A growing number of emerging markets plan to issue sovereign green bonds, which could boost the wider green bonds market through national and international knock-on effects, according to the International Finance Corporation (IFC).

In 2017, emerging markets raised $80m (€65.1m) from issuing green bonds, led by Fiji and Nigeria. Nations including Kenya, Ghana, Morocco and Indonesia are expected to issue in 2018, according to a report from the IFC, a sister organisation of the World Bank.

The total green bond market is expected to reach $250bn in 2018.

The Fiji bond had raised FJD60m (Fijian dollars; €23.8m) by March 2018, and was expected to raise another FJD40m before July 2018, the IFC said.

Ariff Ali, governor of the Reserve Bank of Fiji, said in a statement released with the IFC report: “Fiji has shown that small economies under threat from climate change can deliver effective, credible and innovative ways to finance climate work.”

Governments issuing green bonds to attract climate-related financing should take a leadership and role model function that would trigger both national and international knock-on effects, added the IFC’s senior financial sector specialist Aaron Levine, author of the report.

“What we hope to see following [national issuance] is private sector issuances and sub-sovereign issuances,” he said.

This, Levine said, could happen as a result of the establishment of climate policy that came with the issuance of green bonds. He said: “When the government takes the lead, it is really setting the policy framework direction for the whole country.”

A green bond policy framework based on a long-term issuance programme required governmental and climate-related green policies, Levine explained. Policy frameworks and greater ‘certainty’ could then motivate sub-sovereign issuers and the private sector to follow suit.

Recently, the IFC and Amundi closed the largest green bond fund to date at $1.4bn. Institutional investors from Sweden, France, Austria and Denmark were among the fund’s backers.