Impact Policy Tracker Policy

Chile Sovereign Sustainability-linked Bond



As part of Chile’s Climate Change Financial Strategy, a Government-wide effort, and after presenting the Sustainability-linked Bond (SLB) Framework, the government issued a USD 2 billion SLB to implement actions that fulfill the country’s greenhouse gas (GHG) reduction commitment agreed on its National Determined Contribution (NDC) and to implement a national clean energy agenda. The bond sustainability performance targets (SPT), aligned with its NDC, require Chile to pay investors a higher coupon if it fails to limit GHG emissions and increase its share of electricity derived from renewable sources.

Highlights

  • First of its kind by a sovereign: after being the first country in the Americas to issue a green bond in 2019, with this issuance, Chile became the first country in the world to issue a SLB. The bond was oversubscribed more than 4 times (+USD 8bn), evidencing the market appetite for the instrument.

  • Coordination across government: the joint work of different national government Ministries, particularly in the areas of energy, infrastructure, mining and transportation, was essential given the overarching commitments set by the bond. Through long-term public policy instruments to pursue sustainability objectives led by the Ministry of Energy, all relevant departments, despite not having compliance obligations in terms of emission budget or mitigation efforts, have been directly involved in the issuance and progress report.

Government’s Role:
Market Participant


Country:
Chile

Policy Type:
Sustainable Bonds

Year: 2022

Responsible Institution:
Ministry of Finance (with participation of: Ministry of Energy, Ministry of Transport and Communications, Ministry of Mining, Ministry of Health, Ministry of Agriculture, Ministry of Public Works and Ministry of Housing and Urban Planning).

Additional information:
Ministry of Finance: Sustainability-linked bonds
2023 Sustainability-Linked Bond Report
2024 Sustainability-Linked Bonds Report
Sustainable Fitch: Chile Ushers in Sovereign Sustainability-Linked Bond Market
S&P: World's 1st sovereign sustainability-linked bond issued by Chile
Chile’s Sustainability Linked Bond Framework

Sustainable Bonds

What are Sustainable Bonds?

Within the set of financial instruments that fall under the impact investing umbrella, Green, Social, Sustainability, Transition, Blue, Gender and Sustainability-Linked bonds (often collectively referred to as GSS+, ESG, thematic, labelled or sustainable bonds) have gained prominence in recent years for their potential to help bridge the SDG financing gap. Governments, especially in emerging economies, play a catalytic and pivotal role in scaling these instruments. By issuing sustainable bonds, national, regional, and local public entities mobilise capital for long-term investments with broad social and economic benefits, which often fall outside the scope of conventional, profit-driven financing.

Public issuers are not only large players in terms of volume, representing approximately 50% of sustainable bond issuances annually since 2020, but also critical market enablers. Government-led issuances serve as signals of policy commitment to sustainability, helping to build investor confidence and drive demand from both domestic and international capital markets. Moreover, public sector issuances typically align with international standards and best practices, such as the ICMA principles, thereby setting a benchmark for transparency, impact reporting, and accountability. This leadership lowers the perceived risk for other issuers and facilitates replication by subnational governments, state-owned enterprises, and even private entities. Thanks in part to these public sector efforts, the sustainable bond market continues to grow rapidly. In 2025, issuance of sustainable bonds is projected to reach USD 1 trillion, accounting for 11% of the global bond market, a milestone that reflects both rising investor appetite and the enabling role played by governments in expanding this segment of sustainable finance.

For more information on sustainable bonds and their market trends, visit S&P Ratings “Sustainable Bond Outlook 2025”, Sustainable Fitch “Sustainable Finance Outlook 2025”