THE PARTNERSHIP WILL CONTRIBUTE TO FURTHER EXPANSION AND TRANSPARENCY IN LATIN AMERICA AND THE CARIBBEAN’S GREEN FINANCE MARKET
The Inter-American Development Bank (IDB) and the Government of the United Kingdom, represented by the Department for Business, Energy & Industrial Strategy (BEIS) and the Department for International Trade (DIT), have announced a partnership to support further growth and transparency in the Latin American and Caribbean region’s (LAC) burgeoning green bond market.
The flagship project of the partnership will be a Green Bond Transparency Platform for LAC, a new platform under design by the IDB with support from a coalition of issuers, underwriters, standard setters and verifiers, to support harmonization and standardization efforts in the region’s green bond market.
The platform, scheduled to be launched by year-end, will contribute to increase the transparency and comparability of green bonds in the region. The platform will provide detailed information on how bond proceeds are used and their environmental impact and will test the use of blockchain technology to reduce the transactions costs of use of proceeds reporting and increase traceability. The platform’s introduction is expected to attract new investors to the market and provide greater confidence for existing investors.
Latin America and the Caribbean reported its first regional green bond issue in 2014 and has since seen a total issuance of $12.6 billion through 2019. The IDB supported more than 20% of the total issuance volume in LAC by providing a variety of client support mechanisms, including structuring private and public sector placements, developing green bond portfolios and frameworks, and co-developing new climate bond methodologies, among others. Analysts estimate LAC requires annual investments of $40-50 billion through 2030 to meet its climate challenges.
Malcolm Geere, the United Kingdom’s Alternate Executive Director at the IDB, remarked, “the United Kingdom is pleased to be part of this excellent initiative to develop the green bond market consistently and transparently and build investors’ trust in LAC markets. London is the leading global green financial center due to the depth of innovation, range of products and capital focused on sustainable finance and investment, and world-renowned legal expertise. The United Kingdom wants to work with the most ambitious countries on climate, and Latin America has naturally become a key destination for our International Climate Finance investments. Working with the Inter-American Development Bank is an opportunity to accelerate the growth of the green bond markets through its strong network across the public and private sectors.”
“Unlocking the bond markets for the financing of the Sustainable Development Goals in Latin America and the Caribbean is one of our primary goals. We are thrilled with the prospects of our partnership with the UK for the development of the Transparency Platform and its impact in the green bonds market.” said Matias Bendersky, Chief of Resource Mobilization of the IDB “ The IDB supports the development of innovative financial instruments to achieve the region’s sustainable development and transition to a green economy.” He concluded.
“The platform is the answer to a key challenge of the bond markets: investors demand to know more about the use of the proceeds of the green bonds they buy. If we solve this this problem, we will see a noticeable increase in the growth of the green bond markets. We are partnering with the UK, as well as with some other governments and institutions, to develop such a platform.” Said Juan Ketterer, head of the IDB’s Connectivity, Markets and Finance Division.