Thanks to their strategic position in the partner countries, national development banks can promote private investments in energy efficiency measures and renewable energies. The ‘Green Finance Facility’ of the Inter-American Development Bank (IDB) supports national development banks in developing new financing products for Latin America and the Caribbean. To this end, it provides long-term financing with favourable terms and technical accompanying measures. Depending on requirements, bank employees receive training, market opportunities are analysed and the development of business plans is supported. A Green Bond platform is also being established to help improve the transparency of Green Bonds in the region. In the long term, the programme aims to contribute to an intensification of the financial market. This will also enable commercial banks to develop business models for investments in climate change mitigation technologies.
Countries: Brazil, Chile, Colombia, Mexico, Paraguay, Uruguay
IKI funding: 8,000,000.00 €
Duration: 06/2016 till 12/2024
Implementing organisation: Inter-American Development Bank (IADB / IDB / BID)
Political Partner: Ministry of Economy – Brazil
Ministry of Environment, Housing and Territorial Development (MinAmbiente) – Colombia
Ministry of Environment (MMA) – Chile
Ministry of Environment – Uruguay
Ministry of Finance – Chile
Ministry of Finance – Paraguay
Ministry of Finance and Public Credit – Mexico
Ministry of Housing and Territorial Planning (MVOT) – Uruguay
Secretariat of Finance and Public Credit (SHCP) – Mexico
Implementing Partner: Banco de la Republica oriental del Uruguay
Banco do Brasil
Banco nacional de comercio exterior (BANCOMEXT)
Banco Nacional de Obras y Servicios Públicos (Banobras)
Banco Regional de Desenvolvimento do Extremo Sul – BRDE
Brazilian Development Bank
Chilean Economic Development Agency (CORFO) – Chile
Fideicomisos Instituidos con Relacion a la Agricultura (FIRA)
Financiera nacional de desarrollo agropecuario, rural, forestal, y pesquero (FND)
Fondo para el Financiamiento del Sector Agropecuario – FINAGRO
Minas Gerais Development Bank (BDMG)
Nacional Financiera (NAFIN)
BDMG completed its SDG framework, which was successfully certified by a second party opinion process (SPO), and then moved to issue a USD $50 million SDG Bond in a partnership with IDB Invest.
The operation secures BDMG’s standing as the first Brazilian subregional development bank to issue a sustainable bond in the US market. The bank developed an SDG rating tool to measure the impacts of its portfolio.
BNDES and Banco do Brasil received support from the program to structure their SDG frameworks and certify them though a SPO process.
The Brazilian Laboratory of Financial Innovation (LAB) is a collaborative platform to share knowledge, enhance regulatory frameworks, and pilot innovative products in order to advance sustainable finance in Brazil. The multi-sector forum was initiated by the Brazilian Development Association (ABDE), the IDB, and the Securities Commission of Brazil (CVM) in partnership with the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH. In August 2020, the LAB completed its
4th year working to promote sustainable finance and financial innovation in Brazil. Currently, 264 institutions and 921 members are involved, up from less than 50 institutions at the beginning.
Banobras has strengthened its path to adopting a comprehensive green model in its operations with the development of an Environmental and Social Risk Management System (ESRM), a roadmap for the implementation of a green banking strategy, and a methodology for measuring environmental and social positive impacts of present and future operations.
NAFIN and Bancomext are preparing loan operations with the IDB, which will allow them both to finance distributed generation (DG) projects for SMEs. Resources from the Clean Technology Fund (CTF) will be allocated to support both initiatives with concessional funds.
Established in 2019, the LAB has successfully scaled the financial innovation dialogue structured in its four working groups: green finance, sustainable transportation, sustainable energy and sustainable agriculture.
The program supported the development of a methodology to assess the environmental benefits of protected agriculture, which guides investment in low-carbon, climate-resilient agricultural greenhouses. This allowed the Trust Funds for Agriculture of Mexico (FIRA) to issue a USD $125 million green bond backed by more than 500 projects of protected agriculture and sustainable irrigation systems.
USD $23 million were fundraised from the Green Climate Fund for energy efficiency in small and medium enterprises in Paraguay for the Agencia Financiera de Desarrollo (AFD).
Under the direction of the Ministry of Finance, the facility provided support to Chilean financial authorities to advance the promotion of the Voluntary Green Agreement, an effort derived from the Green Finance Public-Private Roundtable (La Mesa). The support was expanded to the 2020+ Roadmap, which was designed to actualize the commitments made under the Voluntary Green Agreement.
Finagro developed instruments that allow it to estimate the benefits in energy savings, CO2 equivalent emissions reduction of energy efficiency, and renewable energy investments for small and medium farmers.
In 2020, the project was extended to 2024 and includes Chile as a partner country, the Green Bond Transparency Platform and a regional component.
The Green Bond Transparency platform was launched at the end of April 2021 to become a global benchmark for transparency and comparability for the green bond market. As of February 2022, there are 126 bonds published in the GBTP accounting for US$24.1 billion with the participation of eleven countries represented by the reporting-issuers.
The programme jointly organized a regional meeting in partnership with the Nexos+1 platform and the Decarboost IKI project in September 2021. The event aimed to analyze Latin American investment opportunities to accelerate decarbonization and take strategic advantage of instruments or schemes for low-carbon financing.– IDB has partnered with the International Emissions Trading Association (IETA) and the International Carbon Action Partnership (ICAP) to publish a joint report capturing the current landscape of compliance and voluntary carbon markets in Latin America with
an in-depth review of developments, trends and outlooks.– The facility raised funds successfully with the GCF to unlock private capital by valuing bioeconomy financial products and services with climate mitigation and adaptation results in the Amazon Basin. The Amazon Bioeconomy Fund will mobilize a total of $598 million USD through sovereign loans and investment grants with National Development Banks (NDBs), equity investments in sustainable early-stage bioeconomy businesses,
investment grants and guarantee operations, and technical cooperation.