Engagement collaboration: Water bonds to mitigate environmental risks

Project overview

Water is indispensable for life, health, and human activities. As such, sustaining water resources and addressing their scarcity is an urgent global challenge. Latin American countries on the DAC list, like Brazil, are under enormous pressure to manage water resources sustainably. Over 100 million Brazilians lack access to safe sanitation, and more than 200 million rely mostly on hydropower for electricity (OECD, 2022), highlighting the urgent need for innovative solutions. Addressing these issues requires leveraging financial instruments that can drive sustainable environmental projects effectively.

With a specific focus on Brazil, our proposed research aims to integrate an environmental risk approach into analysing the impacts of green bond investments, specifically on water resources. Green bonds are financial instruments designed to fund sustainable environmental projects, such as infrastructure, to address water-related challenges. However, their actual environmental effectiveness and transparency remain underexplored (Ehlers et al., 2020, Jia,2023, Fatica and Panzica, 2021).

Collaboration is at the heart of our approach. The UK is the global leader in water bonds, while Brazil leads in Latin America. By bringing together UK and Brazilian researchers, we aim to foster the exchange of world-class knowledge and innovative ideas and develop networks with local stakeholders; crucial in driving forward our research and ensuring its practical relevance. This partnership will enhance our collective ability to tackle the environmental challenges associated with sustainable finance.

Our objectives are clear: to foster new collaborations, establish fresh partnerships and networks, and develop innovative research projects scalable for further funding applications. These goals will be achieved through a structured approach involving stakeholders via interviews, a workshop, dissemination of findings, and development of further research proposals. Ultimately, by addressing the complexities of environmental risk in green finance, our research will contribute significantly to global sustainable development and environmental stewardship.

The timing of this research is pertinent due to the global push towards sustainable water infrastructure and the urgency to limit the rise in global temperature. Our project aligns with Sustainable Development Goals SDG6 (clean water and sanitation), SDG8 (decent work and economic growth) and SDG17 (partnerships for the goals). Moreover, the upcoming COP 30 in Brazil in 2025 places the Amazon at the centre of global sustainability and climate change discussions. COP 30 presents a crucial opportunity for the Amazon region to address innovative financial instruments like green bonds, offering a unique platform for our research to contribute to global solutions for water scarcity and climate resilience.

Our project brings together researchers from the UK and Brazil, blending expertise in sustainability and finance to tackle complex sustainable fi nance challenges. Dr Beltran leads the UK team, specialising in sustainability transitions, with Dr Park contributing green finance knowledge and Dr Robins focusing on stakeholder engagement. In Brazil, Dr. Lima dos Santos brings expertise in sustainability and integrated reporting, supported by Dr. Dias in environmental accounting. Professors Tjahjono, Pereira, and Dr. Torres provide insights into sustainable operations, financial risk management, and environmental governance. Team members also participate in the RELES network (Latin American Sustainability Studies).

In conclusion, this project is not only timely but also essential. It will advance our understanding of green finance's impact on critical resources like water, promote innovative solutions to environmental challenges, and support broader goals of climate resilience and sustainable development in Brazil and will have implications far beyond its borders.

Project Objectives

Our primary objective is to foster new collaborations between UK and Brazilian researchers, promoting access to world-class knowledge and expertise to measure the environmental impact of water bonds. Indeed, by enhancing early-career researchers' professional and personal experiences, we aim to establish long-term collaborations that will drive sustained progress in sustainable finance and develop networks with local stakeholders, such as regulators and companies—crucial to collectively addressing the environmental challenges associated with sustainable finance. These partnerships will be instrumental in generating innovative ideas for collaborative research projects with potential future scalability, laying the groundwork for long-term, impactful studies that contribute to sustainable development and environmental stewardship.

Impact statement

The strategic allocation of funds across these work packages is intended to meet the project's immediate goal and establish a strong foundation for future research and development efforts in Brazil and other Global South nations. By collaborating with international stakeholders and leveraging the extensive networks of the RELES Network and other partners, the project aims to ensure that the green bond practices developed are both enduring and scalable.

Outputs

Comprehensive funding proposal:
ESRC-FAPESP (or similar) bid proposal draft
Create new collaborations between UK and Brazilian researchers in sustainable finance.

Established partnerships and networks:
Develop fresh partnerships and networks with local stakeholders such as regulators, companies, and academic institutions.
Enhance our collective ability to address the environmental challenges of sustainable finance.

Industrial report and recommendations:
Develop and disseminate an industrial report specifying potential pathways for creating integrated assessment mechanisms.
Include recommendations from stakeholders and an analysis of local regulatory frameworks.

Promoting Sustainable Finance:
Support the development of resilient and sustainable economies that prioritise environmental health.
Contribute to the broader goals of climate resilience, economic stability, and environmental stewardship in the Global South.

Joint Assessment and Reporting:
Conduct a joint assessment of the accomplished activities and submit it to ESRC by the end of the project.
Provide a detailed evaluation of the project's outcomes and recommendations for future research and collaboration.