Climate Resilient debt Clauses and Beyond – providing breathing space in sovereign lending and borrowing

A broad ecosystem approach is critical to overcome existing barriers and scale the integration of Debt Pause Clauses across the entire capital stack of borrowing countries. The “Roundtable on Climate Resilient Debt Clauses (CRDCs) and Beyond” held in Madrid on 2 June 2025, hosted by the Government of Spain, Climate Emergency Collaboration Group, Children Investment Fund Foundation, and the Sustainable Sovereign Debt Hub at Casa de America revealed broad consensus among country representatives, bilateral and private creditors, Multilateral Development Banks (MDBs), and other stakeholders, including credit rating agencies and civil society representatives, about the shared benefits of mainstreaming Debt Pause Clauses. Policy makers and market participants can build on the emerging consensus about the broad benefits of CRDCs to overcome hesitancy and foster the uptake of CRDCs across the entire capital stack.

Climate resilient debt clauses (CRDCs) and, more general, Debt Pause Clauses can provide critical "breathing space" for vulnerable countries experiencing exogenous shocks, be that from a climate event or other crisis, affecting their ability to service external debt obligations. When integrated across the capital stack, Debt Pause Clauses allow governments to defer debt payments and redirect funds towards emergency response spending. This can stave off costly sovereign default while redirecting fiscal space towards supporting vulnerable populations in crisis.

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