Labelled Bonds for the
Net-Zero Transition in
South-East Asia:
The Way Forward
W H I T E P A P E R
J U L Y 2 0 2 4
In collaboration with ETH Zurich
Images: Getty Images
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Contents
Foreword 3
Executive summary 4
Introduction 5
The importance of emerging markets and developing
economies for net-zero transition 5
The role of labelled bonds in EMDE markets 6
1 Current challenges for the labelled bond market in EMDEs 12
Benefits of issuing labelled bonds 14
Costs for issuing labelled bonds 15
2 Solutions and roadmap for implementation 17
Actions for all stakeholders in the market 17
Prioritization and roadmap 22
3 Viet Nam case study 24
Current status of labelled bonds in Viet Nam 24
Solutions in the Viet Nam context 25
Conclusion 28
Contributors 29
Endnotes 31
Labelled Bonds for the Net-Zero Transition in South-East Asia: The Way Forward 2
Foreword
The transition towards net zero will only be
successful if enough private capital is channelled
towards emerging markets and developing
economies (EMDEs) to effectively adapt to and
mitigate the impacts of climate change. Given the
rapid adoption of debt finance and labelled bonds
(. green, social, sustainable, sustainability-linked
bonds and transition bonds) in developed markets,
these instruments now also represent a great
opportunity for EMDEs to finance their transition.
However, countries in these regions suffer from high
perceived risks and often lack awareness, financial
infrastructure and capacity around these tools,
preventing them from becoming more established.
This paper comes as a result of a project
supported by The Rockefeller Foundation and in
collaboration with ETH Zurich, with the objective
to create and engage a community of experts –
including issuers, financial intermediaries and
policy-makers – to identify solutions to promote a
favourable environment to increase the issuance
of labelled bonds. Drawing upon stakeholder
consultations and various workshops, we identified
the measures that will help alleviate the challenges
that these markets are facing. With this paper, we
hope to provide actionable insights and practical
recommendations that empower policy-makers and
other actors in the field to embrace this innovative
financial tool and drive meaningful change.
By promoting labelled bonds in EMDEs, we would
like to seize the opportunity to harness the power of
finance for good and build a more resilient, inclusive
and sustainable future in the region.
This paper is produced by the World Economic
Forum’s Giving to Amplify Earth Action (GAEA)
programme and with technical support from ETH
Zurich’s Climate Finance and Policy Group. This
was made possible with the generous support from
The Rockefeller Foundation.
Gim Huay Neo
Managing Director,
Centre for Nature and Climate,
World Economic Forum
Bjarne Steffen
Climate Finance and Policy
Group, ETH Zurich
Labelled Bonds for the Net-Zero
Transition in South-East Asia:
The Way Forward
July 2024
Labelled Bonds for the Net-Zero Transition in South-East Asia: The Way Forward 3
Executive summary
Various research shows that to reach net zero, the
world needs investment of over $3 trillion every year
from now until the end of 2025. Emerging markets
and developing economies (EMDEs) will play a
critical role in the global transition to a sustainable,
net-zero future but face notable funding gaps.
Green bonds represent a promising avenue for
directing capital towards sustainable projects,
although effective implementation requires stringent
guidelines. Despite witnessing growth in labelled
bond issuances, EMDEs (excluding China) still
hold a relatively small share of the global market
compared to developed economies, underscoring
significant untapped potential. However, challenges
persist in expanding the labelled bond market in
EMDEs, with lessons from developed economies
not always directly applicable due to differences in
local contexts, including types of issuers, industries
and market maturity levels.
This paper aims to pinpoint the primary challenges
confronting labelled bond markets in EMDEs today
and develop potential solutions to address these
challenges. The paper is developed based on
consultations and workshops with key stakeholders
from the Association of Southeast Asian Nations
(ASEAN) region or international organizations
working in the region.
To support and scale a functioning labelled bond
market in EMDEs, three critical elements must align:
an enabling market environment (comprising the
development of robust debt capital markets and
the cultivation of an ecosystem where the net-zero
transition agenda takes precedence), the priorities
of issuers and the expectations of investors.
This paper predominantly focuses on the issuer
perspective as it has been identified as one of the
areas where the most challenges persist.
For issuers to opt for labelled bonds over other
financing instruments, the total added costs of
issuing these bonds cannot be higher than the
added benefits. Based on the consultations,
several key benefits and cost buckets, along with
the associated challenges that might prevent
the benefits from increasing and the costs from
decreasing, have been identified.
Different types of stakeholders, including issuers,
investors, local policy-makers (. governments,
regulators, central banks), and the international
community (. multilateral development banks,
non-profit and standard setters), all have potential
ways to support issuers through measures aimed
at increasing issuer benefits or decreasing issuer
costs. The proposed sets of measures are outlined
as follows:
– Early engagement and close alignment
between investors and issuers.
– Provision of enabling market environment,
including the development of transition plans.
– Clear and applicable regulatory framework,
. standards alignment, introduction of
levels of “greenness” and standardized post-
issuance requirements.
– Organizational preparedness of issuers.
– Knowledge generation, including directed
knowledge-sharing, sovereign issuances
as first-mover, education support and
capacity building.
– Policies aimed at increasing investor demand
for labelled bonds through measures like
enhanced returns, reduced financial risks,
investment mandates, capital requirements,
tax incentives and credit ratings.
– Direct support for issuers, which may include
issuance grant schemes and direct issuance
support (developing frameworks for issuers).
To support different stakeholders in prioritizing
these proposed solutions, all measures have been
assessed based on their anticipated impact and
ease of implementation. Highly ranked measures
can then be treated preferentially on a potential
implementation roadmap. Such measures include
early engagement of investors, organizational
preparedness of the issuer, tax incentives, sovereign
issuances as well as direct issuance support from
the international community.
Accelerating the issuance of labelled bonds in
emerging markets and developing economies
involves charting solutions using insights from
stakeholders in the ASEAN region.
Labelled Bonds for the Net-Zero Transition in South-East Asia: The Way Forward 4
Introduction
Labelled bonds are a key instrument to
finance the transition to net-zero in EMDEs.
To avoid the worst effects of climate change, a swift
global transition of energy systems – meaning a
shift away from fossil fuels to renewable energy –
is required to reach net zero by the middle of
the Emerging markets and developing
economies (EMDEs) will play a decisive role in
this transition (China is excluded from this report’s
analysis of EMDEs due to its unique role in labelled
bonds, which significantly differs from other EMDEs.
All data points and graphs related to EMDEs do
not include China.) Not only are EMDEs home to
two-thirds of the global population and have the
largest population growth projection, but as their
economies develop and standards of living rise, their
demand for energy, infrastructure and consumer
goods will also increase significantly. This will
unequivocally lead to a substantial surge in carbon
emissions if they follow the same high-carbon
growth pathway that developed economies charted
in the Projections over the next two decades
indicate a 5 gigatonne increase in greenhouse gas
(GHG) emissions in EMDEs, compared to a two
gigatonne reduction in advanced
Fortunately, thanks to technological advancements
in clean energy, especially for renewables, there
are low-carbon alternatives for the generation of
energy for many However, in many
cases, clean technologies are more capital-intensive
than established fossil fuel-based technologies,
thereby requiring high upfront As a
consequence, the risk structure in some EMDEs
creates challenges for clean energy investments
despite spectacular cost reductions of low-carbon
technologies in the ,7
Depending on the scenario, annual spending on
clean energy in these economies needs to reach
between $600 billion (sustainable development
scenario) and $1 trillion (net zero by 2050 scenario)
by 2030, although these figures do not account
for necessary additional investments in sustainable
industry, transport, land-use and adaptation
Currently only holding 10% of global
wealth, EMDEs themselves are likely unable to
finance these sums and, therefore, rely on the inflow
of foreign
Current financial flows to EMDEs are still limited. Not
only are international climate finance transfers falling
short of the sums committed,10 but private capital
market investments have also been stagnating, with
foreign direct investments (including both equity and
debt) for renewables at a four-year low in
In addition, the economic environment is becoming
more challenging, especially in EMDEs. In total,
80% of the $10 trillion global debt burden increase
in 2021 was added in EMDEs, taking the total debt
burden of these countries to almost $100 trillion,
or one-third of the global debt At the
same time, the window of all-time-low borrowing
rates appears to have closed. Rising interest
rates in response to global inflationary pressures
and the expansion of credit spreads owing to
heightened geopolitical risks have had a dampening
effect on debt capital markets. EMDE sovereign
issuances in January 2022 were down 40% year
on Finally, higher prices for fossil fuels and
key agricultural commodities sparked by the war
in Ukraine have contributed to tightening financial
conditions in recent years, and although retreats
were observed in 2023, they are still at much tighter
levels than they were in early
It is therefore crucial that the development and
scaling of relevant financing instruments are
supported for the sustainable transition of EMDEs.
While grants and concessional finance, especially
from multilateral development banks (MDBs),15 are
critical sources of catalytic funding for the low-
carbon energy transition, they must be reinforced
by larger pools of private capital to support scale
and speed. To achieve net zero by 2050, the
International Energy Agency (IEA) estimates that
over 70% of clean energy investment in EMDEs
must be financed by private sources, with nearly
60% of this financed by To scale such
debt finance, exchange-traded securities, such as
corporate and government bonds, are key. Not
only can bond markets contribute the necessary
scale (in 2022, global bond issuances stood at
around $59 trillion17) the debt capital market also
allows access to a wide and international investor
base, especially when issuing debt for the purpose
of sustainable development. Further, long-term
bonds, especially, enable a better investment
horizon match with the investment needs for net-
zero transition. These needs are typically heavy in
upfront capital investments18 and have relatively
long payback
The importance of emerging markets and
developing economies for net-zero transition
While grants
and concessional
finance are critical
sources of funding,
they must be
reinforced by larger
pools of private
capital to support
scale and speed.
