新興市場綠色債券 2023 Emerging Market Green Bonds

REPORT

Emerging

Market

GreenBonds

MAY2024

IFC-AmundiJointReport

AboutIFC

IFC—amemberoftheWorldBankGroup—isthelargestglobaldevelopmentinstitutionfocusedontheprivatesectorinemergingmarkets.Weworkinmorethan100countries,usingourcapital,expertise,andinfluencetocreatemarketsandopportunitiesindevelopingcountries.Infiscalyear2023,IFCcommittedarecord$43.7billiontoprivatecompanies

andfinancialinstitutionsindevelopingcountries,leveragingthepoweroftheprivatesectortoendextremepoverty

andboostsharedprosperityaseconomiesgrapplewiththeimpactsofglobalcompoundingcrises.Formoreinformation,visit.

AboutAmundi

Amundi,theleadingEuropeanassetmanager,ranking

amongthetop10globalplayers,offersits100million

clients—retail,institutionalandcorporate—acompleterangeofsavingsandinvestmentsolutionsinactiveandpassive

management,intraditionalorrealassets.Thisofferingis

enhancedwithITtoolsandservicestocovertheentire

savingsvaluechain.AsubsidiaryoftheCréditAgricolegroupandlistedonthestockexchange,Amundicurrentlymanagesmorethan€1.9trillionofassets.Withitssixinternational

investmenthubs,financialandextra-financialresearch

capabilitiesandlong-standingcommitmenttoresponsibleinvestment,Amundiisakeyplayerintheassetmanagementlandscape.Amundiclientsbenefitfromtheexpertiseand

adviceof5,400employeesin35countries.

EmergingMarket

GreenBonds

IFC-AmundiJointReport

EMERGINGMARKETGREENBONDS

Page2

Acknowledgments

ThisreportwaspreparedundertheguidanceofSusanLund,InternationalFinanceCorporation(IFC)VicePresidentofEconomicsandPrivateSectorDevelopment,andPaoloMauro,DirectorofIFC’s

EconomicandMarketResearchDepartment.

JoséAbad,alsoatIFC,wastheleadauthor.WorkingteammembersincludedQuentinAlbert,MohamedBenSlimane,AnggeRoncalBazan,SylviaChen,CharlesDupré,EricDussoubs,JoanElbaz,JulienFoll,

VictorHintzy,TimothéeJaulin,EstherLaw,MollyMintonfromAmundi,andSamedHysa,KaikhamOnedamdy,SelinGoncaOzyurt,JessicaStallings,andImtiazUlHaqfromIFC.

TheupdateoftheGSSSdatabasewasledbyJessicaStallingsandcompletedthankstoNimarjitSingh

fromIFC,whilethegreenbondissuanceforecastswererunbyMohamedBenSlimaneandVictorHintzyfromAmundi.

WethankpeerreviewersJamieFergusson,JohnGandolfo,KaikhamOnedamdy,LailaNordine,EmmanuelNyirinkindi,AyeletPerlstein,andTomaszTelma,allfromIFC,andTimothéeJaulinfromAmundi.We

arealsogratefulforthehelpfulcommentsandsuggestionsprovidedbyGonzaloFernándezattheInternationalMonetaryFund.

ChrisVellacottatIFCeditedthereportwithhelpfromBrianBeary,whileIrinaSarchenkowasresponsibleforgraphicsanddesignwithhelpfromAlisonHeasley.

Page3

TableofContents

Foreword 4

KeyMessages 6

ExecutiveSummary

7

Chapter1:

Introduction

9

Chapter2:

MarketDevelopmentsin2023 1

7

Chapter3:GSSSBondOutlook

33

Chapter4:ConcludingRemarks

38

Annex1:AnnualEmergingMarketGreenBondIssuancebyMarketSegment

40

Annex2:KeyGSSSBondIssuesin2023 48

Annex3:RecentNoteworthyInitiativesforSustainableFinanceinEmergingMarkets 53

EMERGINGMARKETGREENBONDS

Page4

Foreword

T

hesixtheditionofthe‘EmergingMarketGreen

BondsReport’analyzessignificanttrendswithin

thegreen,social,sustainability,andsustainability-

linked(GSSS)1bondmarketsfortheyear2023,and

providesprojectionsfor2024andbeyond.Furthermore,itencapsulatesthelatestadvancementsinpolicyand

regulatoryframeworks.Similartopreviouseditions,

thisyear'sreportrepresentsacollaborativeeffort

betweenAmundi,aprominentassetmanagerinEurope,andtheInternationalFinanceCorporation(IFC),partoftheWorldBankGroup.

