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Cheat sheet: Five novel tools to de-risk investments

Green bonds are already pretty traditional, and so are insurance policies and guarantees against losses, as well as capping returns to maximise impact. But these tools haven’t done the trick. Here are more ambitious instruments one could use: 

(i) Debt for climate swaps: Reducing sovereign debts to improve credit ratings and thereby indirectly boost climate investments

(ii) Contracts for Difference (CfD): A mechanism to hedge against price volatility

(iii) Carbon credits as collateral: Providing future security for current borrowing

(iv) Investment readiness support: Improving project feasibility, structuring & aggregation

(v) FX guarantees: Currency hedging to protect against foreign exchange fluctuations

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