Financing the Sustainable Development Goals: Exploring the Role of Government Bond Investors

Government bond investors can help close the financing gap for the Sustainable Development Goals by directing capital toward governments with strong, yet underfunded, sustainability policies. We introduce a practical method to implement this approach, with the potential to improve the lives of 2.1 billion people, primarily in low- and middle-income countries. The novelty of our approach lies in prioritizing investments where each dollar has the highest potential for sustainability improvement, rather than concentrating portfolios in already well-performing, high-income countries with low interest rates. This reorientation offers a more impactful path for sustainable bond investing. While our focus is on sustainability impact, we acknowledge that investors must also consider expected risk and reward when constructing portfolios.