Climate Bonds: Asia-Pacific Executives Propose New Carbon Credit Network

Introduction

Amidst growing concerns over climate change, business leaders from Asia-Pacific have urged emerging economies in the region to issue climate bonds. These bonds would be indexed to a basket of currencies, aiming to mitigate foreign exchange risks and attract investors from a broader range of markets.

Executive Summary

At the recent Asia-Pacific Economic Cooperation (APEC) CEO Summit, business leaders from the region proposed the creation of a new climate bond network. This network would facilitate the issuance of climate bonds indexed to a basket of currencies, making them more accessible to investors worldwide. The network would also establish a carbon credit trading platform to support investments in climate mitigation projects.

Benefits for Emerging Economies

The proposed climate bond network offers several benefits for emerging economies in the Asia-Pacific region:

• Reduced foreign exchange risks: By indexing the bonds to a basket of currencies, emerging economies can mitigate the impact of fluctuations in any single currency.
• Broadened investor base: The use of a currency basket would make the bonds more attractive to investors from a wider range of countries, increasing the potential for raising capital.
• Increased investment in climate mitigation: The carbon credit trading platform would provide a mechanism for investors to support projects that reduce greenhouse gas emissions.

Conclusion

The proposal for a new climate bond network in the Asia-Pacific region has the potential to accelerate the transition to a low-carbon economy. By mitigating foreign exchange risks and broadening the investor base, the network would enable emerging economies to access capital for climate mitigation projects. As the global economy faces increasing climate-related challenges, this initiative is a positive step towards sustainable growth and resilience.