Dec 19, 2024 (MENAFN via COMTEX) --
(MENAFN - AzerNews) Akbar Novruz Read more
Following the conclusion of COP29 in Azerbaijan, S&P GlobalRatings has introduced an updated rating approach to reflectemerging market trends and address transparency in new financialmechanisms, such as debt-for-nature swaps and payment deferrals forcountries vulnerable to natural disasters.
According to Azernews , citing the S&Preport, these instruments aim to ease the fiscal burden ofcountries with limited financial resources, allowing them to focuson building economic resilience and climate adaptation.
Analysts noted, "Even small or temporary debt relief could allowvulnerable countries to focus more resources on improving economicresilience and adapting to climate change."
The report highlights a rise in sustainable debt issuance acrossemerging markets, particularly in local currencies. However, itunderscores that low-income nations continue to struggle withaccessing climate finance without exacerbating their debtburden.
A key outcome of COP29 was the agreement to mobilize $300billion annually from public and private sources for climatefinance-three times the previous target. S&P views this as asignificant step toward establishing functional global carbonmarkets but cautions that success depends on national commitments,private investment mobilization, and multilateral lendinginstitution support.
The report warns that failing to meet climate finance needscould heighten long-term economic and social risks. Developingcountries disproportionately exposed to climate hazards riskbecoming major carbon emitters unless their economic growth alignswith low-carbon technologies.
S&P anticipates countries will revise their NationallyDetermined Contributions (NDCs) and adaptation plans post-COP29,focusing on medium- and long-term targets for climate resilience.The agency also stressed that more ambitious fiscal targets coulddrive transformative economic strategies in developing nations.
These include insufficient institutional support (due tocontinued geopolitical uncertainty and changing nationalstrategies), lack of standardized blended finance mechanisms, andinsufficient risk mitigation tools to attract private capital.According to the agency's sustainable finance specialists,addressing these barriers will be an important step towardachieving sustainable development goals and net-zero emissions.
Addressing barriers, such as insufficient institutional support,lack of standardized blended finance mechanisms, and limitedrisk-mitigation tools, will be critical for attracting privatecapital. S&P experts emphasized that "COP29 was a significantmilestone in advancing climate initiatives, but achieving the goalswill require significant efforts and coordination between countriesand the private sector."
The agency's updated approach confirms the growing role ofsustainable finance in the global economy, signaling that climateresilience and net-zero commitments are now central to economicstability and development strategies.
By incorporating mechanisms like debt-for-nature swaps andemphasizing climate finance, S&P's updated rating approach is acrucial step in ensuring that financial markets respond to theneeds of vulnerable economies.
It not only helps free up fiscal space for critical investmentsbut also aligns global financial systems with sustainability goals,fostering greater economic stability and resilience against climaterisks.
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