Sovereign green bonds in practice: effectiveness as a climate finance instrument in emerging economies

Sovereign green bonds (SGBs) enable governments to raise capital for national climate, sustainability, and green development objectives. Since the first issuance in 2016, SGBs have expanded rapidly, reflecting their growing role in global climate finance. This study empirically examines the performance and effectiveness of SGBs as a climate finance instrument in four emerging economies: Chile, Egypt, Indonesia, and Nigeria using a multi-criteria evaluation framework covering mobilization effectiveness, economic efficiency, environmental impact, and equity. Our findings indicate that SGBs can effectively mobilize capital toward renewable energy and other projects that deliver environmental benefits, such as clean transportation, water management, and ecosystem restoration. However, their associated debt burden reinforces the need for equitable allocation of proceeds to rural and low-income communities, and stronger alignment with the socio-economic and developmental priorities of emerging economies to ensure the integrity of SGBs.