Labelled Bonds for the Net-Zero Transition in South-East Asia: The Way Forward 5
The instruments that can combine the benefits
of debt financing via bonds with the possibility of
directly supporting sustainability-related projects
and causes are so-called labelled bonds (with green
bonds as the most prominent subtype). There have
been debates on these bonds’ effectiveness in
increasing the share of capital dedicated to low-
carbon investments, especially due to questions
of additionality when green bonds are used for
refinancing ,21 However, besides merely
providing capital, labelled bonds have been shown
to increase transparency and accountability
and often require issuers to raise their “green
ambitions” both in terms of their projects and their
organizations’ operations in Within this
paper, the current and future potential role, as well
as challenges and key solutions for the further
deployment of such labelled bonds in EMDEs, is
explored. In doing so, the paper places a specific
focus on the Association of Southeast Asian
Nations (ASEAN) region. Key insights – especially
on challenges and potential solutions – are based
on workshops and consultations with relevant
stakeholders in the region and internationally.
The role of labelled bonds in EMDE markets
Different types of labelled bonds
Following the definition of the Climate Bonds
Initiative (CBI), 23 labelled bonds can be classified
into two categories: First, use of proceeds (UoP)
bonds, which require the raised capital only to be
used for specific and pre-defined projects, and,
second, impact bonds (IB) that are tied to specific
environmental, social and governance (ESG)
targets, although their proceeds can be used by
the issuer for any purpose.
Use of proceeds bonds
– Green bonds: Proceeds generated from green
bond issuances are earmarked for investments
in projects that are expected to have positive
environmental benefits. These projects typically
focus on areas such as renewable energy and
energy efficiency. Green bonds are the most
prominent type of bond to date, and they also
include subcategories such as blue bonds
(. proceeds are dedicated to the preservation
and sustainable management of marine and
aquatic systems).
– Social bonds: UoP is designated explicitly
for the funding of social initiatives, including
but not limited to health, employment and
gender equality.
– Sustainability bonds: When a bond finances a
combination of both green and social projects
and activities, it will be categorized as a
sustainability bond.
Labelled Bonds for the Net-Zero Transition in South-East Asia: The Way Forward 6
Use of proceeds bonds Impact bonds
SLB bonds
transition bonds
$ trillion
$682
billion
$204 billion
$12 billion
green bonds sustainability
bonds
$654
billion
social
bonds
Types of labelled bonds and the corresponding sizes of cumulative issuances by 2022F I G U R E 1
Source: Climate Bond Initiative.
Current status in EMDEs
and ASEAN
While the labelled bond market started to scale up
in developed markets around 2014, issuances in the
EMDEs only started growing substantially in 2017
(see Figure 2). Although one of the first issuances
from EMDEs was from ASEAN24 (. an issuance
by the Asian Development Bank, headquartered in
the Philippines), the relative importance of the region
has substantially decreased since then. To date,
cumulative labelled bonds from ASEAN only make
up 23% of total issuances in EMDEs and 2% globally.
Impact bonds
– Sustainability-linked bonds (SLBs): While
the proceeds of these bonds can be used
for general purposes, their financing (typically
coupons, but any financial incentive could be
used) is tied to the achievement of pre-defined
and sustainability-/ESG-related key performance
indicators (KPIs). This means that, based on the
design of the SLB, coupons will typically increase
or decrease depending on whether the issuer
reaches its sustainability targets or not. Therefore,
for some types of bonds, the coupon will step up
if targets are not met, while others have a step-
down mechanism if targets are met. There are
even some types that do not change the coupon
rate but require the issuer to make mandatory
payments to third parties (. offsets) if targets
cannot be reached. Although not yet prevalent,
some issuers have also been seen to issue green
SLBs, combining both the mechanics of impact
bonds with the use of capital for green projects.
Other labelled bonds
– Transition bonds: This relatively new category
encompasses the financing of projects that are
not necessarily low- or zero-emissions projects
but might be required to transition to net zero.
This means they are used for decarbonization
activities that do not qualify as “green” and are
typically issued within hard-to-abate and highly
polluting sectors such as mining and aviation.
Currently there is no clear alignment on the
market yet, if transition bonds should be seen
as their own category or a subcategory of green
bonds. Further, some standard-setters see them
as UoP type bonds, while others qualify them as
general-purpose bonds.
In terms of cumulative issuance, the labelled bond
market is dominated by green bonds (see Figure 1),
and although the other types of bonds are slowly
gaining speed, in 2022, green bonds still accounted
for 57% of new issuance values globally.
Labelled Bonds for the Net-Zero Transition in South-East Asia: The Way Forward 7
Cumulative labelled bond issuance ($, billions) in developed economies, China and EMDEs
(following IMF definition) from 2006 to 2022 as well as the relative importance of issuances
from ASEAN vs other EMDEs of all EMDE issuances as of 2010 (first issuances in EMDEs)
F I G U R E 2
0
0%
100%
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
3
,1
9
4
2
,4
0
9
1
,3
7
9
8
1
3
4
8
9
3
1
6
3
5
7
3
2
2
2
4
4
2
4
7
1
5
9
1
2
4
1
2
1
7
78
5
5
6
3
7
1
7
4
1
0
6
5
8
2
6
1
3
98 1 1 1 16433 2
9
6612 4
7
500
1,000
1,500
2,000
2,500
3,000
3,500
Cumulative absolute issuances in $, billions
Cumulative absolute
issuances in $, billions
from EMDEs and share
of ASEAN vs other EMDE
of these issuances
2010
64%
1 1 1 1 2 6 16 37 47 77 124 247 322
36%
64%
36%
62%
38%
40%
60%
26%
74%
18%
82%
16%
84%
12%
88%
19%
81%
22%
78%
30%
70%
20%
80%
23%
77%
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Developed countries China EDMEs
EMDE ASEAN
Other EDME
Note: Numbers include all currencies and labels (including self-labelled).
Source: ETH Zurich, Refinitiv.
The striking underrepresentation of ASEAN countries
persists when looking at the relative size of the
labelled bond market (in relation to general issuances)
in different regions and countries (see Figure 3).
On average, the share of labelled bonds in the total
bond market stood at % for ASEAN countries
between 2020 and 2022. At the same time, some
other EMDEs reached shares of over 60%.
Part of the reason for a relative underrepresentation
of ASEAN countries among the top labelled
issuance share countries could lie in differences in
issuer types and industries. In terms of issuer types
(see Figure 4), it can be observed that in EMDEs,
multilateral issuers have played an especially
important role – and still do today in ASEAN.
Although these issuers were also among the first
to issue labelled bonds in developed economies,
they were overtaken by corporate issuers early
on. In ASEAN, however, multilateral organizations
were, for a long time, the only type of issuers and
still made up 30% of new issuances in 2020-
2022. While sovereign issuers in EMDEs, as well
as ASEAN specifically, make up around 40%, the
share of corporate issuers is around 20 percentage
points lower in ASEAN, with multilateral issuers
picking up this share of issuances. However,
going forward, corporates are also urgently
needed when mobilizing private capital towards
the net-zero transition.
Labelled Bonds for the Net-Zero Transition in South-East Asia: The Way Forward 8
2020-2022 total bond issuances by country and the share of labelled bonds of that totalF I G U R E 3
Developed countries Other EMDE ASEAN Averages
64%
0% 10% 20% 30% 40% 50% 60% 70%
63%
63%
53%
51%
49%
40%
36%
34%
27%
24%
19%
17%
15%
15%
9%
8%
%
7%
8%
7%
6%
%
4%
6%
3%
3%
%
2%
3%
1%
Togo ($6 billion)
Country (total issuance 2020-22)
Andorra ($2 billion)
Mali ($3 billion)
Guinea-Bissau ($1 billion)
Niger ($3 billion)
Burkina Faso ($4 billion)
Laos ($1 billion)
Benin ($6 billion)
Senegal ($7 billion)
Honduras ($10 billion)
Georgia ($6 billion)
Belgium ($923 billion)
Liechtenstein ($4 billion)
Latvia ($6 billion)
Iceland ($19 billion)
Virgin Islands (British) ($142 billion)
Slovenia ($21 billion)
Average top 20 EMDEs
Norway ($481 billion)
New Zealand ($117 billion)
Sweden ($813 billion)
Average top 20 developed countries
Philippines ($535 billion)
Indonesia ($317 billion)
Malaysia ($257 billion)
Average ASEAN
Thailand ($734 billion)
Viet Nam ($108 billion)
0%Myanmar ($6 billion)
0%Cambodia ($1 billion)
0%Brunei ($4 billion)
Note: Shown are the top 10 developed countries and top 10 EMDEs, all ASEAN countries and averages for the top 20 developed countries,
the top 20 EMDEs and ASEAN.
Source: ETH Zurich, Refinitiv.
Labelled Bonds for the Net-Zero Transition in South-East Asia: The Way Forward 9
Multilateral Sovereign Corporate
0%
2010 2012 2014 2016 2018 2020 2022 2010 2012 2014 2016 2018 2020 2022 2010 2012 2014 2016 2018 2020 2022
100%
50%
0%
100%
50%
0%
100%
50%
Developed countries
Cumulative relative issuances
EMDEs
Cumulative relative issuances
ASEAN
Cumulative relative issuances
100%
87%
10%
3%
41%
14%
45%
100%
41%
34%
25%
29%
18%
53%
When taking a closer look at the industries of
corporate issuers (see Figure 5), the clear dominance
of “financials” and “utilities” can be observed
across all types of countries. It is important to note,
however, that it is not only banks and insurers
that are included in the financials industry but also
investment management corporations (. vehicles
specifically founded for a project). What can also be
observed is that the relative importance of several
other industries may vary. While “real estate” is
an important source of labelled bond issuance in
developed countries, it is less relevant in EMDEs.
There, however, issuances from “materials”
companies have played a significant role. In ASEAN,
“transport” is the third most relevant issuer industry.
