Inception phase | PANORAMA

Creating the necessary incentives to foster the success of green bonds

Following the development of the legislative and regulatory framework for issuing green bonds, it was also necessary to create incentives that enhance their attractiveness for both issuers and investors. With BIOFIN’s advocacy and in close collaboration with the Working Group, two key incentives were established.

First, investors benefit from a 15% exemption in withholding tax on green bonds listed on a Zambian exchange with a maturity of at least three years. This measure encourages investment in projects with positive environmental outcomes and accelerates resource mobilization. It also motivates potential issuers, who can expect stronger investor demand and, consequently, higher returns on their bonds.

Second, the SEC introduced a 50% reduction in green bond registration fees in Zambia. By lowering issuance costs, this measure further strengthens the attractiveness of the market for issuers.

A key enabling factor is the support of government and regulators for developing a green bond market and their willingness to design and approve such incentives.

Recently developed green bond markets might be perceived as too risky by investors who are more familiar with traditional bonds and other investments. Creating incentives for both issuers and local investors is crucial to navigate their risk tolerance and to stimulate the market in its early stages.

Capacity building and technical support for market developers and green bonds issuers

Green Finance Mainstreaming Agenda in the Financial Sector Workshop

UNDP Zambia

Since 2018, UNDP BIOFIN has organized various capacity building workshops and provided support towards the development of the green bonds market in Zambia, engaging with key financial sector regulators. These activities have been instrumental in the formulation of the Green Bonds Guidelines and Listing Rules, and have also included targeted trainings for the SEC on the review and approval of green bond applications.

As an example, a series of capacity-building sessions to scale up the market for green bond issuances in Zambia was delivered to members of the Working Group and other key stakeholders (e.g., investment brokers, transaction advisors, institutional investors, etc) in July 2025. The sessions covered topics such as the fundamentals of green bonds, the structuring process, and eligibility requirements.

BIOFIN has also provided technical assistance to high-potential green bonds issuers in Zambia. In 2024, a global call was launched to offer tailored guidance for five companies or other prospective issuers. This support includes drafting green bond frameworks, identifying eligible project pipelines, liaising with investment banks, and engaging second-party opinion providers for certification. It also provides advisory services on aligning bonds with international standards, impact reporting, and market positioning.

Enabling factors include the availability of experts to deliver workshops and provide ongoing assistance, adequate funding to cover activities and logistics, the willingness of government and regulators to develop a green bond market, and the active participation of financial regulators.

During the capacity building and technical support activities, it was observed that financial agents often misunderstood the principles of project finance, which differs from more typical corporate finance transactions in its composition of guarantees and risk scenarios. The benefits of green bonds, compared to conventional government bonds, were also not immediately clear to all participants. This highlights the importance of ensuring that capacity-building efforts (1) explain in detail the distinct characteristics of project finance, (2) are complemented by a broad awareness-raising campaign, and (3) also focus on transferring knowledge on environmental sustainability and associated standards to meet investors’ expectations.

2024 Call for Expression pf Interest: UNDP BIOFIN Provision pf Technical Handho…

Bringing key stakeholders together under the Green Finance Mainstreaming Working Group

The picture shows participants of the Green Finance Mainstreaming Working group, fund managers, and representatives from CEC Renewables around a table in a meeting

UNDP BIOFIN, the Green Finance Mainstreaming Working Group, and Fund Managers meet with CEC Renewables to advance Zambia's green bond market development following the inaugural issuance.

UNDP Zambia

The development of a green bonds market in Zambia is anchored in the activities of the Green Finance Mainstream Working Group, which brings together financial regulators, standard-setting bodies, development partners, and other key institutions with the objective of mainstreaming green finance into Zambia’s financial landscape. Members include the Bank of Zambia, the SEC, and the Pensions and Insurance Authority (PIA). In addition, the Working Group includes strategic participation from the Ministry of Green Economy and Environment, the Ministry of Finance and National Planning, the Zambian Institute of Chartered Accountants, and the Worldwide Fund for Nature (WWF) Zambia.

The establishment of the Working Group provided a regular platform for collaboration among regulatory bodies, government agencies, and experts, fostering an enabling environment for the development and effective implementation of green finance solutions. Many of these solutions are multidisciplinary in nature, from legal requirements to technical expertise, and potentially could not have been developed without this collaborative effort.

Enabling factors include stakeholders’ willingness to participate in and dedicate time to the Working Group, their recognition of the interconnectedness of green finance and the importance of the topic, and the availability of funding to support the Group’s ongoing activities.

A key lesson learned is that establishing governance and collaborative structures is crucial for the development of green bond markets and other financial solutions. Regardless of the level of implementation, national or subnational, these solutions are typically multidisciplinary, and their implementation runs more smoothly not only when there is collaboration, but also when a dedicated platform with clear procedures for ongoing engagement is in place.

