Sovereign debt is a fundamental financial aspect for governments and a readily used tool to facilitate development processes. As countries grapple with the challenges of climate change, the reliance on external debt to fund climate initiatives increases. However, this can become a double-edged sword when unsustainable debt levels hinder investments in climate resilience.
This scoping paper has been developed as part of SLYCAN Trust's work programme on climate finance and loss and damage (L&D) and serves as the initial step in a comprehensive analysis on the interlinkages between the realms of debt justice, a reform of the global financial system, and the implications on L&D funding. In an era where complex, compounding, and deeply interconnected challenges impact nations and their populations, a more nuanced understanding of the above-mentioned interlinkages is crucial for addressing these impacts and building a more sustainable and equitable future. This paper explores both existing and proposed routes for leveraging debt responses to mobilise climate finance for L&D.