Further, issuances related to “agriculture” are more
prevalent in this region, whereas developed countries
have seen very few, if any, issuances in that sector.
Share of cumulative issuances until 2022 by industry for corporate issuers.
Share of labelled bonds in total bond issuances in 2022 by country for
developed countries vs EMDEs and ASEAN
F I G U R E 5
0% 10% 20% 30% 40% 50%
Share of issuances by industry
60% 70% 80% 90% 100%
Financials Services (consumer, health, education) Consumer goods Utilities Renewable energy Energy – fossil fuels
Real estate Transport Technology Industrials Materials Agriculture
Developed
countries
3% 4%4%4%5%5%45% 10%19%
1% 1%
EMDEs 37% 6% 31% 7% 3% 9%
1%2% 2% 1%
ASEAN 50% 23%3% 5% 11%
1% 2%
2%
2%2%
Note: The EMDEs graph also includes ASEAN countries.
Source: ETH Zurich, Refinitiv.
Share of labelled bond issuances by type of issuer. Multilateral (. MDBs),
sovereign (. governments, agencies, municipalities, treasuries and central banks),
and corporate issuers for developed countries vs EMDEs and ASEAN specifically
F I G U R E 4
Note: The EMDEs graph also includes ASEAN countries.
Source: ETH Zurich, Refinitiv.
Labelled Bonds for the Net-Zero Transition in South-East Asia: The Way Forward 10
Expected potential of
labelled bonds
As can be inferred from historical issuances of
labelled bonds, there are distinct differences in the
financing needs of issuers in developed economies
and those in developing markets. Thus, the
potential of labelled bonds in emerging markets is
inherently tied to the unique contextual challenges
and opportunities that these markets present, which
can vary even between different EMDEs. Taking
the ASEAN region as an example, countries exhibit
diverse needs for their development and the pursuit of
net-zero transition. For instance, while both Viet Nam
and Thailand are seen to boast substantial potential
for green bonds to fuel investments in renewable
energy projects, the former seems to already be a
step ahead in realizing this potential. Meanwhile,
Thailand is still lacking incentives to generate
renewable energy projects at scale, despite robust
investor appetite for bonds covering such projects.
Yet, from stakeholder consultations, clean transport
emerged as an interesting sector for Thailand’s
green bond potential. Conversely, countries such as
Indonesia, the Philippines and Malaysia still heavily
rely on coal, making transition financing a paramount
necessity to steer them towards cleaner energy
sources and fulfil their commitments to climate
action. The contrasting landscapes within developing
economies underline the importance of tailoring
labelled bond strategies to address the unique needs
and opportunities presented by each region and
country. Thus, tangible, country-specific development
plans need to be established to identify the
respective financing needs and corresponding
types of labelled bonds required.
Due to the varied needs, estimating an overall
potential is difficult. However, a simple back-of-
the-envelope calculation can provide a directional
idea of how much additional potential for the
labelled bond market in EMDEs and ASEAN
specifically could be expected. If EDMEs achieve
the same proportion of labelled bonds within their
total bond market as the average seen in the top
20 developed economies, they could experience
a $353 billion increase in labelled bond volume.
This includes an estimated $142 billion in green
bonds, assuming they maintain the current average
where green bonds constitute 40% of all labelled
bond issuances. For ASEAN only, the potential
increase in labelled bond issuances would amount
to around $19 billion, including $8 billion in green
bonds – not accounting for any growth in the
general bond market.
High-level calculation of further potential in labelled and green bond issuances in
EMDEs and ASEAN
TA B L E 1
Size of bond market
(in $, billions)
Potential increase in
labelled bond volume
(in $, billions)
Potential increase
in green bond volume
(in $, billions)
EMDE 7,509 355 142
ASEAN 644 19 8
It is very difficult to quantify the overall positive
effect on the climate from these investment
sums, especially, as previously mentioned, due to
questions of additionality and a lack of consistent
forms of impact reporting. Further, not all labelled
bonds are of equal quality. Yet, it can be argued that
through the existence of such financing instruments
that provide better and potentially cheaper financing
to green issuers, additional capital is freed up
and potentially even more green projects can be
realized. Labelled bonds are often associated
with additional positive impacts on biodiversity,
electrification, standards of living and Lastly,
another key advantage of labelled bonds as a
financial instrument lies in their capacity to bolster
accountability and transparency. This, in turn, can
increase awareness and heighten expectations
among stakeholders in the market, thereby even
further accelerating the net-zero transition. All things
considered, it is important that, when supporting
labelled bonds, it is ensured that measures promote
bonds with high quality and transparency.
The potential of
labelled bonds in
emerging markets
is inherently tied
to the unique
contextual
challenges and
opportunities that
these markets
present.
Labelled Bonds for the Net-Zero Transition in South-East Asia: The Way Forward 11
Current challenges
for the labelled bond
market in EMDEs
1
Entities considering the issuance
of a labelled bond need to weigh
added benefits against added costs.
To support and also scale a functioning labelled bond market in EMDEs, three
critical elements must harmonize: namely an enabling market environment,
the priorities of issuers and the expectations of investors (see Figure 6).
To support labelled bonds in EMDEs, the following three elements are required:
an enabling (market) environment as a foundation and issuers and investors
that see a benefit in labelled bonds over other financing instruments
F I G U R E 6
Enabling market environment
International community
Local policy-makers
Issuers
Investors
Focus
of this
report
The foundation of an enabling market environment
encompasses both the financial infrastructure that
underpins a functional debt capital market and the
cultivation of an ecosystem in which the net-zero
transition agenda is a priority. In many EMDEs,
the domestic financial markets, including public
debt markets, are not fully mature. These markets
often grapple with low liquidity and limited depth,
leading to volatility and high risk for
Accordingly, the participation of retail and even
institutional investors may remain modest, and
with that, capital-raising costs are elevated. This
means that before any specific support to scale
labelled bond issuances can be effective, the local
bond markets, in general, need to reach a certain
level of maturity to offer attractive investment
opportunities. While there are some measures that
can be taken by the international community to
support this development, 27 a favourable financial
market environment is typically influenced by
economic stability and enabling policy contexts
such as appropriate legislative requirements as
well as taxation and accounting frameworks 28 –
all elements mostly driven by local governments
and regulators.
The second aspect of an enabling environment is
the responsibility of local governments, namely in
cultivating an atmosphere for the net-zero transition
agenda to hold paramount significance. Many
Labelled Bonds for the Net-Zero Transition in South-East Asia: The Way Forward 12
emerging economies are in the early stages of
prioritizing the net-zero transition and developing
corresponding incentive frameworks, such as
crafting transition plans and implementing carbon
pricing mechanisms. Yet such actions are imperative
to incentivize both issuers and investors to embrace
sustainable practices, a goal that labelled bonds can
support as a catalytic instrument.
Once favourable market conditions are established,
it is vital that both issuers and investors perceive
the advantages of participating in the labelled
bond market. Based on consultations with key
stakeholders from the ASEAN region, challenges
both from an investor and issuer perspective
were identified. In terms of investors, a substantial
portion of demand for labelled bonds currently
emanates from international investors, given the
incentive structures and regulatory requirements in
their home This underscores the need
to activate local investors, through incentives and
mandates, for example. Further, there is still a need
to educate and spread awareness about labelled
bonds among certain investors who have not
yet engaged in the labelled bond market. Finally,
in several cases, financing terms and structures
offered in EMDE issuances do not always match the
investment appetite of international investors and
better coordination would be required.
For issuers, challenges range from even being
aware of the different potential types of labelled
bonds available to the identification of attractive
opportunities for such issuances, and the actual
issuance and post-issuance processes, which are
often costly. So far, however, previous research and
reports have often not focused sufficiently on the
challenges faced by issuers and how they can be
supported to overcome these challenges. Therefore,
this paper primarily centres on the issuer perspective,
aiming to develop solutions that best support and
facilitate the core benefits of issuing labelled bonds
while reducing added costs. By doing so, other
enabling market environment aspects, including
investor demand, can indirectly be addressed as
well, as they will increase issuer
The issuer perspective
Issuers require compelling benefits, encompassing
both financial and non-financial rewards, to
outweigh the additional costs associated with
issuing labelled bonds. Only then is it an interesting
alternative to other capital sources. However,
several challenges currently hinder many issuers
from realizing the net benefits of labelled bonds,
thereby slowing down their widespread adoption
as a sustainable financing solution. While different
benefit and cost elements do not necessarily have
the same relevance for different issuers, a high-
level overview of the benefit and cost types most
prominently mentioned throughout the stakeholder
consultations can be found in Figure 7 and are
discussed in detail in sections and .
Monetary and non-monetary benefits and costs in the issuance of labelled
versus conventional bonds have been identified
F I G U R E 7
Benefits for issuer
vs
Baseline vs
vanilla bond
Direct
monetary
Indirect/non-
monetary
Direct
monetary
upfront
Direct
monetary
continuous
Indirect/non-
monetary
Costs for issuer
Total
benefits
Greenium
Reputation
Certification
External
review
Framework
(consulting
fees)
Uncertainty
Auditing
Reporting
Coordination
Sustainability
strategy
Investor
access
Governance
Total
costs
?
Note: For labelled bonds to be an attractive alternative, total added benefits need to at least outweigh added costs.
The sizes of benefits and cost buckets are indicative.
Source: ETH Zurich.
Labelled Bonds for the Net-Zero Transition in South-East Asia: The Way Forward 13
For issuers, using labelled bonds can come with
various benefits, ranging from potential monetary
savings in the cost of capital to non-monetary
aspects such as an improved reputation. Monetary
incentives carry heightened importance for
sovereign issuers, given that most of their spending,
and thus their financing, still needs to cover some
type of green, social or transition elements. Thus,
they will more likely seek financing via labelled
bonds if a financial benefit can be identified. In
contrast, non-monetary incentives typically hold
significant importance for issuers especially from the
private sector in the renewable energy industry as
well as fossil fuel and incumbent energy companies
(for example issuing transition bonds or SLBs).