Collaborationwithfinancialinstitutions,theprivatesector,andgovernmentsisessentialtoIFC’smissiontomobilizeprivatecapitalforsustainabledevelopmentandclimate-relatedobjectives.Asapioneerinthegreenbondmarket,IFChasissued,since2010,morethan$12.6billioningreenbondsthrough198securitiesacross21differentcurrencies.

Moreover,IFCofferstechnicalsupporttobothissuersandinvestorsindevelopedandemergingmarkets,enhancingtheintegrityofthegreenbondmarket.IFChasalso

contributedsignificantlythroughitsleadershiponthe

executivecommitteeoftheGreen,Social,Sustainability,andSustainability-Linked(GSSS)BondPrinciples,servingaschairfromJuly2020toJune2022.

1Forafulldescriptionofeachcategoryofsustainablebond,seeBox1inChapter1

Amundicontinuestodedicateitselftothegrowthof

thegreenbondmarketandothersustainablefinance

instruments.ItspartnershipwithIFConinitiativessuchastheAmundiPlanetEmergingGreenOneandtheBuild-Back-BetterEmergingMarketsSustainableTransaction

funds,launchedin2018and2021respectively,aimstoboostboththedemandandsupplyofgreenbondsinemergingmarkets.

In2023,issuanceofGSSSbondssawsignificantexpansionindevelopingeconomies,reboundingstronglyfrom

thepreviousyear'sslump.Thissurgewasdrivenbya

confluenceoffactorsincludingeasinginflationconcerns,governmentalandcorporateinitiativestoaddressclimatechallenges,andmorefavorablefinancialconditions.

Regulatoryprogressinmultiplejurisdictionssupportedthemarket'sexpansionbyestablishingclearerguidelinesforsustainablefinanceinanumberofregionswhichinturnislikelytomaketheseassetsmoreappealingto

internationalinvestors.

Muchofthegrowthinissuanceseenin2023wasdrivenbysovereignborrowersseekingfundsastheysteppedupeffortstomeetclimatetargets.Asaresultoftheincreaseinsustainablebondissuance,significantinvestment

flowedintogreenconstruction,renewableenergy,andwaterprojects.Also,innovationsinsustainabilitycriteria,

Page5

SUSANM.LUND

VicePresident,EconomicsandPrivateSectorDevelopment,IFC

suchasChile'sinclusionofagender-basedperformance

indicatorinitssustainability-linkedbondframework,

underscoredabroadertrendofintegratingsocialgoalsintofinancialstrategies.

Overthemediumterm,weanticipatecontinuedgrowthingreenbondissuancewithinemergingmarketsdrivenbyanaccelerationoftheenergytransition.

Nevertheless,geopoliticaltensionsandthereputational

damagefromstillprevalentgreenwashing—misstatingtheextenttowhichfinancialinstrumentsmeetsustainability

FOREWORD

YERLANSYZDYKOV

GlobalHeadofEmergingMarkets,Amundi

criteria—posesignificantthreatstothisrosyoutlookfor

themarket.Anydownturnwouldseverelyimpactglobal

effortstoachievetheclimatetargetsestablishedbythe

2015ParisAgreements.Sustainablefinancemarketsare

crucialforaddressingthecapitaldeficitsinfundingeconomicandenergytransitionsinemergingmarketsbydirecting

privatesectorinvestmentstowheretheyaremostneeded.Consequently,substantialeffortsmustbemadetoensurecontinuedgrowthintheGSSSmarket,includingenhancingregulations,standardizingbestpractices,mobilizingpolicies,andraisingawareness.

