SOCAR CEO: Debt-to-climate swaps may help developing countries

Debt-to-climate swaps could be one possible tool for engaging developing countries in the climate agenda, Rovshan Najaf, president of the State Oil Company of Azerbaijan (SOCAR), said at a panel discussion at the World Economic Forum 2026 (WEF 2026), Report informs.

According to him, the issue of motivation remains key when discussing the climate agenda in developing countries.

"Looking at the bigger picture, when it comes to developing countries, the first question we're constantly asked is, 'Why do we need this?' These are the countries that say, 'You already have developed infrastructure, you're at a different stage of development, and therefore you view the situation differently,'" Najaf noted.

He emphasized that for many countries, basic access to basic infrastructure remains a priority.

"They ask a reasonable question: why should we keep up with you on climate change and decarbonization if our immediate needs haven't yet been met? This question requires an honest and clear answer, because without the consent of these countries, without building a sense of ownership and willingness to participate, climate projects will not be able to achieve their goals," added the head of SOCAR.

The second key challenge is financing climate initiatives in countries with high and often "toxic" debt burdens, he noted.

"After the question, 'Why do we need this?' comes the next question: 'How are we going to finance it?' The private and public sectors in developing countries are unable to shoulder all the costs. They rely primarily on external support in the form of grants and loans from international organizations and development funds. However, the problem is that these countries already have extremely high debt burdens. How can we address this situation?" he noted.

As one possible solution, Najaf proposed using a debt-for-climate swap mechanism.

"The idea is for debt servicing obligations to be automatically channeled into funding green or decarbonization projects through accelerated and simplified mechanisms. The use of such rapid response tools could be a practical solution to the current situation," he concluded.