These sectors often prioritize benefits such as
reputation enhancement, aligning with sustainability
goals, and accessing a broader investor base (see
section “Indirect or non-monetary benefits”).
Direct monetary benefits
“Greenium”
A “greenium” is often seen as the core financial
benefit of labelled bonds. Greenium refers to the
price premium or lower yield that investors may
be willing to accept for labelled bonds. Although
they are assumed to be the premium attributed to
these investments’ perceived positive environmental
and social impact, greeniums have likely been
primarily driven by supply and demand dynamics.
Demand has, for a long time, outweighed supply,
sometimes resulting in oversubscriptions as high
as 20 times the available amount. However, more
recent analyses have shown that with growing
supply that meets this demand, greeniums have
been Anecdotal evidence suggests
that many issuers have entered into the issuance
process expecting better financing terms and are
disappointed to find only marginal greeniums, if
at all. With many different parameters typically
influencing the price of an issuance, greeniums
are not guaranteed.
At the same time, it has been shown that, when
greeniums exist, they tend to be larger for more
credible issuances, measured both by the issuer’s
credibility as well as the level of certification
and external reviews that a labelled bond has
This suggests that investors are willing
to pay a larger premium for bonds they perceive as
less risky in terms of greenwashing, and this can
have substantial implications for EMDEs. In these
economies, certification standards and taxonomies
may not fully align with those in developed markets,
leading to differences in understanding and
assessment. This is because international standards
and regulations are not always easily applicable in
EMDEs. For example, there are many smaller and
medium enterprises in these regions that do not
have the capacity to go through complex and costly
validation processes, such as having their targets
approved by the science-based target initiative.
Indirect or non-monetary benefits
Reputation
Issuing a labelled bond can carry a reputational
benefit in signalling a company’s commitment
to sustainability, including its efforts to develop
a sustainability strategy. Especially for issuers
in the renewable energy industry, this has been
referenced as a key motivational factor for issuing
labelled bonds (. to prove they are “best-in-
class”). For these companies, labelled bonds help
to raise awareness within developing markets
and establish their presence as best-in-class
sustainable entities. However, it is important to
note that renewable energy industry issuers may
also require support, education and guidance
to navigate the complexities of labelled bond
issuance, especially when they are just beginning
their journey of issuing such financial instruments.
Investor access
Labelled bonds offer an issuer the distinct
advantage of gaining access to a more diverse
set of investors (both in terms of geography and
investor types). This benefit has been particularly
mentioned by issuers from fossil fuel or other
carbon-intensive industries, as they are expecting
to encounter significant challenges to secure
financing at reasonable prices in the longer term.
While there is a considerable debate ongoing as to
whether industries should still receive investments
at all, if they do, it should be ensured that such
financing is clearly tied to rigorous decarbonization
requirements, which can be achieved via labelled
bonds (. SLBs with ambitious emission reduction
targets, transition bonds for projects with significant
emission reduction potential). This, however,
requires clear standards and controls to prevent
misuse of the label, as this could, in turn, reduce
the market’s trust in these instruments.
Besides labelled bonds providing issuers with
access to new investors, they also support better
access to a broader set of investment types, such
as different tranches, offering flexibility in terms of
maturity and other parameters, which may not be
as easily possible to do in the regular bond market.
Governance
The issuance of labelled bonds often necessitates
the establishment of a robust sustainability strategy
by the issuer. While this can be seen as an initial
Benefits of issuing labelled bonds
Labelled bonds
offer an issuer the
distinct advantage
of gaining access
to a more diverse
set of investors
(both in terms of
geography and
investor types).
Labelled Bonds for the Net-Zero Transition in South-East Asia: The Way Forward 14
challenge, it also offers benefits in terms of
improving transparency and governance within the
issuer’s operations. Developing a comprehensive
sustainability strategy compels the issuer to assess
its environmental and social impacts, set clear
sustainability goals and implement measures to
achieve them. This process not only aligns the
issuer with international sustainability standards
but also ensures greater transparency in reporting,
enabling investors and stakeholders to gain
deeper insights into the issuer’s commitment to
responsible practices. In this way, the governance
aspect of labelled bond issuance not only serves
to secure funding for sustainable initiatives but
also elevates the issuer’s overall standards of
transparency and accountability.
The costs associated with issuing labelled bonds
can be broken down into monetary costs that
directly necessitate paying an external provider
for their services – both on a one-off basis during
the issuance process and as costs that might
recur throughout the duration of the bond. At the
same time, non-monetary costs will be incurred,
especially in terms of the time committed by
internal resources to additional tasks that are
required due to the issuance.
Direct monetary costs – upfront
External consulting to develop a labelled
bond framework
One of the primary costs associated with labelled
bond issuance (especially in EMDEs) is developing
a comprehensive labelled bond framework, as it
typically requires hiring external consultants. While
some issuers also opt to develop it themselves, can
access a grant, or have it taken over by a partner,
many consultation stakeholders reported that
issuers were making use of such external consulting
services. Based on these accounts from several
ASEAN countries, the costs associated with such
services can range from $30,000 to $60,000. The
complexities of the existing taxonomies and lack of
clarity surrounding how international requirements
translate to the EMDE context add to the challenge
of issuers trying to independently navigate the
issuance process. In addition, given the relatively
nascent stage of the labelled bond markets in many
EMDEs, there is limited experience and scale in the
region, and thus only a few local service providers,
which necessitates international consultancy support.
Also, international providers are sometimes seen
as more credible. However, as the market scales
and matures, it is anticipated that local expertise
and credibility will be built up, reducing dependence
on costly external consultants from abroad. To
facilitate the growth of such local ecosystems,
knowledge-sharing between market participants
is essential. Unfortunately, several accounts have
indicated that knowledge and experience sharing
can be limited, even though initial issuances have
taken place. Thus, measures to reduce disparities –
and with that, the complexity – of taxonomies and
standards to support the initial scaling of the market
and encourage effective knowledge dissemination
and collaboration are expected to support the
simplification of the processes and the reduction of
costs over time in EMDEs.
External review
The role of undergoing an independent (.
second-party opinion provider, assurance or
certification providers) review and verification
process (costing between $15,000 and $50,000)
in the labelled bond market remains essential for
ensuring transparency and credibility. However, a
challenge that persists is the existence of a large
set of different standards from multiple standard-
setters, countries or regions that may govern
these opinions. There are notable disparities in
the qualities of second-party opinion providers
(SPOs) that might deter the effectiveness and
trustworthiness of such reviews. It would, therefore,
be important to further standardize and develop
well-defined requirements for the external review
process for all types of labelled bonds – and this is
not just from the perspective of issuers in developed
economies. The establishment of a consistent set of
criteria and expectations would not only streamline
the evaluation process but also provide a level
playing field for issuers and investors, ultimately
bolstering the reliability and comparability of these
opinions within the labelled bond market.
Certification
The final upfront direct cost associated with
some labelled bonds is the official certification of
a labelled bond based on the use of proceeds,
adherence to specific standards and, in the case
of SLBs, the level of their performance. However,
it is important to note that only a small share
of labelled bonds undergo official certification.
While the most significant and widely recognized
certification for green bonds is the CBI certification,
some issuers opt for alternative approaches. A
large share of bonds is reported as “CBI-aligned”,
meaning that they align with the CBI’s criteria but
do not go through the formal certification process.
Additionally, certain issuers choose self-labelling,
wherein they independently assess and declare
their bonds as green without third-party certification.
The decision whether to pursue certification often
hinges on several factors, including the issuer’s
Costs for issuing labelled bonds
Labelled Bonds for the Net-Zero Transition in South-East Asia: The Way Forward 15
resources and priorities and the perceived benefits
of certification – arguably even more pronounced
for EMDE issuers than for issuers in other countries.
However, although certification is an additional layer
to provide transparency and credibility, it may not
be currently feasible for every issuer.
Direct monetary costs –
continuous
Auditing
In terms of continuous direct costs associated with
labelled bonds, one component is the auditing
costs incurred for external reviews post-issuance.
The need for and the type of these audits can vary
depending on the type of verification chosen by
issuers. While some issuers opt for voluntary audits,
issuers with CBI-certified bonds must submit their
annual reports for external review. The auditing
process serves as an additional layer of transparency
and assurance for investors, providing them with
confidence in the bond’s alignment with sustainability
criteria. However, a key concern frequently
associated with such auditing costs is the uncertainty
surrounding them. This uncertainty can take various
forms, including concerns about potential changes
in requirements that may become more stringent
and costly over time and the prospect of additional
auditing requirements being introduced by standard-
setters at a later stage, even if they were not initially
mandated. This underscores the importance of
clear and consistent standards and requirements
within the labelled bond market to mitigate issuer
apprehensions and enhance investor trust.
Indirect or non-monetary costs
Sustainability strategy
Issuing labelled bonds often entails a somewhat
underestimated prerequisite, which is the
development of a comprehensive sustainability
strategy. While this is not a specified requirement by
standard-setters and is therefore often overlooked,
the steps that need to be taken throughout the
issuance process of labelled bond typically impose
(or are at least significantly facilitated by) the
integration of ESG and sustainability principles
into the organization’s operations in one way or
another. This may involve a thorough revision of the
issuer’s projects in terms of their climate and social
impacts, emission tracking or ESG target setting
(especially for SLBs). Such an integration represents
a significant undertaking that requires not only
added work but also effective change management
to ensure alignment with sustainability goals.
Moreover, the bond issuance process itself involves
numerous steps that require resources and time,
from initiating the decision to issue such a bond
to creating the framework (if not outsourced).
This complexity can pose challenges, especially
for first-time issuers. Consequently, there is
internal demand for knowledge and expertise,
often prompting issuers to allocate additional
resources and, in some cases, establish dedicated
sustainability or ESG teams.