Page6

EMERGINGMARKETGREENBONDS

KeyMessages

Bouncebackin2023

EmergingmarketGSSSbondissuancesurged45percentin2023toreach$209billion,anall-timehigh.IssuersoutsideChinaincreasedtransactionsbyaround65percentto$111billionwhilethosewithinthecountrysawa28percent

advancetoaround$98billion.

OutsideChina,GSSSbondissuanceinemergingmarketswasdrivenbygreenbonds,whichincreasedby81percent.IntheMiddleEastandNorthAfrica,mostnotablyUAEandSaudi

Arabia,greenbondissuancemorethandoubled.

DrivenbySovereigns

Theaccelerationingreenbondissuanceinemergingmarketsin2023waspartlydrivenbysovereignswhichmorethan

tripledtheirgreenbondsales.Theirshareoftotalemergingmarketgreenbondissuancejumpedto17percentfrom

7percentin2022.Butfinancialinstitutions,whichincreasedsalesofthesecuritiesby52percent,remainedthebiggestissuersofgreenbonds,selling58percentofthetotalversus

51percentin2022.Corporatessawtheirsharefallsharplyto

21percentfrom32percent.

UseofProceeds

RenewablescontinuetoclaimthebiggestshareoftheproceedsfromemergingmarketGSSSbondissuanceat37percent,flatfromthepreviousyear.Greenbuildingsclaimed29percent,upfrom9percentin2022,while

waterprojectshavealsobecomeincreasinglyimportant,representing12percentofissuancein2023,upfrom

8percent,onaccountoftheemergenceof“blue”bonds.

IssuanceOutlook

IssuanceofemergingmarketGSSSbondsislikelytogrow

atanannualrateof7.1percentoverthe2023–2025period,

withsalesvolumesrisingto$240billion,from$209billion

currently.Forthegreenbondsub-category,growthwill

befasterstill,at7.5percentperyeartoreach$156billionin2025.Thisoutlook,witha70percentprobability,assumesnoreversalininvestordemandforsustainableassetsalongsideemergingmarketsovereignandcorporateborrowers

steppingupeffortstofinanceclimatecommitments.

DriversofMarketGrowth

Easinginflationaryworriesandbenigngrowthoutlooksinmanyemergingmarketsarebehindmuchoftherecovery

trend.ButgrowthinGSSSbondsalescanalsobelargely

attributedtogovernmentsandcompaniessteppingup

effortstoconfrontclimatechallenges,alongsideongoing

improvementsinregulationandmaturingfinancialmarkets.

Page7ExECUTIVESUMMARy

ExecutiveSummary

S

ustainablefinance,thecapitalmarketusedby

borrowerstofundprojectsandinitiativeswith

soundenvironmentalandsocialcredentials,isboomingindevelopingeconomies.

Emergingmarketissuanceofgreen,social,sustainability,andsustainability-linked(GSSS)bonds,whichareeligibleinvestmentsforfundsfocusedonenvironmentalandsocialcriteria,surged45percentin2023toreach$209billion,anall-timehigh.

ForemergingmarketsoutsideChina,growthwasevenfaster,at65percent,reaching$111billionovertheyear.InChinaitself,meanwhile,GSSSbondissuanceadvancedby28percenttoaround$98billion.

Thismarksanimpressivebouncebackfromtheslumpinsalesseenthepreviousyearwheninflationstifleddemandamonginvestorswhowereworriedaboutthedecliningvalueoftheirbondholdings,whilerisinginterestratespromptedborrowerstoputtheircapitalraisingplansonhold.

TherecentgrowthinemergingmarketGSSSbondissuanceisalsosettocontinue,accordingtothecentralforecasts

outlinedinthisreport,risingbyaround7.1percenteachyearthrough2025.Thatmeanssalesvolumeswillreacharound$240billionin2025.

