/publications/Fiscal-Policy-and-Sustainable-Finance-Enhancing-the-Role-of-the-Financial-Sector-in-Achieving-the-Sustainable-Development-Goals.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{climatebondsinitiative2024fiscal, author = {{Climate Bonds Initiative}}, title = {{Fiscal Policy and Sustainable Finance}}, institution = {Climate Bonds Initiative}, year = {2024}, month = jun, url = {https://www.climatebonds.net/files/documents/publications/Fiscal-Policy-and-Sustainable-Finance-Enhancing-the-Role-of-the-Financial-Sector-in-Achieving-the-Sustainable-Development-Goals.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }