Environmental Finance/IFC
March 2025
The third volume of the Emerging Market Real Economy Sustainable Bonds report explores the prospects for sustainable bond issuance in the real economy across a diverse set of emerging markets that includes Ghana, Kenya, Nigeria, South Africa, Pakistan and Türkiye.
The report offers a detailed examination of each country’s macroeconomic environment, regulatory frameworks and strategic priorities, alongside real economy sector profiles in telecommunications, real estate, as well as chemicals and paper and packaging manufacturing. In addition, it provides a non-exhaustive list of leading companies in each sector that have potential to issue sustainable bonds in the future.
Emerging markets demonstrate varied economic structures and face unique challenges, often shaped by their vulnerability to external shocks such as the COVID-19 pandemic and the Russia-Ukraine conflict. These events have disrupted supply chains, strained public finances and exposed energy security vulnerabilities, amplifying economic pressures in these regions.
For fixed income markets, particularly sustainable debt, the impact has been twofold: while market volatility and rising borrowing costs have created hurdles, the urgency of addressing energy transitions and funding recovery efforts has driven increased interest in green and social bonds. Many emerging markets have leveraged sustainable debt as a tool to attract international investment, finance climate resilience and support inclusive recovery initiatives.
As such, these nations are increasingly leveraging sustainable finance to bolster resilience and promote long-term growth. Renewable energy investments in Türkiye are leading a transformation in the country’s manufacturing sector and Nigeria’s economy is gradually diversifying growth to shift from oil dependence into sectors like telecommunications and agriculture. Kenya, meanwhile, is increasingly capitalising on its abundant renewable energy resources to power a ‘green’ economic transformation.
Sustainability and climate action are integral to national policies across these countries. The six countries in our report have ratified the Paris Agreement and adopted ambitious climate goals, such as Türkiye’s target for net-zero emissions by 2053. Meanwhile, initiatives like Kenya’s Sovereign Green Bond Framework and Ghana’s Green Finance Taxonomy aim to increase the levels of sustainable investment in these countries in future.
Regulatory frameworks and supporting mechanisms are crucial in shaping sustainable finance ecosystems. South Africa’s Green Finance Taxonomy and Nigeria’s Climate Change Act provide clear guidelines to encourage investment in climate-friendly projects. Similarly, Pakistan’s Green Bond Guidelines and Kenya’s Vision 2030 framework integrate sustainability objectives into broader national development goals, enhancing policy clarity and boosting investor confidence.
Nevertheless, the maturity of sustainable bond markets in these countries varies. South Africa and Türkiye lead by number and volume of bonds issued, driven by enabling regulatory environments and strong investor interest. In contrast, the sustainable bond market in Ghana and Kenya are still in its early stages and exhibit significant growth potential.
Market challenges remain in the form of limited project pipelines, underdeveloped reporting systems and continued investor risk aversion that may hinder growth and scalability. In addition, public sector dominance in certain sectors, particularly energy and transportation, is likely to limit further private sector investment in sustainable bonds.
While underdeveloped capital markets and fiscal constraints create further systemic challenges, the report highlights the potential of use and impact of sustainable bonds across different sectors in the countries covered. In providing a non-exhaustive list of sector companies, the report also aims to increase issuer and investor interest and encourage their participation in promoting and investing in inclusive and climate-resilient growth.
Read the full pdf report below.