In addition, it is crucial to consider broader advancements in the financial system that, while not mandatory for issuing green bonds, are likely to strengthen their creditworthiness. In Zambia, the Working Group is also pursuing complementary solutions that support the development of the green bond market, including measures to enhance economic stability, credit ratings, and market infrastructure. Examples include the development of Zambia’s National Green Finance Strategy and Implementation Plan, as well as a green finance taxonomy, tagging, and reporting system.

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Creating the legal and regulatory enabling environment for green bonds in Zambia

The development of legislation and regulations was the foundation for establishing a green bond market in Zambia. The 2019 Green Bonds Guidelines are the main outcome of this process and serve as the enabling regulatory framework for green bonds issuances in the country. They were officially gazetted and developed in line with the International Capital Market Association’s (ICMA) Green Bond Principles, a voluntary protocol for the issuance of green bonds.

The Guidelines comprehensively cover the requirements for issuing green bonds, including the engagement of an independent external reviewer and the submission of a detailed, green bond framework to the Securities and Exchange Commission (SEC). This framework must explain the project selection criteria to be used, how funds will be utilized, the management of proceeds (the funds raised from selling the bonds), and how environmental objectives will be achieved. Together, these elements promote transparency, accountability, and investor confidence.

To complement the Guideline, the Green Bonds Listing Rules were also developed, providing a detailed pathway for issuers to list green bonds on the Lusaka Securities Exchange (LuSE). They also establish procedures for evaluating the environmental credentials of green bonds and reporting impacts, contributing to an orderly market.

The mobilization and coordinated efforts of all relevant stakeholders in capital markets and regulatory bodies, such as the SEC and the LuSE, are essential for the development and approval of the guideline and associated rules.

Developing green bonds based on clear legislation and regulations, transparent and accountable mechanisms, and adherence to international standards is crucial to building investor confidence and, consequently, ensuring the bond’s success in mobilizing resources for climate and biodiversity projects. This is particularly important for countries where lower credit ratings could affect the bond’s perceived creditworthiness.

In addition, developing a green bond market is a time-consuming process that requires engagement from multiple stakeholders and ongoing consultations. Therefore, it is essential to manage stakeholders’ expectations and allocate sufficient time to each stage.

Finally, although the effective issuance of green bonds must include independent reviewers, it was identified that this expertise did not exist locally. At the same time, contracting foreign reviewers is costly and time-consuming. Hence, it is important that initiatives for the development of green bond markets also include professional development initiatives to train domestic independent reviewers.

The Securities Green Bonds Guidelines 2019

Partnership with a “lighthouse teacher” and a supporting school community

The garden coordinator teacher and the students co-creating the garden

ESSRG Nonprofit Kft.

A passionate teacher takes the initiative and dedicates a huge part of her time coordinating the project, collaborating with researchers, and engaging students along with her colleagues. The democratic school community and the teacher(s)’ intrinsic motivation lead to a certain creative freedom to pursue their own ideas and pedagogical innovations, while creating a trusting, open atmosphere for experiential learning in the school garden and through arts-based practices.

Supporting school leadership, available green space of the school, dedicated teacher, teamwork

It is essential to have at least one teacher at the school who is willing to dedicate time and energy to the project. Our research showed that the teacher’s background is less important than their strong intrinsic motivation – their deep belief in the value of connecting with nature and integrating green spaces into school life. Naturally, this commitment alone is not enough; it must be supported by a democratic school environment, such as an encouraging principal or school district, which enables the teacher to turn their vision into reality. The drawback of this building block, however, is that if the success of a project depends too heavily on one individual, it may not be sustainable in the long term.

Although school gardens are included in Hungary’s national curriculum as an optional specialisation, this currently applies only to grades 5 through 7. However, the teachers and experts we interviewed suggested that it would be more effective if education in this area began earlier and continued beyond these years. Therefore, a potential additional building block could be the presence of a supportive educational policy environment.

Verification and traceability tools

This step seeks to ensure, on a scientific basis, that products labeled with the seal do not contain shark or other species that are threatened or protected by law. This principle is the backbone of the seal's credibility.

To this end, random genetic sampling will be carried out on the protein used to prepare or has been used to prepare ceviche labeled with the seal, at least twice a year. The samples are sent to a certified genetic analysis laboratory (e.g., COIBA AIP, in the case of Panama) to verify whether or not species excluded by the seal are being used.

The company covers the costs of the analysis, and if prohibited protein is detected, the right to use the seal is withdrawn.

There must be reliable laboratories that use molecular techniques to detect proteins from sharks, rays, and other endangered fish species.
If there are no laboratories in the country interested in joining the initiative, laboratories in other countries may provide support with sample processing.
The sampling and analysis protocol must be rigorous and always carried out through random sampling without prior notice.

Scientific traceability gives the seal technical legitimacy.
If samples from one country have to be processed in another, permission to access genetic resources must be obtained in both the country of origin and the country of destination.
The possibility of financing part of the genetic analysis should be explored so that the cost does not fall entirely on the commercial partner. This will make it easier to attract more people interested in participating in the initiative, increasing its reach to more people and increasing the volume of ceviches that do not use protein from sharks, rays, or endangered species.

