Research Report: Financing Sustainable Development and International Climate Commitments through Public Markets

This report by MOBILIST, in collaboration with the Brazilian Stock Exchange (B3) and the Global Infrastructure (GI) Hub, considers how public markets can help mobilise private capital to close the climate finance gap in Brazil and other emerging markets and developing economies (EMDEs).

Climate change, pollution, and biodiversity loss may be the greatest challenges humankind has ever faced. But they are also history’s biggest investment opportunity to create a more resilient, just future. Public resources alone cannot provide the financing needed to meet this opportunity.

MOBIIST’s Financing Sustainable Development and International Climate Commitments through Public Markets report comes after MOBILIST and B3 hosted two events in Sao Paulo to bring together market participants, policymakers, and development finance specialists to accelerate capital mobilisation for sustainable development via public markets. Firstly, it analyses the unique attributes of listed stocks, bonds, funds, and other products that make them well-suited to meeting financing needs in EMDEs before discussing associated risks and mitigants.

Drawing on the discussions during these events, the report considers the specific listed structures and strategies that can make otherwise illiquid or sub-scale assets accessible to larger institutional asset allocators, focusing on innovations in Brazil and the Latin American markets. These structures and strategies have emerged from MOBILIST’s pipeline and portfolio and in the Brazilian public capital markets and include:

• Infrastructure and green asset-backed securitisation
• Guarantees for listed hard currency green instruments
• Listed investment companies and funds tailored to underlying assets most prevalent in EMDEs
• Corporate initial public offerings (IPOs) and special purpose acquisition companies (SPACs)
• Listed products offering exposure to carbon credits and nature-based solutions

The report then considers how policies and regulations can constrain or help to scale financing for sustainable development through public markets. For example, ensuring that global regulatory frameworks represent EMDE risks accurately and fairly, building deep domestic savings industries, and developing quality exchanges with efficient regulation.

In conclusion, it highlights the potential roles that official sector development finance actors can play, emphasising the opportunity to harness public markets’ unparalleled transparency to demonstrate the viability and attractiveness of EMDE assets and markets.