Therearemultipleforcesdrivingthisupsurgethatarelikelytostayinplaceoverthenexttwoyears.Easinginflationaryworries,projectedratecutsbytheU.S.FederalReserveandothercentralbanks,andbenigngrowthoutlooksinmanyemergingmarketsarebehindmuchofthetrend.

ButgrowthinGSSSbondsalescanalsobelargely

attributedtogovernmentsandcompaniessteppingup

effortstoconfronttheclimatechallengestheyface,

transformingeconomiesandbusinessestomakethem

moresustainablewhilebuildingresilience.Allthisneedstobefundedandtheinternationalfinancialmarketsconnecttheseborrowerswithagrowingpoolofportfoliocapital

thatprioritizesenvironmental,social,andgovernancecriteriawhenchoosingassetstobuy.

Inshort,risingfinancingneedstofundgreentransitionsinemergingmarketsaremeetinggrowingdemandthatiscapableofabsorbingmoregrowthinGSSSbondissuance.

Atthesametime,financialandregulatoryconditionsare

favoringemergingmarketissuers.Marketgrowthisbeing

supportedbyongoingprogressbymarketsupervisorsin

establishingguidelinesforcategorizing,regulating,and

trackingsustainablefinanceinmultiplejurisdictions.This

meanssustainablefinancemarketsindevelopingeconomiesarebecomingdeeper,easingthewayformoreinvestmentcapitaltobuyupdebtissuedinthosemarkets.

Thisstudyalsoshowsthatthenewinvestmentisfindingitswaytowhereitismostneeded,notjustalleviatingtheperennialproblemofcapitalscarcityinemergingmarketsbuttargetingcrucialeconomicsectors.Dataonhowthe

proceedsofgreenbondsalesareusedshowarapidlyrisingsharegoingtowardgreenerconstruction,acentralpillar

ofmanyemergingeconomiesaswellasamajorsourceofgreenhousegasemissions.

Page8

EMERGINGMARKETGREENBONDS

Thelargestsliceofthemoneyraisedfromtheinstrumentsinemergingmarketsduring2023wasdesignatedfor

renewables,thoughat37percentthesharewasbroadly

stablerelativetothepreviousyear.Thenextbiggest

destinationformoneyraisedfromsalesofgreenbonds,andrapidlyclosingthegap,wasbuildings,claiming29percentofthetotalfrom9percentayearearlier.Waterprojects

havealsobecomeincreasinglyimportant,representing

12percentofissuancein2023,upfrom8percent.Thisis

duetoariseinsalesofbluebonds,asub-categoryofgreenbondsusedtoraisemoneyforwaterandocean-related

sustainability.Lowcarbontransportsawitscontributionfallto11percentfrom18percentin2022.

AmongthemostsignificantinnovationsovertheyearwithintheGSSSbondmarket,wealsohighlighttheinclusionofa

socialkeyperformanceindicatorinChile'sSustainability-

LinkedBondFrameworkthatwasupdatedinJune.This

introducedagender-basedmetrictargetinganincreasein

femalerepresentationontheboardsofcompaniesregulatedbytheFinancialMarketCommissiontoatleast40percentby2031.

Tobesure,astepupinGSSSbondsalescouldleadtomoredebtonbalancesheetsandissuers’capacityforborrowing

haslimits.Nevertheless,thereisroomforissuanceto

growfromcurrentlevelsandGSSSbondsstillrepresenta

fraction—around5percent—ofannualemergingmarket

bondissuanceoutsideChinawheretheproportionissmallerstill,at1.7percent.

ThisreportstartsbyoutliningthefinancialmarkettrendsthatunderpinthenewissuancemarketforGSSSbondsinemergingmarkets.Asecondchapterbreaksdownprimarymarketperformanceduring2023fromseveralperspectives,lookingatissuancebyregion,trendsintheuseofproceedsandotherfeatures.ThethirdchaptersetsouttheforecastscompiledbyAmundiforissuancevolumesoverthenext

twocalendaryears,andaconcludingsectionsketches

somepotentialconsiderationsforpolicymakers,regulators,investors,issuers,andmultilateraldevelopmentbanks

seekingtoensurethecontinuedhealthofthismarket.

