The Breathe Better Bond Initiative


Globally on average, 80% of people in cities are exposed to unsafe air quality. And poor air quality disproportionately affects populations living in low- and middle-income countries, where 97% of people in cities are exposed to air quality below World Health Organization standards. Meanwhile, cities are a major contributor to climate change, responsible for 70% of global CO2 emissions. And many of the worst effects of climate change will be experienced in cities.

Historically greenhouse gas emissions and air pollution have been approached from different policy arenas, with air pollution often being of greater concern for local governments However, increasingly city coalitions are also emphasizing climate action and have identified that by tackling short lived climate pollutants (SLCPs), an opportunity arises to tackle both problems at once.

Within this challenge, city governments face several barriers. Cities often face competing demand for capital and lack access to sufficient finance. In addition, they often lack capacity to identify bankable projects, and for monitoring and regulation.

The Solution

The Breathe Better Bond Initiative is an innovative bond, paired with technical assistance, issued by local governments in developing nations, which uses proceeds to invest in projects that reduce both air pollution and greenhouse gas emissions.

The Breathe Better Bond is a bond, issued by a city, state, or public private partnership, that will raise finance for city projects that reduce both air pollution and greenhouse gas emissions. The Breathe Better Bond Initiative complements the funds raised by the bond issuance with a technical assistance package that includes capacity building for cities focused on identifying sources of air pollution, project pipeline preparation, and strengthening or improving enabling conditions. Specifically, the bond proceeds will fund projects across different sectors such as waste, solar generation, and electrification of transit.

Implementation and Impact

The proponent, the IFC, is planning pilot issuances in several emerging market cities. It estimates that bond issuances in each of these cities will be in the range of US $50 – US $200 million. Priority target cities have been pre-selected which have a combined population of more than 100 million people. Implementation of projects will have long-term positive health benefits for the local populations by reducing air pollution, and will also help cities reduce greenhouse gas emissions.


The Breathe Better Bond Initiative is kicked off by grant financing for technical assistance. This TA will initially focus on assessing both air pollution and GHG emissions sources and alternatives, emissions modelling and forecasting, strengthening enabling conditions, and project preparation. It is expected that this process will take at most 2 years but can be completed much more quickly in cases where cities have strong enabling conditions and have identified project pipelines.

Once completed, a bond will be issued by the municipality or a public private partnership raising money from institutional investors. Development finance institutions may provide credit enhancement if needed. The proceeds will then be used to fund projects that reduce both air pollution and GHG emissions.

Technical assistance may support capacity building for monitoring, reporting and verification (MRV) and impact evaluation.

Once operational, each project will periodically provide data for impact tracking purposes. In some cases, the issuer may get a results-based payment (or payments) for example from a philanthropic institution, a DFI, or the issuer’s national government, if it achieves certain criteria, which will be structured on a bespoke basis for each city depending on the local context.