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Aligning Sovereign Debt Financing with Climate Action in the Asia-Pacific Region

The Asia-Pacific Region’s prolonged economic growth in the past decades have come at great environmental costs, largely through manufacturing activities, consumption and urbanization. The ongoing COVID-19 pandemic has highlighted the degree of interdependence among Asia-Pacific economies through its network of global value chains; and coupled with existing risks from global climate change, the region's entire economic model is at risk. The options available severely hamper climate finance options, and developing economies in the region must contend with high financing costs for their physical climate investments.

This paper outlines how nations can reorient investment decisions and mobilize necessary finances to sustain growth. It also considers the social and political aspects of upgrading the social provisioning and care sectors which the region’s economies depend in tandem with economic growth and in the context of global climate change. Possible remedies would not only be appropriate for financing climate action; they would also prove necessary for the long-term sustainability and efficiency of inter-national financial markets.