With the support of the IADB, the BDMG is preparing to become the first Brazilian public bank to issue Sustainable Bonds in line with the UN’s Sustainable Development Goals (SDG).
To this end, BDMG has just published an unprecedented framework in the Brazilian market. It is a conceptual document that seeks to frame the social and environmental projects to be financed in the context of the ODS, starting – in the case of BDMG – from a portfolio of approximately R$ 500 million.
The Sustainable Bonds are debt securities used to finance projects with potential for positive impact on the environmental or social sphere, or both. The demand of the national and international market for this type of bonds has recently increased and Brazil stands out for the opportunities in this segment.
In the case of BDMG, one of the final steps for the issuance of these bonds has just been completed: the construction of a framework -for the first time in Brazil, guided by the SDG- capable of orienting social and environmental projects to be financed. The document was prepared with the assistance of the IDB and the Financial Innovation Laboratory (LAB), in addition to the Sitawi consultancy.
“The development of this framework provides way for BDMG to issue sustainable bonds in the next 12 months, with the potential to build a portfolio of socio-environmental projects that exceeds half a billion reais. I believe that this pioneering spirit of BDMG may become an increasing trend in the Brazilian development sector, strengthening and innovating the relations with multilateral organizations. There is a great appetite in the international credit market for financing the sustainable economy (ESG). The clean and renewable energy sector, for example, is particularly strategic for the process of diversifying the economic matrix of Minas Gerais,” says Sergio Gusmão, president of BDMG.
In this process, BDMG also obtained a Second Part Opinion (SPO) certification from the international consultancy Sustainalytics, which proved the bank’s ability to issue national and international sustainable bonds. With the SPO certification and the publication of the document (framework), in addition to starting the preparations for the issuance of bonds in the market, BDMG also intends to advance in the measurement of the impact of operations. To do so, also in partnership with the IADB, is developing a calculator that allows the evaluation of emissions, reductions and carbon stock of financed projects.
The IADB’s representative in Brazil, Morgan Doyle, highlights the importance of environmentally and socially responsible finances in the recovery of economic growth that the country – and the world – will seek. “As a result of the pandemic, we will see governments, civil society – including the financial market – increasingly concerned with business models that not only allow economic growth, but do so in a responsible manner. Combining these two issues is possible, and the issuance of green bonds is an example of this. We are very happy to be able to assist BDMG in this process, which should become a paradigm for other similar actions in the country,” says Morgan.