Privateinvestmentisvitalforcoveringthefinancingneedsofgovernmentsandcorporationsseekingtomeetnet-zeroandotherclimatecommitmentsmadeatinternationalsummitssuchasCOP28,aswellasbuildingresiliencetoevermore

frequentextremeweatherevents.TheGSSSbondmarketisakeymediumforchannelingprivatefundstowardtheemergingmarketswhereitisneededthemost.

1

Introduction

S

ustainablefinance—themarketfordebtsecurities

thatraisemoneyforsustainableprojectsand

initiatives—isinrobusthealthindevelopingeconomies.Newissuesbyemergingmarketcorporateand

sovereignborrowersduring2023ofgreen,social,

sustainability,andsustainability-linked(GSSS)bonds—seeBox1fordefinitions—areoftenencountering

ordersthatexceedtheamountofdebtbeingsold.2

Indeed,demandforthesesecuritiesmeanstheyields

onsuchdebtaresimilaroroccasionallybelowthose

onconventionalbondsinemergingmarkets,makingitattractiveforgovernments,corporations,andfinancialinstitutionstoraisemorecapital.

Severalfactorsdrivethis.Firstly,2023sawabroad

improvementinsentimentarounddebtcapitalmarketswithsustainablebondsenjoyinganevenmoreemphaticshiftin

mood.Theamountofnewmoneyflowingintoinvestment

fundsprioritizingenvironmental,social,andgovernance

(ESG)issuescontinuedtogrow,albeitataslowerpace

thanpreviousyears,3addingtoglobaldemandfornew

GSSSbonds.Meanwhile,authoritiesinmultipleemerging

economiesaremakingprogresstowardimplementing

guidelinesandcategorizationsystemsforsustainablefinance.Theyarealsoensuringthatthenewtaxonomiesarebetter

alignedandcomparablewiththoseinotherjurisdictions.

Thisisasignificantdevelopment.Investorsneedtobeable

toestimateriskwhenconsideringaddinganassettotheir

portfolioandthisisdifficult,inefficient,andcostlywhen

dealingwithmultiplesetsofrulesandcategorizationsthatareincompatiblewithoneanother.

Makingemergingmarketassetseasiertoassessforriskandpotentialreturnsbyinternationalinvestorsunlocksastill

growingpooloffundsfocusedoninvestmentsthatmeetESGpriorities.Thisbodeswellforgovernmentsandcompanies

indevelopingeconomiesthatmadecommitmentsat

internationalsummitssuchasCOP28inlate2023totransitiontheireconomiesandbusinessesawayfromfossilfuelsand

buildresiliencetotheconsequencesofclimatechange.Theirfundingneedsaresizablebutemergingmarketgovernmentstypicallyhavelessfiscalfirepowertomeetthoseneedsthantheircounterpartsindevelopedeconomies.Thatmeans

encouraginginternationalportfoliocapitaltomakeupthatshortfallisvitallyimportant.

ThissixtheditionoftheEmergingMarketGreenBonds

ReportoutlinespatternsinnewissuanceofGSSSsecuritiesbyemergingmarketborrowersthroughout2023and

presentsforecastsfornewsalesthrough2025,basedoncalculationsbyAmundi.

IssuanceofemergingmarketGSSSbondsrecoveredin2023fromthepreviousyear’sslump,tomatchthe$1trillionrecordsalessetin2021,arebounddescribedindetailinChapter2.

Thisreflectedongoinginvestordemandforemergingmarketandgreenassetsincontrasttothewidespreadnervousnessof2022amidpeakinginflationandmonetarytightening,

conditionsthatareunfavorableforbondmarketsentiment.4

Themomentumof2023issettocontinue,meanwhile,as

describedinAmundi’scentraloutlookscenarioinChapter3,withthestressesthatheldbacknewGSSSbondsalesin2022receding.TheremainderofthischapterdescribesthemarkettrendsunderpinningthisandhowinvestorappetiteforGSSSbondshasevolvedoverthepastyear.Indeed,itoutlineshowconditionsinmanyemergingGSSSbondmarketsarefavorabletoborrowersincomparisonwithdevelopedeconomies.

