The OECD has published a report, based on an OECD-LuxSE survey and follow-up consultations, on how investors view public sector green, social, sustainability and sustainability-linked bonds, with a particular focus on developing countries. The report finds that investor interest is driven mainly by alignment with institutional investment strategies and sustainability objectives, alongside expected long-term returns and transparency. Surveyed investors generally saw public sector green, social and sustainability bonds as comparable in risk to conventional bonds, reported no clear ex-ante preference between green, social and sustainability bonds and sustainability-linked bonds, and assessed macroeconomic and institutional risks as issuer-level factors that typically apply across conventional and labelled bonds alike. The paper places those findings against a market where developing-country issuance remains limited despite large financing needs. It notes that GSSS bonds represented 5% of annual emerging market issuance in 2024, while in 2025 only 17% of the green, social and sustainability bond market was issued in developing countries, falling to 5% excluding the People’s Republic of China. The survey drew 11 responses from investors managing more than USD 5.7 trillion in assets. Based on the results, the OECD sets out seven policy considerations: developing-country issuers should prioritise liquidity buffers and flexible issuance strategies; donors and policymakers should support harmonised but locally adapted standards and taxonomies, strengthen budgetary reporting for eligible expenditures, build sustainability-focused mandates for domestic funds, improve post-issuance disclosure and impact measurement, and assess unintended effects of blended finance approaches; and market participants should increase the inclusion of developing-country GSSS bonds in benchmark indices. The report points to further work on the role of investment strategies in shaping demand, the effect of benchmark construction and passive investing on capital flows to developing countries, and the reasons some investors remain outside the GSSS bond market.
OECD2026-07-10
OECD report identifies investor priorities and seven actions to expand public sector GSSS bond issuance in developing countries
The OECD has released a report on investor incentives for public sector GSSS bonds, finding that demand is driven mainly by fit with institutional mandates, expected long-term returns and transparency. Investors generally viewed labelled bonds as carrying similar issuer-level risks to conventional bonds, while developing-country issuance remains small. The report sets out seven actions focused on standards, reporting, domestic mandates, disclosure, blended finance, issuer liquidity and benchmark inclusion.