LAC Green Finance Facility
As of: April 2021
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.
State of implementation/results
- The project supports National Development Banks (NDBs) in structuring green bonds. In October 2018, the Trust Funds for Rural Development (FIRA) in Mexico issued a green bond for USD 123 Mio.
- In response to the demand of NDBs and other institutional stakeholders in the financial market, a web interface to share information and knowledge about green financing was launched.
- In 2017, the Laboratory of Financial Innovation (LAB) was launched in Brazil. It connects more than 40 institutions representing market regulators, ministries of finance and planning, stock market, associations of investors, pension funds and insurers, as well as sectorial experts. The LAB fosters an intersectoral dialogue on green bonds, green finance and financial instruments for investments of social impact.
- In Mexico, the Association of Banks of Mexico (ABM) and the Adisory Council on Climate Finance of the Mexican Stock Exchange (BMV) initiated the replication of such network, joining efforts to promote the Mexican Laboratory of Financial Innovation.
- With project support, USD 23 million were raised from the Green Climate Fund for energy efficiency in small and medium enterprises in Paraguay for the Agencia Financiera de Desarrollo (AFD).
- In Mexico, the state-owned NDB Banobras adopted a strategy to become a Green Bank participates in the Green Bank Network. Moreover, the project supported Sociedad Hipotecaria Federal (SHF) in implementing a tool for evaluation of impacts on climate change and sustainability of financed projects.
- In Brazil, the provincial development bank of Sao Paulo, Desenvolve SP, developed guidelines and a detailed strategy for municipal level public-private partnerships for street lighting, waste management and distributed solar energy. A similar approach is being replicated with the provinicial development bank Fomento Parana.
- The project contributed to the "Green Bank Design Summit" in March 2019, supporting NDBs in sharing experiences in structuring green finance products to achieve national climate policy goals.
- At COP-25, the Regional Green Bond Transaprency Platform was officially launched
- in 2020, the project was extended to 2024 and includes Chile as a partner country and an additional regional component.