GREEN GUARANTEE COMPANY INSTRUMENT ANALYSIS

The Green Guarantee Company (GGC) is a specialist guarantor designed to help public and private sector borrowers in emerging and frontier markets access long-term hard currency debt from global institutional investors for climate adaptation and mitigation projects. Managed by the Development Guarantee Group (DGG), the GGC provides full guarantees for bonds and loans of 5-20 years, aligned with the Climate Bond Standard (CBS), to mitigate sovereign and currency risks. The instrument includes a Technical Assistance (TA) facility to build issuer capabilities and market readiness. The GGC aims to catalyze approximately USD 10 billion in commercial term debt over its first decade, targeting sectors such as energy, transport, water, buildings, and waste, with an initial pilot phase in South Africa.

• The GGC provides full hard currency guarantees for medium to long-term institutional debt (5-20 years) to help borrowers in emerging and frontier markets access global credit and capital markets. In the event of a non-payment default, the GGC assumes the borrower's position and ensures investors receive all payments according to the original schedule.
• To ensure environmental integrity and investor confidence, the GGC requires all guaranteed debt instruments to be certified against the Climate Bond Standard (CBS), which uses science-based climate targets to define project eligibility.
• The GGC is designed to be financially sustainable, aiming for commercial maturity within 10 years. Financial modeling across four scenarios indicates the GGC can underwrite USD 10.6 billion in climate debt and achieve operating breakeven within 10 years, with a positive equity Internal Rate of Return (IRR) in all scenarios.
• The instrument targets a wide range of emerging and frontier markets, excluding China. The implementation is phased, starting with a pilot in South Africa, followed by large emitters like Brazil, India, and Indonesia, then medium-sized economies such as Egypt, Philippines, and Bangladesh, and finally smaller, vulnerable markets including island states and Least Developed Countries (LDCs).
• The GGC includes a Technical Assistance (TA) facility, capitalized with USD 10 million in grant funding, to address technical barriers. This facility focuses on project preparation (structuring and certification), capacity building for market participants, and local market engagement.
• The GGC aims to catalyze significant environmental and social impacts over a 20-year horizon, including adding 7.97 GW of renewable energy capacity, avoiding 74.89 million tons of CO2 equivalent per year, and unlocking USD 2.65 billion for women-owned initiatives.
• The GGC manages credit and concentration risk by capping exposures to B-rated countries at 20%, limiting single transactions to USD 200 million, and capping aggregate exposure to any single country or sector at 40% of the total guaranteed portfolio.
• The GGC differentiates itself from other guarantee facilities by offering full cover in hard currency for a broad range of climate projects, whereas comparable instruments often focus on local currency, partial cover, or specific sectors like renewable energy.

APA

Climate Policy Initiative (2022). GREEN GUARANTEE COMPANY INSTRUMENT ANALYSIS. https://www.climatepolicyinitiative.org/wp-content/uploads/2022/10/GGC-report.pdf

Chicago

Climate Policy Initiative. GREEN GUARANTEE COMPANY INSTRUMENT ANALYSIS. 2022. https://www.climatepolicyinitiative.org/wp-content/uploads/2022/10/GGC-report.pdf.

Wikipedia

{{cite report |author=Climate Policy Initiative |title=GREEN GUARANTEE COMPANY INSTRUMENT ANALYSIS |date=September 2022 |url=https://www.climatepolicyinitiative.org/wp-content/uploads/2022/10/GGC-report.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{climatepolicyinitiative2022green, author = {{Climate Policy Initiative}}, title = {{GREEN GUARANTEE COMPANY INSTRUMENT ANALYSIS}}, institution = {Climate Policy Initiative}, year = {2022}, month = sep, url = {https://www.climatepolicyinitiative.org/wp-content/uploads/2022/10/GGC-report.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }