Voluntary principles for the deployment of credit enhancement instruments
The Sustainable Sovereign Debt Hub is proud to announce the publication of the Voluntary principles for the deployment of credit enhancements to support sustainability-linked financing for nature and climate.
Developed after a year of dialogue within the Task Force, the principles set out four elements that can improve both the access and affordability of credit enhancement instruments. Together, they support more effective, transparent and high-impact sustainability-linked transactions.
Four core elements
1. Suitability
Credit enhancements should be tailored to a country’s macroeconomic and financial context, ensuring the instrument is appropriate for its needs and debt profile.
2. Nature and/or climate impact
Credit-enhanced transactions should be anchored in ambitious and credible national commitments for nature and climate. These should align with the Paris Agreement and/or the Kunming–Montreal Global Biodiversity Framework, use material and relevant KPIs, and demonstrate coherence between policy action and capital mobilisation.
3. Governance structure
Structures should follow recognised best practice on the use, management and oversight of resources. They should include clear reporting and robust, independent verification.
3. Accountability and effectiveness
Credit enhancements are scarce public resources. Their use should therefore be efficient, transparent and geared towards replicable models that strengthen accountability and maximise impact.
The Principles present a concrete step towards creating a shared understanding and developing shared practices in the use of credit enhancements form sustainability-linked financing. The Task Force has proven a valuable venue for the exchange of knowledge and expertise between participating members, and will continue to work on a consistent and harmonised approach to developing impactful credit enhancement solutions.