However, a persistent issue arises from the scarcity
of expertise in ESG and labelled bond issuance in
EMDEs. In many instances, organizations grapple
with a shortage of talent and knowledge related to
ESG practices, which extends to understanding
how to interact effectively with the international
investor and labelled bond community. These
knowledge gaps need to be bridged and the
necessary capabilities built to successfully and
impactfully issue labelled bonds, particularly in
regions where such expertise is underdeveloped.
Coordination
Efficient coordination represents an additional
challenge for labelled bond issuers, necessitating
extra effort and resources. Internally aligning
various teams and stakeholders, especially during
the development of sustainability or transition
strategies, can be a complex endeavour. Further,
external coordination with diverse and often new
service providers is required. Building effective
relationships and ensuring seamless collaboration
with external parties, such as verification agencies
and auditors, becomes essential for ensuring
compliance with the necessary standards.
Reporting
Preparations for regular reporting (both for the
auditing process as well as general impact/
allocation reports expected by the international
markets) represent another cost factor for labelled
bond issuers, stemming from the increased need
for resources. Just as uncertainty surrounds
auditing costs, the potential that reporting
requirements might be significantly modified over
time poses an added challenge. Issuers may find
themselves in the unknown regarding the internal
efforts and resources required to meet evolving
reporting standards.
Issuing labelled
bonds often entails
a somewhat
underestimated
prerequisite, which
is the development
of a comprehensive
sustainability
strategy.
Labelled Bonds for the Net-Zero Transition in South-East Asia: The Way Forward 16
Solutions and roadmap
for implementation
2
There are 19 measures to be implemented
across the ecosystem to support the
issuance of labelled bonds in ASEAN.
Based on the same consultations conducted
with key stakeholders in the labelled bond market
in ASEAN, a set of potential solutions has been
developed to better support issuers based on the
insights from the previous section. Their primary aim
is to either increase the benefits or decrease the
costs of labelled bonds for issuers. In the first step,
solutions are described and grouped by four types
of stakeholders, namely issuers, investors, local
policy-makers and the international community (.
MDBs, non-profits, standard-setters, SPOs, rating
agencies, international regulations). In the second
step, these solutions are prioritized based on their
ease of implementation as well as their impact. This
assessment is then used to propose a roadmap for
the support of labelled bonds in the ASEAN region
specifically, albeit with the expectation that key
elements could also apply to EMDEs more broadly.
Issuers
Solutions aimed at increasing issuer benefits
1 Close alignment with investors: To increase
the benefits for issuers in the labelled bond
market, it can help to establish closer and early
alignment with investors throughout the issuing
process. By actively involving investors from the
outset, issuers can gain valuable insights into some
specific expectations regarding the types of
labelled bonds and bond characteristics they are
seeking. While there are instances of sustainable
projects requiring funding that cannot be easily
made “bankable” to match the requirements of the
current financial system (a challenge that needs to
be tackled by a different set of solutions), there are
also projects that can be an attractive investment
opportunity, when structured the right way. In
such cases, early collaboration will not only allow
issuers to make certain tweaks to their offerings
to better meet investor demand but also build
trust in the market. When investors are included
in the process, they are able to understand the
issuer’s commitment to sustainability and the
quality of the labelled bonds being offered. This
alignment and transparency can help mitigate
unintended “greenwashing” and ensure robust
demand for issuances.
Solutions aimed at decreasing issuer costs
2 Organizational preparedness: An element
that can unexpectedly drive up costs for the
issuers of labelled bonds is the absence of a solid
sustainability strategy, such as including a
dedicated department focusing on sustainability
and ESG matters. The bond issuance process can
become cumbersome and protracted without
groundwork on sustainability targets and
operations. This is particularly true when top
management is not fully engaged, as the
commitment of key decision-makers plays a pivotal
role in the success of sustainability initiatives.
Therefore, ensuring that an organization has its
“house in order” and is properly prepared is a
relevant enabling factor for cost reductions to an
issuer before embarking on its labelled bond
issuance journey. This preparation includes
securing C-suite-level support, establishing
streamlined operations and having a clear strategy
and reporting mechanisms in place. Having a clear
long-term strategy will also help in developing a
solid pipeline of relevant and truly sustainable
projects, meaning potential labelled bond
frameworks can be developed very stringently with
a long-term vision and, accordingly, will not need
to be redesigned for each potential new issuance.
Additionally, a stringent and solid framework can
positively impact an issuer’s benefits in terms of
potentially increased greeniums.
Actions for all stakeholders in the market
Labelled Bonds for the Net-Zero Transition in South-East Asia: The Way Forward 17
Investors
Solutions aimed at increasing issuer benefits
and decreasing issuer costs
3 Early engagement: Besides providing
capital, investors can play an important role
in the labelled bond market by actively engaging
with issuers. This support includes providing
valuable insights to issuers, such as regarding what
types or structures of bonds are most appealing to
the investor community. This can be valuable as
bond markets have the potential to suffer from
asymmetric information, where investors and
underwriters have a better understanding of the
market than issuers. While overcoming such
asymmetries requires additional structures to
support the issuers in understanding the market,
with direct and ongoing engagement with potential
issuers, larger investors can help issuers align their
offerings with market preferences, thereby
increasing the likelihood of a successful issuance.
Moreover, investors can disclose their willingness
to pay for the additional effort required for the
issuance of labelled bonds. In discussions with
market participants, it has become apparent that
while the premium for labelled bonds has seen a
decreasing trend, many investors still recognize and
appreciate the extra work and diligence required
for these issuances. They are willing to pay for the
added value of labelled bonds that align with their
sustainability objectives. Investors could potentially
even start more clearly differentiating the premiums
they are willing to pay depending on the levels
of ambition and credibility of the labelled bond
frameworks (. a lower premium for “dark green
projects” or for more alignment to standards). While
some previous research in experimental setups
has shown that the willingness to pay for higher
levels of investments might not be significant,33 this
could still be an avenue to explore (see solution 15
“Levels of “greenness””).
Further, impact-oriented investors might explore
the possibility of entering into advanced market
commitments, thereby assuring potential issuers
that there will be sufficient demand if they issue
bonds fulfilling specific requirements.
Any such investor support will not only facilitate cost
reduction for issuers during the issuance process
but also augment demand, the result of which
might be to further boost potential greeniums. At
the same time, such collaboration could enhance
transparency and allow investors to gain a better
understanding of the quality of the respective
labelled bond issuances, which would, in turn,
also reduce an investor’s effort and due diligence
requirements. This further underscores the mutual
benefits of strong collaboration between issuers
and investors in the market.
Local policy-makers
(governments, regulators,
central banks)
Solutions aimed at increasing issuer benefits
4 Increased returns: Measures aimed at
supporting labelled bond returns can help
incentivize issuances and drive demand. This can,
for example, be achieved by implementing efficient
carbon pricing mechanisms that require market
participants to price in the full costs of their activities
when calculating their cost of capital, thereby
making sustainable projects and organizations more
attractive to investors. Additionally, introducing
support schemes such as renewable energy feed-in
tariffs or power purchase agreements can boost
returns for sustainable projects, making them more
attractive to investors. These increased returns can
stimulate investor demand and, with that, enhance
the benefits for issuers.
5 Reduced financial risks: Investor demand
for labelled bonds can be further stimulated
through a reduction of the risks associated with
these instruments. Policy measures designed to
mitigate risks can act as incentives for investors.
These measures may encompass government-
backed guarantees, first-loss provisions or
insurance mechanisms. By offering this safety net,
governments can enhance investor confidence in
labelled bonds, making them more appealing
investment options. Such initiatives not only bolster
demand from investors but also provide issuers with
a more secure and supportive environment to enter
the labelled bond market with confidence.
6 Investment mandates: A strategy to directly
amplify labelled bond investments is to
establish green investment requirements or quotas
for domestic investors, including insurers, pension
funds, development banks and government entities
such as state investment funds and sovereign
wealth funds. These mandates can compel such
investors to allocate a certain proportion of their
portfolios to green or labelled bond investments.
Doing so would not only align their financial
activities with sustainability objectives but also
bolster demand for labelled bonds.
7 Capital requirements: To bolster the appeal
of labelled bonds as an investment
opportunity, an additional strategy could involve
adjusting capital reserve requirements for investors
in alignment with the ESG risk profiles of their
assets. By increasing capital requirements for the
holding of higher-risk assets regarding climate
considerations, it would be possible to factor in the
transition risk associated with such investments.
This would include the potential negative
consequences of failing to meet existing or future
carbon reduction requirements. Alternatively, capital
requirements could be reduced for highly
Labelled Bonds for the Net-Zero Transition in South-East Asia: The Way Forward 18
sustainable investments if they come at a lower
transition risk. While properly quantifying the
(transition) risk difference between labelled and
unlabelled bonds requires further research, and
reserve requirements must maintain financial
stability, requiring lower capital reserves for labelled
bonds could make these opportunities more
attractive for financial investors compared to
unlabelled bonds.
8 Tax incentives: Tax incentives can serve as
an instrument to increase labelled bond
issuances applied to both issuers and investors.
On the investor’s side, tax incentives could, for
example, take the form of tax breaks specifically
tied to investments in labelled bonds. Another
approach would involve the issuance of tax credit
bonds, where investors receive tax credits in place
of traditional interest payments. These measures
can elevate demand for labelled bonds by making
them more financially appealing to investors.
Furthermore, issuers can benefit from tax incentives
in the form of tax rebates that subsidize their
interest payments on labelled bonds. This approach
directly enhances the attractiveness of such bonds
to issuers by increasing the financial benefits
associated with these bonds. In this manner, tax
incentives effectively serve as a dual catalyst,
creating demand from investors while also providing
issuers with added incentives to participate in the
sustainable finance landscape.