2Examplesofoversubscribedbondissuesduring2023includesovereigngreenbondsalesfromIndiaandTurkey,asoutlinedinAnnex2ofthisreport.

3SeeReuters,2023,”ESGfundssufferweakerdemanddespitehelpfromtech-sectorperformance,”availableat:

/sustainability/sustainable-finance-reporting/

esg-funds-suffer-weaker-demand-despite-help-tech-sector-performance-2023-12-21/

4SeeAnnex1fordetailsaboutthedataset,thesourcesused,andthemethodologyfollowed,aswellasanychangescomparedtopreviouseditions.

EMERGINGMARKETGREENBONDS

Page10

BOx1

DefinitionsandGuidelines

Greenbonds:Fixed-incomeinstrumentswithproceedsearmarkedexclusivelyforprojectswithapositive

environmentalimpact.TheGreenBondPrinciples(establishedin2014andlastupdatedinJune2022)

developedbytheInternationalCapitalMarketAssociation(ICMA)havefourcomponents:useofproceeds,processforprojectevaluationandselection,managementofproceeds,andreporting.Severalcountriesandjurisdictionshave

developedguidelinesforgreenbondissuance,manyofwhichalignwiththeGreenBondPrinciples.

Bluebonds:Asub-categoryofgreenbondsspecifyingthatproceedsareusedforfinancingwater-related

sustainableprojects.

Socialbonds:Proceedsfromsocialbondsaredirectedtowardprojectsthataimtoachievepositivesocial

outcomes,especially,butnotexclusively,foratarget

population.ICMA'sSocialBondPrinciples(introducedin2017,lastupdatedinJune2023)havefourcomponentsanalogoustotheGreenBondPrinciples:useofproceeds,

theprocessforprojectevaluationandselection,managementofproceeds,andreporting.

Sustainabilitybonds:Sustainabilitybondsaredebtinstrumentsthatraisemoneytofinanceorrefinanceacombinationofgreenandsocialprojects.The

SustainabilityBondGuidelinesestablishedbyICMA

(lastupdatedinJune2021)arealignedwiththecorecomponentsofbothGreenandSocialBondPrinciples.

Sustainability-linkedbonds:Theseinstrumentsareperformance-basedbondswherebytheirfinancialorstructuralcharacteristics,suchasthecouponrate,areadjusteddependingonwhethertheissuerachieves

predefinedsustainabilityobjectives.Theobjectivesaremeasuredthroughkeyperformanceindicatorsand

assessedagainstsustainabilityperformancetargets.Failurebytheissuertomeetthosegoalsmayresultin

ahighercoupon.Thesebondscanalsobestructured

torewardbetter-than-expectedperformancewitha

lowercoupon.Unlikesocialorgreenbonds,proceedsarenotearmarkedforspecificprojects.InJune2020,ICMApublishedtheSustainability-LinkedBondPrinciples(lastupdatedinJune2023),providingguidelinesonstructuringfeatures,disclosure,andreporting.

Climatetransitionbonds:Thiscategoryofdebtaimstofinancethetransitiontoalow-carboneconomy.

TheClimateTransitionFinanceHandbookpublishedbyICMAinDecember2020(andlastupdatedinJune2023)recommendsdisclosuresforissuersmarkingeitheruse-of-proceedsorsustainability-linkedinstrumentswith

aclimatetransitionlabel.Therearefourkeyelements

totherecommendeddisclosures:theissuer'sclimate

transitionstrategyandgovernance;theenvironmentalimpactofitsbusinessmodel;theclimatetransition

strategythatmustbescience-basedandincludetargets;andthetransparencyofimplementation.

