ABSTRACT
The rise of thematic finance, from green and social bonds to sustainability-linked instruments, represents a real opportunity to reconcile finance and development. The recent COVID-19 crisis has been addressed through large stimulus packages, which will need to be financed through the issuance of new government debt. Corporations must adapt to new regulations, which attempt to tackle the many challenges linked to the environment or social inequality across the world. However, the utilization of non-financial parameters alongside more traditional financial characteristics presents new types of risks to practitioners. These new risks can be mitigated through the design of new policy frameworks, but it is also important to explore new tools to counter the negative effects of this sudden explosion of thematic instruments. New research is needed, and methodologies must be developed to ensure that the progress made in redirecting financial flows correctly reaches its objectives.
