Investment in green bonds, debt securities that are issued to finance projects that generate environmental or climate change benefits, increased eightfold in the last five years in the region, with a more accelerated rise between 2020 and 2021, in the midst of the pandemic, according to the Inter-American Development Bank (IDB). “In the last year we have seen a substantial increase in thematic bonds (green or social projects) in Latin America and the Caribbean with a volume of 12.5 billion dollars in 2020 and 8 billion for green bonds in 2021,” details Juan Antonio Ketterer, head of the IDB’s Connectivity, Markets and Finance Division.
According to a report by the international organisation Climate Bonds Initiative (CBI), debt issuance for the sole purpose of financing projects to improve the environment so far in 2021 is almost 30% higher than that issued in the first months of 2020 globally. The top three issuers, corporate and sovereign combined, were Mexico (28%), Brazil (19%) and Chile (12.5%), which together accounted for 60% of the total regional issuance from January to April reported CEPAL.
According to BNP Paribas, throughout Latin America, corporations and institutions are increasingly adopting vigorous sustainability policies and practices, reflecting in part the severe economic duress arising from the Covid-19 pandemic and the impact of climate change. Institutions and companies that have the resources and strong regional presence will play a pivotal role in expanding the parameters of sustainable finance. This in turn will help an even wider range of industries to successfully integrate policies and practices that will accelerate their sustainability journeys and help build a better future.
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