Solutions aimed at decreasing issuer costs
9 Issuance grant scheme: To alleviate one of
the key direct costs, meaning the cost
associated with the development of labelled bond
frameworks, local policy-makers can implement
grant schemes to cover the expenses incurred by
hiring consultancies for the purpose of developing
such frameworks. These grants serve as a valuable
resource, particularly in the early stages of labelled
bond market development, as they provide
essential support for getting initial issuances off the
ground. Issuers can then use the knowledge and
frameworks acquired during this process for
subsequent issuances. Furthermore, once the
market has achieved a certain level of scale and
maturity, more local consultancies are expected to
enter the market, reducing the current heavy cost
associated with international consultancies.
10 Sovereign issuances: Governments can play
a role in supporting the growth of their local
labelled bond markets by taking the initiative to
issue labelled bonds themselves, making sure they
are role models with their issuance in terms of
ambition level and ensuring additionality. In doing
so, they not only demonstrate their commitment to
sustainability but also become pioneers in their own
markets, paving the way for other issuers. They can
then actively share the experiences and knowledge
gained through their own labelled bond issuances.
This knowledge-sharing has the benefit of
supporting the reduction of costs for all market
participants since others can learn from their
experiences and potentially avoid costly mistakes.
Finally, sovereign issuances help build scale within
local markets, facilitating the development of
knowledge and expertise domestically.
11 Knowledge sharing: In addition to sharing
insights and experiences from their own
sovereign issuances, local policy-makers can play a
role in fostering a culture of knowledge sharing
within the broader labelled bond market. Such
knowledge sharing would extend beyond the details
of specific issuances and encompass valuable
information on processes, information sources and
strategic partners that can provide support and
guidance on structuring and staffing for success. To
incentivize such knowledge sharing, policy-makers
should, for example, tie grants and other support
schemes to clear requirements for sharing their
experiences with the market.
They can also help to initiate knowledge sharing
and collaborative efforts between key stakeholders
(. investors, issuers, consultancy firms and
standard-setters) via the creation of dedicated
forums or platforms. Such forums could serve as
spaces for open dialogue, sharing best practices
and the consensus-building necessary for
setting industry-specific standards. Ideally, these
knowledge-sharing and standard-setting initiatives
should be conducted on an industry-by-industry
basis. By aligning the efforts and expertise of
stakeholders within each specific sector, a deeper
understanding of the unique needs and dynamics
of those industries can be cultivated.
12 Transition plans: Further, governments can
bolster support for the growth of their local
labelled bond markets by developing well-defined
sustainability goals and comprehensive transition
plans, serving several purposes. First, they will
contribute to providing an enabling market
environment by bringing the country on to a
consistent, long-term and committed transformation
path providing more certainty and allowing
companies to afford longer-term, sustainable
investments. Secondly, such plans help in the
identification of the most critical and relevant
industries that are required for the local net-zero
transition. This will then help to determine the specific
types of labelled bonds that are most relevant to
these industries. This approach will also pave the
way for targeted educational and promotional
efforts within local markets, catering to the unique
needs of each industry. For instance, in countries
with a heavy reliance on coal use, transition bonds
may take precedence, while SLBs might be more
relevant for companies without immediate green
project potential but significant decarbonization
requirements. With such targeted education and
support, the issuance process can be made less
time- and resource-consuming for potential issuers.
13 Capacity building: The scale-up of labelled
bond issuances demands an infusion of talent
and expertise within both organizations and the
Governments
can bolster support
for the growth of
their local labelled
bond markets
by developing
well-defined
sustainability goals
and comprehensive
transition plans.
Labelled Bonds for the Net-Zero Transition in South-East Asia: The Way Forward 19
broader market (. build-up of local consultancy
services). Governments can provide several types of
support to facilitate the development of this
know-how. One approach could, for example,
involve the funding of students or trainees to engage
in capacity-building initiatives within organizations
abroad. This hands-on learning experience would
equip individuals with the skills and insights needed
for labelled bond issuances and enable them to
bring this knowledge back to their home countries.
Additionally, governments can support local
certification and education programmes tailored to
sustainable finance and labelled bond expertise.
By bolstering these educational efforts, they would
help ensure a steady pipeline of professionals
capable of handling the complexities of labelled
bond issuances. Governments could consider
establishing centres of excellence in partnership
with universities or other academic institutions
to further strengthen the talent pool. These joint
ventures could serve as hubs for knowledge,
research and training, facilitating the growth of
domestic expertise in the labelled bond market.
International community
Solutions aimed at increasing issuer benefits
14 Credit rating: Placing greater emphasis on
integrating ESG factors into credit ratings
could be one potential lever to enhance the
attractiveness of labelled bonds as investments.
At present, credit ratings tend to have a backwards-
looking perspective, failing to adequately account
for the risk that is, for example, associated with
fossil fuel investments versus more sustainable and
future-proof green investments. By integrating ESG
measures more comprehensively into the
assessments conducted by rating agencies, labelled
bonds could potentially secure higher credit ratings.
This shift is particularly vital in the context of EMDEs,
where credit ratings wield substantial influence over
investor decisions. Elevating the credit ratings of
labelled bonds would render them more attractive to
investors and thus further stimulate demand. To
implement such a measure, a core prerequisite will
be the implementation of well-defined climate risk
disclosure frameworks to determine clear guidelines
to measuring and qualifying such climate-related
risks. Previous experiences of trying to include ESG
performance and credible future ESG targets in
such considerations have proven that this can be
quite challenging. However, when such reporting is
done well and implemented stringently, investors
also better understand their portfolio’s riskiness,
which can make sustainable investment instruments
like labelled bonds even more attractive.
15 Levels of “greenness”: To encourage a
greater prevalence of certified labelled bonds,
which would bolster transparency and instil investor
trust in the market, the international community,
particularly standard setters, should pursue greater
alignment on common certification standards.
Simultaneously, there should be room for a
diversified array of certifications. For instance, a clear
system for rating or flagging different degrees of
adherence to standards or the level of ambition could
be established – . as a measure of “greenness”.
Such a multifaceted approach would enable more
issuers to attain certifications, building market
confidence, especially in EMDEs. Moreover, it
would open the door to a tiered approach, where
greeniums could be negotiated and set at varying
levels, giving the possibility to better remunerate and
support top-tier/deep-green projects. Similar to the
varying values assigned to different types of carbon
offsets in the market (see Box 1), this approach
acknowledges that investors may have varying
levels of willingness to pay according to the quality
and sustainability credentials of the investment.
20Labelled Bonds for the Net-Zero Transition in South-East Asia: The Way Forward
Carbon creditsB O X 1
In the voluntary carbon market, a wide range of prices for various types of carbon credits
is observed, reflecting different levels of willingness to pay for these credits.
The following are among the different factors that contribute to
the variations in price:
Project type: Projects with high costs, such as those involving
advanced technologies or extensive reforestation efforts, often
yield higher-priced credits.
Type of credit: The type of carbon credit seems to matter, with
removal credits (. direct air capture) often commanding higher
prices than avoidance credits.
Project credentials: The credentials of projects typically also
influence projects’ pricing, with projects certified for their positive
environmental and social impacts by widely accepted standards
generally fetching higher prices.
Developer quality: The reputation and quality of the credit
developer or issuer can impact pricing since projects associated
with reputable organizations may be seen as more trustworthy
and, consequently, more valuable in the market.
Source: Abatable.
Ranges as well as median prices observed for different types of carbon credits in dollars per tonne of carbon
dioxide equivalent (tCO
2
e)
Solutions aimed at decreasing issuer costs
16 Direct issuance support: Organizations can
also play a role in bolstering the labelled bond
market through direct issuance support, a practice
that MDBs have been notably engaged in. This
support extends beyond mere advocacy and takes
the form of active assistance, especially for
first-time issuers. It involves actively guiding issuers
through the entire process, from covering the
development of the framework to potentially even
engaging as investors in the issuances themselves.
17 Educational support: The international
community can further support the
effectiveness of the labelled bond market by
providing education and expertise to stakeholders in
EMDEs. Approaches could include, for example, the
creation of dedicated forums and platforms where a
diverse range of stakeholders (including seasoned
international participants, local issuers and
investors) can come together, creating constructive
feedback loops and collaborative development. The
international community could further support local
capacity building by setting up training programmes
accessible for EMDEs (see the International Finance
Corporation’s Green Bond Technical Assistance
Program as a notable example) or sponsoring
student programmes domestically or abroad to
ensure the transfer of expertise. By facilitating such
knowledge exchanges, the international community
would empower local participants in the labelled
bond market, enabling them to make informed
decisions and drive down the costs of issuances.
Forest conservation
(REDD+)
Afforestation and
reforestation
Soil carbon
Biochar
Direct air carbon
capture and storage
0 50 100 150 200 250 300 1,100 1,150
$/tCO
2
e
1,600
$8
$14
$30
$115
$1,100
Minimum Maximum
Median
Labelled Bonds for the Net-Zero Transition in South-East Asia: The Way Forward 21
18 Standards alignment: To ensure easier
accessibility of the labelled bond market and
a higher chance for EMDE issuers to achieve
certification, there is a need to simplify and
enhance the clarity of international standards and
taxonomies. This involves ensuring the many
different regulations/standards from all over the
world are more homogenous or at least more easily
comparable. While this streamlining is essential, it
should be accompanied by a concerted effort to
ensure that such standards are not solely tailored to
developed economies. They should also account
for the distinctive requirements and capacities of
EMDEs, considering that an important aspect of
climate financing for EMDEs is adaptation finance.
This recognition calls for a more nuanced and
differentiated view of labelled bonds from EMDEs.
It acknowledges that projects or KPIs, which might
be seen as less ambitious from an international
standard’s perspective, are not necessarily an
attempt at greenwashing by the issuer. Instead,
they could align with the region’s distinct
sustainability goals and developmental priorities and
capabilities. Nevertheless, the standards should
ensure that the requirements and ambitions it sets
are relevant (. definitions of UoP are solid and
precise, and there are clear legal implications if not
met) and ambitious for the respective context to
ensure that they are seen as relevant green
investments for investors. To enhance alignment,
standard-setters could, for instance, offer
representatives from these regions a seat at the
decision-making table. They could also promote
collaborations with local stakeholders to develop
standards that accurately reflect the unique realities
and challenges faced by EMDEs.
