LAC Green Finance Facility

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.

Project data

Countries: Brazil, Chile, Colombia, Mexico, Paraguay, Uruguay
IKI funding: 8,000,000.00 €
Duration: 06/2016 till 12/2024
Status: open
Implementing organisation: Inter-American Development Bank (IADB / IDB / BID)
Political Partner: 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

Ministry of Integration and Regional Development (MIDR) - Brazil

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

Bancoldex

Brazilian Development Bank

Chilean Economic Development Agency (CORFO) - Chile

Desenvolve SP

Fideicomisos Instituidos con Relacion a la Agricultura (FIRA)

Financiera nacional de desarrollo agropecuario, rural, forestal, y pesquero (FND)

Fomento Paraná

Fondo para el Financiamiento del Sector Agropecuario - FINAGRO

Minas Gerais Development Bank (BDMG)

Nacional Financiera (NAFIN)
Online: http://www.greenfinancelac.org/lgi/

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State of implementation/results

The Green Bond Transparency Platform (GBTP), launched in 2021, became the key reporting tool and the benchmark for harmonized reporting, transparency and comparability for the region’s green bond market. Several global financial actors proposed to scale the GBTP as the global industry utility for standardized reporting. The GBTP covers 80% of the volume of green bonds issued in LAC and more than 200 issuances.
The Facility supported National Development Banks to access the Green Climate Fund via the IDB to finance the bioeconomy to reduce the impacts of climate change in the Amazon biome by prioritizing natural capital and delivering climate benefits.
LATAM Projects Hub: The hub is a scalable regional platform, created by two national development banks from Mexico and Brazil (BANOBRAS & BNDES), ALIDE and IDB to increase investments in sustainable infrastructure by investors. More than 90 projects worth more than USD 40 billion and their sustainability criteria are currently included in the Hub.

BDMG issued a USD 50 Million SDG Bond in partnership with IDB and IDB Invest (the first sustainable bond in the US market by a Brazilian subregional development bank) and an innovative developed SDG rating tool measures the impacts of its portfolio.
BNDES Blended Finance. The program supported BNDES, to create a selection process for blended finance projects and enabled the launch in May 2022 and selection of the first 11 proposals selected.
FGEnergia - Credit Guarantee Fund for Energy Efficiency, managed by BNDES, launched in September 2022, in partnership with 5 banks. BNDES’ FGEnergia obtained an additional contribution of Euro 25 Million from KfW enabling a potential portfolio to EUR 250 Million.
The awarded Brazilian Laboratory of Financial Innovation (LAB) started in 2017 and is a multi-sector collaborative platform to share knowledge, enhance regulatory frameworks, and pilot innovative products to advance sustainable finance in Brazil (Global Finance Magazine). The LAB involves 326 institutions and 1,314 members and was initiated by the Brazilian Development Association (ABDE), the IDB, and the Securities Commission of Brazil (CVM) in partnership with the GIZ.

The Facility supported Chilean financial authorities, in collaboration with the Ministry of Finance, to develop the Voluntary Green Agreement, and the development of a green taxonomy, as a direct result of the roadmap process.

Finagro developed instruments to estimate the benefits in energy savings, CO2 equivalent emissions reduction of energy efficiency, and renewable energy investments for small and medium farmers.
Bancoldex strengthened capacities to structure and launch a new green credit line for sustainable transportation through its first-tier and second-tier channels.
Financiera de Desarrollo Nacional (FDN) strengthened capacities towards the creation of a sustainable development strategy incorporating the short, medium and long-term planning horizon of FDN.

Trust Funds for Agriculture of Mexico (FIRA) issued a USD $125 million green bond backed by more than 500 projects of protected agriculture and sustainable irrigation systems. The bond is CBI-certified due to a novel methodology to assess the environmental benefits of protected agriculture created with support of the facility. FIRA continued innovating and issued its first social gender bond.
Banobras’s Environmental and Social Risk Management System (ESRM) was implemented during 2022 and led to the creation of an ESRM Unit. This unit facilitated Banobras’ issuance of local sustainable and social bonds.
The Mexico LAB’s consists of four working groups: green finance, sustainable transportation, sustainable energy and sustainable agriculture. The Sustainable Transport Working Group completed the roadmap to attract national and international financing.

The Agencia Financiera de Desarrollo (AFD) implements a Green Climate Fund project for energy efficiency in small and medium enterprises (USD 23 million). The development of the GCF proposal was supported by this project.
Support for the framework development of green bonds with public sector actors.