The Inter-American Development Bank is the largest source of development financing for Latin America and the Caribbean. The Connectivity, Markets and Finance (CMF) Division works with the public sector financial institutions to design funding solutions that mobilise private investments and ensure inclusive and sustainable development
The most important activity in the coming decade will be to unlock and scale-up sustainable finance. Two specialists within the division outline the key lending and technical assistance initiatives that the IDB has been working on in the past decade.
We see a lot of potential for those issuers who have not yet taken advantage of the thematic bond market. We are also looking at ways in which the IDB can be a neutral broker in the market to promote more transparency, best practice and education on several issues. We have been working at the national level in several countries to develop public and private dialogues and work with regulators to develop good taxonomies and transparent practices in the market.
The other way we support the market is to provide public-private instruments whereby IDB can provide a credit enhancement. We have seen increasing opportunities for blended instruments that can help investors access these products and increase the credibility of them.
We started with a view on sustainable development, but now we are looking for ways to diversify the pool of investors, offer new financial instruments and engage with governments and regulators.
The Green Bond Transparency Platform Supports the harmonisation and standardisation efforts on Latin America and the Caribbean green bond reporting. Its goal is to contribute to transparency and comparability, helping attract new investors to the region and providing a greater level of confidence to existing investors. The platform uses Blockchain (DLT) technology and by accessing the platform, issuers, investors and other market actors can upload and research information on transaction details, bond performance, use of proceeds, and environmental impacts of the region’s green bond issues.
Another priority is to promote the good functioning of the markets themselves and help issuers with adopting transparent ways to present relevant information. We are also working to help our clients understand the growing importance of environmental, social and governance (ESG) ratings as we have experienced a few occasions where issuers were not fully aware of the importance of real and accurate ESG ratings.