19 Post-issuance requirements: To enhance
predictability and enable better planning for
post-issuance costs in the labelled bond market,
clearer and more consistent requirements could be
established regarding reporting and auditing. This
would include providing assurances that these
requirements would not undergo frequent and
unpredictable changes. To achieve this, standards
could, for example, be set contractually per issuance
or be changed only within a defined timeframe,
with reviews occurring only at specific intervals.
As capacities might be too limited to implement
all the identified measures at the same time, it
can be helpful to prioritize such solutions and
plan an implementation roadmap accordingly.
To enable a high-level view of such a prioritization,
the key stakeholders consulted throughout the
development of this paper were invited to share
their perspectives on the list of proposed measures.
They were asked to assess each solution by
ranking them based on their anticipated impact
and to provide an evaluation of the feasibility of
implementing these solutions. The aggregated
output of these individual assessments can be
found in Figure 8.
Prioritization and roadmap
Labelled Bonds for the Net-Zero Transition in South-East Asia: The Way Forward 22
Aggregated results of solution assessment evaluated based on expected impact
and ease of implementation
F I G U R E 8
Ease of implementation
Im
p
ac
t
High
Low
Hard Easy
International community
Local policy-makers
Investors
18
15 14 16
19
17
7
4
8 10
9
11
13
12
5
6
1
2 3
Issuers
Close alignment with investors Organizational preparedness1 2
16
1714
15
19
18
Credit rating Education support
Levels of “greenness” Standards alignment
Direct issuance support Post-issuance requirements
10
4
6
7
11
12
138
9
5
Increased returns Issuance grant scheme
Reduced financial risks Sovereign issuances
Investment mandates Knowledge-sharing
Capital requirements Transition plans
Capacity buildingTax incentives
Early engagement3
Medium-term Short-term
Short-termLong-term
Notes: Each dot in the matrix marks where the consulted set of stakeholders see the respective solution to rank.
This overview can give a first idea of which general
areas are worth addressing immediately and which
solutions might need to be tackled later.
It is generally recommended that highly impactful and
relatively easily implementable measures are applied
as soon as possible. Based on this assessment,
measures for all types of stakeholders can be found
in the upper right quadrant – from organizational
preparedness of issuers to direct issuance support
of (international) organizations. Further, given the
urgency of addressing the climate crisis, it is advisable
to tackle all measures that are easily implemented in
the short term, even if some of them are expected
to have a lower impact. Here, it can also make
sense to consider which of these measures might
have additional positive effects outside of the labelled
bond market, for example, in capacity building. A
workforce with a solid education on sustainability
and climate finance will likely have added benefits
besides the development of labelled bond financing.
Solutions that are more difficult to implement
(shown towards the left side of the matrix) may
require more time to be addressed. Here, it would
be advisable to prioritize more impactful measures
for the medium term on the roadmap. Meanwhile,
the least impactful and most challenging solutions
should be addressed in the long term.
Of course, it should be kept in mind that the
exact qualification of these measures might differ
depending on the country or regional context.
For example, based on what is already being
addressed or has previously been implemented in
a country, some measures might be much easier
to realize in one country as opposed to another –
especially in terms of local policies. Moreover, the
summary is only based on a limited set of individual
assessments and should only be seen as a first
suggestion for potential prioritization. Despite
its broad scope, this high-level assessment can
provide valuable first guidance on where to focus
efforts initially. It can assist various stakeholders in
creating their own strategies to effectively support
issuers and the labelled bond market in ASEAN
and EMDEs more broadly.
Labelled Bonds for the Net-Zero Transition in South-East Asia: The Way Forward 23
Viet Nam case study3
The first labelled bonds in Viet Nam were green
bonds issued in 2016 by local government entities
in Ho Chi Minh City and Ba Ria-Vung Tau province.
Although Viet Nam was among the first ASEAN
countries to issue such labelled bonds (the Asian
Development Bank, located in the Philippines,
issued the first in 2010, and Ihsan Sukuk Bhd in
Malaysia in 2015), it was not until 2020, when the
labelled bond market in Viet Nam really started to
experience some momentum and a peak of 11
issuances was reached in 2021. Despite the recent
uptake, Viet Nam still has significant potential to
grow its labelled bond market, especially when
compared to other ASEAN countries (both in terms
of value and number of issuances), as can be seen
in Figure 9.
Cumulative labelled bond issuance in billions of US dollars and number of labelled bonds
in ASEAN countries from 2010 to 2022
F I G U R E 9
P
h
ili
p
p
in
n
es
S
in
g
ap
o
re
T
h
ai
la
n
d
In
d
o
n
es
ia
M
al
ay
si
a
V
ie
t
N
a
m
L
ao
s
M
ya
n
m
ar
C
am
b
o
d
ia
B
ru
n
ei
40
35
30
25
20
15
10
5
0
400
350
300
250
200
150
100
50
0
Cumulative absolute issuances from ASEAN countries
($, billions)
Cumulative number of issuances from ASEAN countries
19
P
h
ili
p
p
in
n
es
S
in
g
ap
o
re
T
h
ai
la
n
d
In
d
o
n
es
ia
M
al
ay
si
a
V
ie
t
N
a
m
L
ao
s
M
ya
n
m
ar
C
am
b
o
d
ia
B
ru
n
ei
32
107
70
136
3
382
Note: The numbers include all currencies and labels (including self-labelled). Note that Viet Nam numbers come from a GGGI report and the remaining data from
the Refinitiv database and might thus underestimate total issuances in ASEAN countries outside Viet Nam.
Source: ETH Zurich, Refinitiv, GGGI.
Some recent key milestone issuances include
the VND 1,725 billion (Vietnamese dollars)
(approximately $75 million) green bond issued in
June 2022 by EVNFinance, a domestic financial
services company. This partially guaranteed (by
GuarantCo) bond was the first internationally
certified bond in local currency. It both adheres to
the ICMA’s Green Bond Principle 2021 as well as
the ASEAN Green Bond Standards. EVNFinance
was supported by GuarantCo, who partnered
with the Global Green Growth Institute (GGGI) to
assist in structuring and verifying this bond. This
support was part of GGGI’s Viet Nam Green Bond
Readiness Programme, funded by the Ministry
of Finance, the Government of Viet Nam and the
Government of Luxembourg. The first senior,
fully unsecured and unguaranteed green bond
was then issued by the Bank for Investment and
Development of Viet Nam (BIDV) and followed
a year later in October 2023. This issuance
(VND 2,500 billion, approximately $100 million)
also adheres to ICMA Green Bond Principles.
Current status of labelled bonds in Viet Nam
Labelled Bonds for the Net-Zero Transition in South-East Asia: The Way Forward 24
Existing actions and potential
next steps
To better understand how advanced and well-
supported the Viet Nam labelled bond market
is to date, the proposed key measures 1-19 are
considered in the specific Viet Nam context. For
that purpose, relevant local stakeholders were
consulted, and a dedicated Viet Nam workshop
was conducted in March 2024. The results of
these consultations are presented by grouping the
measures according to whether and to what extent
such actions have already been implemented.
Solutions not yet developed or implemented
6 Investment mandates: Although several
governmental directives and decisions have
promoted green credit and banking growth, no
specific investment mandates have been
implemented for local investors by March 2024.
On the contrary, in 2022, the Law on Insurance
Business has been amended to introduce
restrictions preventing insurance companies from
investing in bonds used to refinance debt.
Accordingly, labelled bond issuances that are
issued for the refinancing of sustainable projects
(and thus offer a relatively less risky investment) will
also be negatively impacted by such a regulation.
7 Capital requirements: No specific capital
requirements relating to environmental or
social risks have been incorporated yet in the
Vietnamese banking sector.
8 Tax incentives: While certain tax incentives
exist for income from producing renewable
energy, no specific tax incentives have been
implemented to finance such projects using labelled
bonds. There are also no tax incentives for
investments in such bonds.
15 Levels of “greenness”: So far, no specific
levels of greenness have been developed in
Viet Nam or globally. The only perceived differences
in the quality of bonds can be determined by their
approved alignment to specific standards and
certifications. However, uncertainty exists around
such alignments, depending on different providers
that check for such alignments. Further, no clear
agreements around quality differences and
respective premiums that could be charged have
been reached yet.
Solutions partially developed or
partially implemented
1 Close alignment with investors: In Viet
Nam, while issuers of larger financial offerings
have generally worked closely with investors, this
collaboration has primarily involved multilateral
development banks. Thus, issuers should still
work on getting closer and aligning early with
local investors.
2 Organizational preparedness: Viet Nam has
seen a strong ESG momentum, with many
businesses incorporating ESG into their strategy
and making, or planning to make, ESG
commitments. However, experts think that issuers
can do even more and will need to develop clear
roadmaps and plans that state specific objectives
and benefits and actively incorporate green bonds
as part of their long-term ESG journey.
3 Early engagement: While some international
investors (. IFC) have been actively
involved in local issuances of labelled bonds, less
specific engagement from local investors has been
identified. Accordingly, this measure still holds
relevant potential in the Viet Nam context.
4 Increased returns: Although Viet Nam had
previously implemented feed-in-tariffs for
renewable energy, these have been discontinued.
Such a policy discontinuation can introduce
uncertainty that is not desirable for developing the
labelled bond market. On the other hand, a carbon
pricing mechanism is being implemented, and a
pilot carbon trading platform is expected to launch
in 2025. While this is a start, the effectiveness of
such an emission trading scheme will highly depend
on how well it is implemented, and clearly, there is
significant additional potential for further measures
aimed at increasing labelled bond returns.
