Tax policy is a popular tool for governments around the world seeking to influence behavior, including for encouraging environmentally sustainable investment. But is it really an effective way to accelerate the transition to a greener economy? A Prosperity Insight Note, based on findings from a new World Bank database of Corporate Income Tax (CIT) incentives, reveals that tax incentives are rewarding polluting economic activities in more cases than they are promoting sustainability.

A new capital markets issuer made its debut on the London Stock Exchange this month: The Climate Investment Funds (CIF) Capital Markets Mechanism or CCMM issued its USD500 million inaugural bond on January 22, 2025, which was six-times oversubscribed. CCMM is the first pure play climate issuer and the first multilateral climate fund to access the capital markets. This is the culmination of an 8-year journey from when the Clean Technology Fund or CTF, one of the two funds within CIF and a key multilateral sources of climate finance, explored how to operate in a more financially efficient manner.

Emerging market and developing economies (EMDEs) face higher risks from climate change than advanced economies. If not addressed, these risks could threaten their stability, negatively impact economic opportunities and development outcomes, and even set back decades of work to end extreme poverty and boost prosperity in these countries.

Discover the critical insights of the Finance and Prosperity Report 2024 through these compelling interactive graphs. Engage with these visualizations to explore the data, understand the trends, and gain valuable insights into the future of finance and prosperity.

A Thai Recipe for Green Finance: What’s Cooking in the World of Sustainable Finance?

Emerging market economies require USD 6.9 trillion to USD 7.6 trillion between 2023 and 2030 in order to achieve the Sustainable Development Goals. Additionally, intergovernmental organizations and research institutes worldwide estimate that global investments up to USD 275 trillion will be required between 2020 and 2050 to reduce greenhouse gas (GHG) emissions to net zero by 2050. Sovereigns in emerging markets are recognizing the need for additional finance and exploring a myriad of options, including borrowing from the capital markets through dedicated sustainable financing instruments that earmark proceeds for specific types of projects. Since 2016, twenty-six emerging market (EM) sovereigns have issued green, social, and sustainability (GSS) bonds amounting to USD 125 billion, as of 30 June 2024. A key aspect of these labeled bonds is that issuers need to report the use of proceeds and the social and environmental impacts of projects and activities supported.