Abstract

Awareness of environmental and social issues has been rising in recent years. The growing integration of ESG factors by investors, corporates and governments has implications for sovereign debt management as it has the potential to noticeably affect investment decisions, investment tools and country credit assessments over time. Public debt management, as an interface between governments and financial markets, can play an important role in supporting government ESG agendas by conveying to investors government commitments to improve environmental and social outcomes and by financing such activities through the issuance of ESG-labelled bonds.Against this background, this chapter takes the perspective of a public debt manager and discusses approaches to incorporating ESG factors into public debt management. Using survey-based data, it identifies common practices, challenges as well as the key features of emerging leading practices.

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