5 Reduced financial risks: There have been
instances of guarantees for labelled bonds
(see issuance by EVNFinance). However, even more
financial risk reduction measures could be
implemented in the future. This could, for example,
include local credit enhancement facilities.
However, other than EVNFinance, BIDV primarily
received international backing with the World Bank
and the International Finance Corporation (IFC),
providing technical and financial support (. by
paying the external reviewer) through their Joint
Capital Market Development Program (J-CAP).
Finally, a third noteworthy issuance was the first
local SLBs issued in August 2023 by BIM Land
Group, a leading Vietnamese tourism and property
developer. The IFC also supported this issuance
by helping develop the sustainability-linked
financing framework and tailor-made sustainability
performance targets, as well as investing up to
$150 million into the bonds.
Solutions in the Viet Nam context
Labelled Bonds for the Net-Zero Transition in South-East Asia: The Way Forward 25
9 Issuance grant scheme: So far, only some
small financial benefits, like the 50% reduction
of certain service fees for the public issuance
applied in stock exchanges and Viet Nam Securities
Depository, have been proposed. Further, issuers
deciding to issue a bond in the Singapore market
can benefit from the grant scheme implemented
there by the Ministry of Finance in Singapore.
However, a similar scheme has not yet been
implemented in Viet Nam.
10 Sovereign issuances: While the first labelled
bonds issuances locally were done by
government entities, these did not have any clear
effect on future issuances, as the next labelled
bonds issued only followed several years after.
Potentially, the market was not ready and educated
enough at the time. Further, knowledge-sharing
might not have been done effectively. However,
additional sovereign issuances at this point could
potentially help support the current momentum.
Such issuances would have to ensure that, this
time, a significant amount of knowledge-sharing
will occur.
14 Credit rating: Some ESG elements have
already been taken into consideration by
credit rating institutes globally (not Viet Nam-
specific only). For example, S&P takes ESG credit
factors into account for credit rating analysis,
however, only when these are very clearly
identifiable and material to the ability to pay (.
risks to a company’s cash flows if it will have to pay
high potential carbon tax in the future). Accordingly,
there is still considerable room to extend such risk
considerations beyond the easiest quantifiable risks.
18 Standards alignment: In 2017, an ASEAN-
specific green bond standard was introduced.
This standard is based on the international Green
Bond Principles and CBI Climate Bond Standards.
Several of the bonds following the ASEAN
standards have also received CBI certification.
However, several experts still see the ASEAN
standard as too far removed from the Viet Nam-
specific context and identify the development of a
Viet Nam standard as an important priority. Further,
no locally specific standards exist for beyond green
bonds (. for other types of labels).
19 Post-issuance requirements: While post-
issuance requirements are captured in
respective standards, additional measures could be
taken to reduce uncertainty for issuers around
future changes. This also includes clear penalty
regulations in case of non-adherence.
Solutions fully developed with multiple
elements implemented
11 Knowledge sharing: Several local knowledge-
sharing initiatives have previously been
implemented. These include a handbook co-authored
by CBI and the State Securities Commission of Viet
Nam, as well as roundtable conferences and forums
organized by local entities (. by the Vietnamese
Minister of Finance in collaboration with Luxembourg,
Vietnam Institute of Directors and Viet Nam
Investment Review). However, much more
knowledge-sharing could still be implemented,
especially in learning from prior deals, as this has
been insufficient so far. Local experts also suggest
that clear guidance documents from the
government could help develop local knowledge.
12 Transition plans: A detailed Viet Nam energy
transition plan was published at the UN
Climate Change Conference at the end of 2023
(COP28). A total spending of $ billion is
expected for this transition.
13 Capacity building: At the end of 2023, the
Ministry of Education and Training and the
UNESCO Hanoi Office held a consultation
workshop on the national education for sustainable
development initiative. While this is a good start to
local capacity building, this still needs to be
developed into a clearly actionable programme.
16 Direct issuance support: Several
international institutions have previously been
involved in direct issuance support in Viet Nam. This
includes the IFC/World Bank, ADB or GGGI. Ideally
this support will continue, also for smaller issuances.
17 Educational support: Many international
programmes that offer educational support for
the labelled bond market in Viet Nam are ongoing.
This, for example, includes a capacity-building
programme with a series of training events by GGGI
and the Viet Nam’s Ministry of Finance, the Viet
Nam Green Bond Readiness Programme supported
by GGGI and the government of Luxembourg,
in-person training programmes in green bond
issuances offered by State Securities Commission
of Vietnam (SSC), in collaboration with the German
development agency GIZ (as part of their
Macroeconomic Reforms/ Green Growth
Programme). There are also several publications
and guides for Viet Nam specifically (. by CBI) as
well as for the region more broadly (. by the Asia
Sustainable Finance Initiative, Capacity-Building
Alliance of Sustainable Investment (CASI),
international training academy by CBI, ICMA
sustainable finance online education, ADB guide for
issuing ESG bonds in developing countries). With
such a vast offering, keeping a good overview and
choosing which support scheme to use might be
difficult. Accordingly, in this case, a key next step
might be to provide an overview of existing key
offerings and potentially ensure coordination and
synchronization among them to ensure new issuers
are not overwhelmed by the large and diverse set of
potential support offers.
Viet Nam-specific priorities
Based on the specific context of labelled bonds
in Viet Nam as identified, the proposed measures
have been reassessed to identify key next steps
Labelled Bonds for the Net-Zero Transition in South-East Asia: The Way Forward 26
to best support the future development of the
market. For that purpose, the same assessment
as previously done for the entire ASEAN region has
been repeated for Viet Nam. Here, core Viet Nam
experts and stakeholders were invited to give each
solution a ranking for the anticipated additional
impact and implementation feasibility. The output of
this assessment can be found in Figure 10.
Aggregated results of Viet Nam-specific solution assessment evaluated based on
expected impact and ease of implementation
F I G U R E 1 0
Ease of implementation
Im
p
ac
t
High
Low
Hard Easy
International community
Local policy-makers
Investors
18
15
14
16
19
17
7
4
8
10
9
11
13
12
5
6
12
3
Issuers
Close alignment with investors Organizational preparedness1 2
16
1714
15
19
18
Credit rating Education support
Levels of “greenness” Standards alignment
Direct issuance support Post-issuance requirements
10
4
6
7
11
12
138
9
5
Increased returns Issuance grant scheme
Reduced financial risks Sovereign issuances
Investment mandates Knowledge-sharing
Capital requirements Transition plans
Capacity buildingTax incentives
Early engagement3
Medium-term Short-term
Short-termLong-term
Note: Each dot in the matrix marks where the consulted set of stakeholders see the respective solution to rank.
If comparing this view with the general ASEAN
assessment in Figure 9, some of the measures
are assessed very similarly, for example, increased
returns (4) and direct issuance support (16). Others
see a somewhat larger jump. While sovereign
issuances (10) were identified as good short-
term measures in general, they are seen as much
less feasible and impactful in Viet Nam. Further,
transition plans (12), reduced financial risk (5) and
levels of “greenness” (15) saw significant drops in
perceived impact, making them unattractive for
immediate implementation. On the other hand,
close alignment with investors (1) seems to be a
much more impactful and easily implementable
measure in Viet Nam, making it relatively high-
priority. Finally, it can be noted that many measures
previously ranked as easy to implement but
not as impactful became much more impactful
in the context of Viet Nam. A large share of
these measures is concerned with capacity and
knowledge development both by local policy-
makers and through the support of international
stakeholders (11, 13, 17).
A roadmap for Viet Nam can be developed following
the same logic as applied in the high-level ASEAN
assessment. Solutions to prioritize in the short
term here include both issuer measures (especially
alignment with investors) as well as measures for
local policy-makers and international stakeholders.
While some of these solutions will be more
budget-heavy, such as grant schemes and direct
issuance support, several of the measures can be
implemented without significant capital deployment.
This includes setting clear investment mandates
for local investors (. minimum share of green
investment for institutional investors) as well as all the
educational measures, where a large impact can be
achieved through coordinating efforts. Key measures
to tackle in the medium term include engagement by
investors, increased return (besides carbon pricing
that will be implemented soon, feed-in-tariffs could,
for example, be reintroduced), tax incentives (.
consensus suggests a tax rate around 5%), as well
as the continuation of developing a Viet Nam-
specific standard that is aligned with international
requirements (also beyond green bonds only).
Labelled Bonds for the Net-Zero Transition in South-East Asia: The Way Forward 27
Conclusion
A rapid transition from fossil fuels to renewable
energy is imperative to avert the worst
consequences of climate change and achieve
global net-zero emissions by mid-century. This
is especially true in EMDEs, which are projected
to significantly increase carbon emissions over
the next decades without a shift to low-carbon
alternatives. This requires significant investments,
which EMDEs cannot carry on their own. While
labelled bonds could be a valuable instrument to
attract such international investments, EMDEs have
not yet played a substantial role in the labelled bond
market due to various challenges and barriers.
A functioning labelled bond market requires
three elements: an enabling market environment,
the alignment of issuer priorities and investor
expectations. This paper focuses on the issuer
perspective and identifies the key benefits and
costs, both direct and indirect, associated with
their participation in the labelled bond market. It
postulates that for labelled bonds to be an attractive
financing option, issuers need to achieve net
benefits from such issuances. Several measures
are developed to support this, either aimed at
enhancing issuer benefits or mitigating key costs.
This set of potential solutions encompasses,
among others, financial support mechanisms
and incentives, recommendations on facilitation
of education and (international) coordination, as
well as suggestions to improve market structures
and standards. While all stakeholders, including
policy-makers, the international community and
investors, hold levers to support issuers and,
with that, the growth of labelled bond markets,
issuers must also actively engage. This includes
investing in their organizational preparedness,
such as incorporating sustainability into their
core organizational framework. Not only is such
integration advantageous for bond issuance, but it
ultimately contributes to achieving the core impact
that labelled bonds promise: tangible, positive
climate impact of projects an
