Scaling Up Green Guarantees

This report by the Green Guarantee Group (GGG) provides a roadmap to scale the use of green guarantees to mobilize private capital for climate action in emerging markets and developing economies (EMDEs). It identifies systemic barriers—including regulatory constraints under the Basel Framework, currency risks, and data gaps—and proposes four primary recommendations to optimize guarantees as a catalytic investment tool to help meet global climate finance targets.

• Guarantees are highly efficient at mobilizing private capital, with MDB guarantees accounting for nearly half of the total private capital mobilized by multilateral development banks, despite representing only about 5% of their financial commitments.
• The report recommends clarifying the supervisory treatment of guarantees under the Basel Framework to allow banks to obtain better capital relief. Specifically, it suggests regularly updating the list of "eligible MDBs" and developing risk-based methodologies for calculating capital relief for complex partial guarantees where simple proration is not feasible.
• To address foreign exchange (FX) risk that deters investment in EMDEs, the GGG recommends that guarantee providers offer guarantees denominated in local currency and scale up donor-backed currency risk hedges and first-loss facilities.
• The GGG proposes improving risk pricing by expanding the Global Emerging Markets Risk Database (GEMs) to include guarantee-specific data, such as default and recovery rates, and implementing a tiered-access approach to balance transparency with confidentiality.
• The report advocates for scaling national guarantee institutions and regional platforms to pool risks and aggregate projects. Key actions include strengthening national institutions via regional hubs, standardizing underwriting criteria across MDBs and DFIs, and exploring exposure-swapping arrangements to manage risk concentration.
• The GGG Secretariat is developing a directory of guarantee products, scheduled for presentation at COP30, to help project developers and public financial institutions search, compare, and apply for available guarantee instruments.

APA

Climate Policy Initiative (2025). Scaling Up Green Guarantees. https://www.climatepolicyinitiative.org/wp-content/uploads/2025/06/Scaling-Up-Green-Guarantees-1.pdf

Chicago

Climate Policy Initiative. Scaling Up Green Guarantees. 2025. https://www.climatepolicyinitiative.org/wp-content/uploads/2025/06/Scaling-Up-Green-Guarantees-1.pdf.

Wikipedia

{{cite report |author=Climate Policy Initiative |title=Scaling Up Green Guarantees |date=July 2025 |url=https://www.climatepolicyinitiative.org/wp-content/uploads/2025/06/Scaling-Up-Green-Guarantees-1.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{climatepolicyinitiative2025scaling, author = {{Climate Policy Initiative}}, title = {{Scaling Up Green Guarantees}}, institution = {Climate Policy Initiative}, year = {2025}, month = jul, url = {https://www.climatepolicyinitiative.org/wp-content/uploads/2025/06/Scaling-Up-Green-Guarantees-1.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }