Paraguay is the first country in the region to typify and incorporate guidelines for the emission of SDG bonds within its national regulation. The national securities regulatory body  – Comisión Nacional de Valores (CNV) – issued the Resolution No. 9/20 on March 5^th, which modifies the legislation seeking to “endow the stock market with new financial instruments that promote social and environmental objectives” aligned with the 2030 Agenda and the SDGs.

This Resolution defines SDG bonds as those debt instruments that finance projects with green, social or sustainable goals or measurable impacts; the latter contributing to achieve both, environmental and sustainable impacts. This type of bonds is not exempt from general regulations and conditions, including the terms of risk qualification. However, they must be certified by an independent third party, guarantee the use of financing for the specific projects proposed and are subject to periodic public reporting on their impact. If the bond issuer does not meet these additional requirements, it will lose its ODS bond certification as a way to discourage the issuance of bonds that appear to be sustainable, but are not.; all SDG Bonds must be verified by an independent verifying third party recognized by the Climate Bonds Initiative.

Furthermore, the Resolution states that the governance, management, transparency, impact assessment and accountability of the SDG bond market in the country, will be guided by international standards and guidelines, including those of the Green, Social and Sustainable Bond Principles (GBP), International Capital Market Association (ICMA), Climate Bonds Initiative (CBI), International Climate Bonds Standards and UNDP´s Impact Management Standards.

The Word Wildlife Fund (WWF), UNEP Finance Initiative and UNDP Paraguay have assisted the CNV in drafting this SDG Bond regulation. UNDP will continue to support the CNV in building the national ecosystem for the domestic SDG bond market, including the promotion of UNDP´s global SDG Impact standards.

"We must make the transition towards sustainable development for the prosperity and well-being of all. And sustainable finance plays an important role in guiding our economy towards the good use of our resources. That is why this first step that Paraguay takes to typify and regulate the SDG Bond's market is crucial, " explains Joshua Abreu, president of the National Securities Commission (CNV Paraguay).

The SDG Bonds will help Paraguay´s COVID response during the recovery phase by promoting and easing the financing of projects that will not only stimulate the economy, but also contribute with social and environmental benefits, in order to “build back better.”

Bearing in mind that the most vulnerable groups will be the most affected by the economic slowdown, it is crucial that expansionary economic policies to counteract the anticipated recession are also aimed at generating employment for them. Likewise, investment in environmentally-friendly projects could contribute to improving public health (e.g. air quality). In this regard, SDG Bonds could leverage investment that will translate into measurable social and environmental benefits during the recovery phase.