Inception phase

Multi-national

Cash-for-work program to link financial assistance with positive environmental outcomes

The picture shows four men in a beach cleaning activity.

Participants in beach cleaning activity

UNDP Thailand

The crowdfunding campaign raised resources to provide cash transfers to taxi boat and small fishing boat drivers, who were identified as one of the most vulnerable groups due to the COVID-19 pandemic (for more information, please refer to building block 1). To achieve this, a cash-for-work program was established, in which temporary cash transfers are conditional on the provision of labor for the corresponding period. The boat drivers were hired for three months to clean beaches, collect marine debris, recycle the waste collected, and mobilize the local community for biodiversity conservation.

In this way, the campaign not only contributed to the livelihoods of boat drivers during the pandemic, but also increased their awareness of, and engagement with, biodiversity loss caused by unsustainable practices. These engagements strengthened a sense of ownership among locals towards the campaign and their own island, serving as an additional motivation for conservation and restoration, fostering behavior change after the cash-for-work program ended.

Willingness of locals to engage in the work, along with effective communication campaigns to increase mobilization of those participating in the cash-for-work program and for biodiversity conservation.

Cash-for-work programs have the potential to provide incentives for behavior change with long-term impacts by combining much-needed financial support with awareness raising and skill building efforts. These programs also uphold the agency of participants, who engage in meaningful work in exchange for income.

Technology and innovation to create digital platforms that are accessible and tailored to local needs

The image shows campaign participants at the beach, in Koh Tao, with boats in the background. They are holding a sign of the campaign.

Koh Tao, Better Together and Krungthai Bank

Krungthai Bank

Krungthai Bank (KTB), a key partner in the "Koh Tao Better Together" crowdfunding campaign, developed an easy-to-use electronic donation platform integrated with the Thai tax system. The bank's innovation lab offered to create the e-donation platform. Through a QR code, Thai citizens were able to make donations in a quick, transparent, and verifiable way. The platform allows Thai donors to automatically send their donation information to the Revenue Department for tax deduction. UNDP also designed another e-donation platform for international donors.

KTB acted as the initial donor of the campaign, contributing 30% of the fundraising target. Furthermore, the bank committed to covering the remaining donations if the target was not met, which was unnecessary thanks to the success of the campaign.

Additionally, KTB provided trainings on digital financial services to boat drivers.

The key enabling factor is the establishment of effective public-private partnerships to leverage the expertise of each stakeholder. By combining BIOFIN's financial expertise, KTB's innovation, Raks Thai Foundation's experience in engaging local communities, and the government's role in overseeing financial services, it was possible to develop and disseminate an appropriate e-donation platform and run the campaign.

Another relevant condition is effective communication strategies to increase public awareness of, and access to, the e-donation platform.

It is imperative to promote partnerships and multisector engagement to address global and local challenges that are multidisciplinary by nature, from financial constraints amid a global health crisis to biodiversity and ecosystem degradation.

Moreover, it is crucial to develop solutions that reflect advancements in innovation and digitalization. When well-designed, digital tools have the potential to reach a large number of individuals (i.e., surpassing the fundraising target) and simplify processes (i.e., connecting the e-donation platform with the tax system). Equal importance must be given to the training of locals on these digital tools, enabling just and equitable access.

"Koh Tao Better Together" page on Krungthai Bank's website.

Data-driven and evidence-based design for effective crowdfunding strategies

UNDP Thailand conducted a socio-economic impact assessment of COVID-19 on Koh Tao's tourism sector. Using pre-pandemic data and information from locals, the study concluded that small tourist boat drivers are amongst the most affected and most vulnerable segment of the population due to the complete dependence on tourism. The study estimated the minimum living cost of USD 500 (THB 15,000) for individual households in Koh Tao and found that 90% of them received almost no income since the beginning of the pandemic. The study served as the foundation for the campaign, enabling the estimation of a baseline, making sure that the solution addresses the most vulnerable groups and provides an income that can, at least, alleviate sustenance needs. The campaign was also designed with the support from UNDP's Crowdfunding Academy, with expertise in this area.

Enabling conditions include the availability of socioeconomic data prior to the event (in this case, the COVID-19 pandemic) or the ability to collect data from relevant stakeholders before designing the crowdfunding campaign. Another enabling condition is having the technical capacity or necessary support to translate existing data and studies into the design of a project/program.

The importance of designing programs and projects based on data and well-conducted studies, ensuring that the project effectively meets the needs of participants. Beyond supporting the design of the crowdfunding campaign, the impact assessment of COVID-19 on Koh Tao revealed how, on the one hand, local livelihoods became vulnerable without tourism and, on the other hand, the pause in visitor activity allowed nature to recover. Therefore, the crowdfunding campaign — and the COVID-19 impact assessment — were the entry point for rethinking a more sustainable future for tourism on the island.

Data-driven and evidence-based design for effective crowdfunding strategies