Bhutan Explores Sustainable Finance with Thematic Bonds to Propel Green Transition
The framework, aligning with international best practices, delineates crucial aspects—use of proceeds, project evaluation and selection, management of proceeds, and reporting.
Thimphu: In the wake of mounting economic challenges post-COVID-19 and the impending graduation from least developed country status, Bhutan embraces a paradigm shift towards sustainable finance. With a debt-to-GDP ratio at 134.8%, the Kingdom explores innovative financial solutions, focusing on thematic bonds, to bolster climate adaptation and mitigation initiatives.
Notably, Bhutan, renowned for maintaining carbon-neutrality, eyes Sustainability Bonds as a pivotal tool to accelerate climate goals, create green jobs, and attract private sector investment. ESCAP’s engagement with Bhutan since 2017 culminates in the development of a Sustainability Bond Framework, shaping the future issuance of Bhutan’s first-ever sovereign Sustainability Bond.
The framework, aligning with international best practices, delineates crucial aspects—use of proceeds, project evaluation and selection, management of proceeds, and reporting. In a recent stakeholder workshop co-hosted by Bhutan and ESCAP, Bhutan’s unique context was highlighted, reflecting in project categories such as large-scale green hydroelectricity projects and adapted sections like “Clean Transportation.”
Bhutan concurrently develops its green taxonomy with Asian Development Bank support, enhancing project classification and curbing greenwashing. These strategic steps aim to diversify Bhutan’s creditor base, open avenues for innovative financing, and align the nation with climate and sustainable development ambitions.
As Bhutan pioneers this sustainable finance initiative, the issuance of thematic bonds emerges as a beacon for green transition, unlocking potential alternative sources of finance and fostering a resilient and environmentally conscious economy.
