Abstract
The expansion of financing sources holds particular importance in the context of implementing the European Green Deal in Ukraine. Given the escalating climate and environmental threats, the pursuit of new green financing mechanisms for countries burdened with high levels of debt persists. Amidst the full-scale war in Ukraine, the options for state financing of environmental projects and programs are significantly restricted. The article examines the formation of additional financing sources aimed at restoring ecosystems and ecological infrastructure damaged by the war in Ukraine. Drawing upon an overview of international practices, this study elucidates innovative approaches to environmental financing, which involve exchanging a part of the state's external debt for commitments to invest in nature conservation programs and achieve climate neutrality. The analysis highlights significant variations in the implementation of green debt swaps across different countries, underscoring the need to assess the feasibility of adopting such mechanisms in Ukraine, especially given its heightened reliance on debt. Utilizing multi-criteria analysis, a comparative evaluation of key "green debt conversion" instruments was conducted, encompassing Bilateral Debt-for-Nature Initiatives, Debt-for-Nature Swaps, and Debt-for-Climate Swaps. A comparative table has been compiled to illustrate the key characteristics of these instruments and to assess the potential impact of their use in Ukraine. The benefits of exchanging debt for investments in environmental recovery, as outlined in Ukraine's National Recovery Plan, are delineated. The primary sources for accumulating funds to meet the state's obligations resulting from the adoption of green debt swaps have been identified. Recommendations for the implementation of green debt swaps in Ukraine have been provided. It has been concluded that green debt swaps could be employed in Ukraine to finance specific environmental or climate-related projects and initiatives, establishing conservation and climate funds through contributions from both domestic and international ESG investors. To protect against “greenwashing”, it is advisable to bolster oversight of financial transactions and to expand the list of key performance indicators (KPI) used to evaluate investment decisions, considering ESG factors.
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