The UNEP FI, a financial initiative developed by the United Nations Environment Program (UNEP), organized a roundtable for Latin America and the Caribbean on “sustainable finances” in Buenos Aires. With Brazil, Mexico and Colombia leading this market, it is becoming stronger in the region and has the potential of attracting over one thousand billion dollars in investments to fight climate change.

The global Green Bonus Market could reach 150 billion dollars in 2017, with United States, France and China being the main players.

“It is about reducing the risk, but most importantly, finding investment opportunities, as the transition to a low carbon economy is no longer an option”, said Tatiana Assali, Head of the Principles for Responsible Investment at the UN.

“The global investment market on sustainable funds of developed countries for Latin America is of 1,000 billion dollars. This is a huge opportunity to develop financial products”, added Assali.

“Latin America is the most vulnerable region in the world regarding climate change. This does not add new problems, but increases the already existing problems, such as poverty and inequity”, said Santiago Lorenzo, Head of Green Finance at the WWF.

Eric Usher, Head of the UNEP FI, agrees on the fact that “Latin America is a leader in many ways. On a global scale, Brazilian and Colombian initiatives are always mentioned. There, the financial industry has always worked closely to governments in order to promote behavior rules and protocols on the subject”.

In 2014, Brazil’s Central Bank launched a resolution that forces financial institutions to add environmental and social risks to their financial analysis, said Mario Sergio Vasconcelos, of the Brazilian Banks Federation (FEBRABAN).

Currently, Brazil is developing a multi-sector process between the government and banking to define a mechanism to “set the price of carbon”.

Denise Hills, Director of Sustainability of Itaú-Unibanco, said that the banks’ “Green Bonus” emissions grew from 7.5% in 2016 to almost 20% in 2017.

One of the most remarkable cases of the seminar was Bancolombia. The first bank in Latin America to launch a line of green credits that reached 100 million dollars.

Beatriz Ocampo, Sustainability Manager of the Colombian bank, told how the company also manages its direct impact on the environment by measuring and compensating its own carbon footprint, and apply the climate change risk matrix to its over 18 thousand suppliers.

“We are at the same table than the government and 20 other banks, working on the strategy and training”, pointed out Ocampo.

In Colombia, the government and the Association of Banks, signed in 2016 the Green Protocol, which seeks to join efforts and promote the sustainable development of the country, working on the environment preservation and the sustainable use of natural resources.

A star product of Bancolombia is its housing plan, which delivers special credit benefits to green construction. It recently added “Banco2”, a system to protect ecosystem services in which families that protect ecosystems are paid for their work, thanks to the contributions of people and companies committed on measuring their environmental impact and compensating with voluntary contributions.

On April 2017, another financial institution in Colombia, Davivienda, became the second Latin American private bank to issue green bonus. Both in this case, as well as in Bancolombia’s case, the bonds were completely acquired by the International Financial Corporation (IFC), the financial organization of the World Bank, which has the priority of investing on projects that seek to tackle climate change.

Spokespersons from Banorte, the first Mexican bank to sign the Principles of Responsible Investment of UN, said that the sustainability area directly reports to the CFO and the investors’ relations area. “Our system of sustainable finances is completely integrated to the risk matrix of credit management. This provides us a clear competitive advantage”, said Mariuz Calvet, Director of Sustainability at Banorte.

Mexico is also expanding the “carbon market”, and the stock exchange already has a pilot model test.

A meeting point among every party responsible for developing finance sustainability strategies was to point out the relevance of communication and benchmark tools, such as the Dow Jones Sustainability Index (DJSI) and the Carbon Disclosure Project (CDP).

“The entire economy must change, which includes the financial system. The notions of sustainable development will become more and more important. For example, for the automotive sector the concept of clean vehicles will be part of the agenda, investors in this sector will be more and more interested in predicting what the industry of the future will be like”, concludes Eric Usher, from UNEP-FI.

Source: UNEP FI