This report sets out the case for moving sovereign debt markets towards the explicit valuation of natural capital, and for greater use of performance-linked instruments to deepen creditor and debtor sharing of associated risks and opportunities. Advancing these two developments would be a much needed and timely development in addressing the short-term debt crisis and long-term, structural sovereign debt challenges, and the urgent need to finance the transition to a net zero, nature positive world.

This paper is aimed at participants active in sovereign debt markets, including issuers and investors. It is also highly relevant to a wider set of policymakers and financial market participants interested in increasing the resilience of financial markets and scaling up sustainable finance.