1. Themes
  2. Fiscal Space
  3. Climate-resilient Debt Clauses and Pre-emptive Reprofiling

Climate-resilient Debt Clauses and Pre-emptive Reprofiling

Climate-Resilient Debt Clauses (CRDCs) are ex-ante agreements to postpone debt repayments in the instance of climate disasters, creating fiscal space for emergency response and resilient reconstruction.

2030 Goals

01

Ensure Brazil’s Debt Management Office and Treasury Secretariat have technical capacity and regulatory authority to incorporate contingency-based debt clauses (like CRDCs) in sovereign issuance frameworks.

02

Integrate CRDCs and pre-emptive reprofiling as part of Brazil’s broader sovereign climate finance strategy, aligned with G20 dialogues and national climate risk frameworks.

03

Facilitate pilot CRDC programs with multilateral and bilateral creditors (e.g., IDB, AIIB, World Bank) as a first step toward building market familiarity and overcoming reputational concerns.

Status

No Progress

Brazil placed climate-resilient debt clauses on the global agenda during its 2024 G20 presidency, signaling intent to integrate them into sovereign debt management. Adoption remains at discussion stage, with practical application still limited.

Credit rating agencies such as Fitch and S&P confirmed that well-structured, net present value-neutral clauses would not be treated as default events, lowering reputational risks for Brazil.

Pre-emptive reprofiling is not yet developed at the sovereign level, but it is seen as a potential complement to future CRDC strategies to strengthen resilience against climate shocks.

Leading Actors

Cooperation is required between these actors and audiences to drive progress foward in Climate-resilient Debt Clauses and Pre-emptive Reprofiling.

Public Financial Institutions

Central Bank of Brazil (BCB)

Multilateral Development Banks

Inter-American Development Bank (IDB)

Multilateral Development Banks

World Bank

Multilateral Development Banks

Asian Infrastructure Investment Bank (AIIB)

International Organizations

UNDP ECA

International Organizations

G20 Finance Track (under Brazil’s presidency)

Ministries

Ministry of Finance (MF)

Other Governmental Organizations

National Treasury (STN)

Other Governmental Organizations

Debt Management Office (within National Treasury)

Other Governmental Organizations

Federal Audit Court

Supportive Stakeholders

World Resources Institute Brasil (WRI Brasil)

Supportive Stakeholders

Instituto do Clima e Sociedade (iCS)

Supportive Stakeholders

Observatório do Clima

Supportive Stakeholders

Instituto Escolhas

Key Milestones

Showcasing the key reform milestones for Climate-resilient Debt Clauses and Pre-emptive Reprofiling that have been addressed at global events.

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New York, US

Global Innovation Lab for Climate Finance Endorsement Meeting

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  • Climate-resilient Debt Clauses and Pre-emptive Reprofiling

    Develop a legal and financial framework to integrate CRDCs into Brazil’s complex public debt structure, accommodating diversified maturities, multiple currencies, and a broad creditor base

  • Domestic Financial Market Development

    Deepen domestic capital markets through long-term sustainable instruments.

Washington DC, US

Annual Meetings of the IMF and World Bank

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  • Sovereign Debt Architecture

    Announce and operationalize a medium-term sovereign bond pipeline and emissions calendar to provide long-term visibility and strengthen investor confidence

  • Climate-resilient Debt Clauses and Pre-emptive Reprofiling

    Create domestic legal standards for CRDC triggers, disaster definitions, and verification protocols, ensuring credibility and investor confidence

Brasilia, Brazil

Brazil Investment Forum

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  • Sovereign Debt Architecture

    Strengthen coordination between federal and subnational governments, aligning climate finance strategies and ensuring consistency across project pipelines

  • Climate-resilient Debt Clauses and Pre-emptive Reprofiling

    Design CRDC models tailored to Brazil’s eligibility constraints, enabling access despite exclusion from SIDS and low-income country–focused programs

Location TBC

PRI in Person

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  • Climate-resilient Debt Clauses and Pre-emptive Reprofiling

    Develop a legal and financial framework to integrate CRDCs into Brazil’s complex public debt structure, accommodating diversified maturities, multiple currencies, and a broad creditor base

  • Urban and Subnational Finance

    Enable municipal issuance of urban green bonds linked to climate-resilient infrastructure and waste management.

Learn More

Publications and educational material to deepen understanding of Climate-resilient Debt Clauses and Pre-emptive Reprofiling.

G20 Presidency Note on Climate Resilience

Climate-resilient Debt Clauses and Pre-emptive Reprofiling

Note prepared under Brazil’s G20 Presidency outlining principles for building climate-resilient financial architecture.

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