Otherlabels:Someissuershaveusedotherlabelsfor

sustainabledebtfunding,suchas“adaptation,”or“SDG”(SustainableDevelopmentGoals)bonds.Mostofthesespecifythatproceedsfromthebondmustalignwith

ICMAprinciplesbuttheirbrandinghasbeenadapted

tosingleoutaspecificfeature.Somebondslabeled

"sustainabledevelopmentbonds"departfromICMA

principles,astheyarenot"use-of-proceeds"bondsbutaregeneralpurposesecuritiesfromissuerswhowish

toflagthattheirmissionisinherentlysustainable.The

proliferationoflabelsrequiresvigilancefrominvestors

aroundprojecteligibility,allocation,andimpactreportingcommitments.

Page11

EmergingMarketGreenBondMarketPerformance

Theyear2023sawareboundinthemarketforsustainablefinanceindevelopingeconomiesanddebtissuancemoregenerally.Thesedevelopmentsbenefitedfromcalmer

financialmarketswithinvestorsanticipatingthatlowerinflationwouldsetthestageforcentralbankstostarteasinginterestrates(seeExhibit1).

INTRODUCTION

Thecomebackwasmorevigorousacrossemergingmarketswherepolicymakersinsomejurisdictionshadhiked

ratesearlierthandevelopedcountrypeersinresponsetoinflationarypressures.Asaresult,theyachievedsignificantprogressinbringingpricerisesundercontrol.5Inaddition,economicgrowthalsoprovedtobemoreresilientthan

expectedandrecessionwasavertedintheUnitedStatesandelsewhereleadingtocorporateearningsthatwereaheadofforecasts.

ExHIBIT1

FinancialMarketsStagedaRecoveryin2023

Totalreturnin2023versus2022

20222023

15.2%

10.9%

1.5%

4.9%4.2%

16.1%

-25%0%25%

Source:JPMorganWealthManagement

U.S.EquitiesWorldEquities60/40Portfolio

U.S.HighYield

USDCashU.S.Agg.Bonds Commodities

-18.1%

-17.7%

-17.0%

24.5%

6%

-10.2%

-13.0%

-11.2%

21.

5InternationalMonetaryFund.2023."GlobalFinancialStabilityReport:FinancialandClimatePoliciesforaHigh-Interest-RateEra."Washington,DC,October.

EMERGINGMARKETGREENBONDS

Page12

However,secondarymarketperformanceofgreenbondsfromemergingmarketissuerslaggedconventionalbondsbyaround200basispointsin2023afterending2022

around450basispointsaheadonatotalreturnbasis(seeExhibit2).Greenbondstendtooutperformconventionalbondsinsecondarymarketsduringrisk-offperiods,andtounderperformwhenthemarketmoodismorepositive.Thisreflectsthehigherqualityoftheaveragegreenbond

issuer.Whilethisexplainsthedivergencebetweenthetwotypesofassetsinemergingmarkets,indevelopedmarkets,

however,theoppositewasobserved,likelyreflecting

thelongerdurationofgreenbondsinacontextof

changinginterestrates.Onaverageglobally,greenbondsunderperformedin2022onthebackofhigherrates,onlytooutperformin2023drivenbytheexpectationsoflowerratesdowntheroad.

ExHIBIT2

EmergingMarketGreenBondsMarginallyUnderperformedin2023DuetoStructuralFactors

Greenbondperformancein2022–2023

GlbalBonds

onn

25%

25%

GreenBonds,10.7%

AllBonds,5.7%

0%

AllBonds,9.1%

GreenBonds,7.1%

0%

-10.8%

-15.3%

-16.2%

-22.7%

-25%

-25%

EmergigMarketBods

20222023

20222023

Source:Bloomberg,IFC

Note:LeftpanelcomparestheBloombergMSCIGlobalGreenBondIndexUSDagainsttheBloombergGlobalAggregateBondIndexUSD;rightpanelcomparestheBloomberg

MSCIEMGreenBondIndexUSDagainsttheBloombergEMAggregateBondIndexUSD.Inbothcases,wecomputethedifferencebetweenannualgrowthratesoverend-of-yearlevelsineachindex.

Page13INTRODUCTION

Aclosely-watchedgaugeofmarketsentimentaroundsustainablefinanceisthegreenpremium,sometimes

referredtoasa“greenium.”Thisreferstotheyield

advantageforissuersofGSSSbonds