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A new class of debt instruments: carbon credit linked bonds

27 October 2024 / Author(s): Deborah Zandstra , James Kelton
Issue: November 2024 / Categories: Feature

The genesis and development by IBRD and its structuring banks of bonds with coupons linked to the issuance of carbon credits has been an exciting development in the capital markets and in the natural capital space, though the asset class is not without its challenges. This article explains how this new type of bond works and considers how the asset class can be further developed into a widely used instrument capable of providing large-scale upfront funding to natural capital projects across the globe.

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