Strong green bonds growth in 2017 a solid platform for market expansion
What’s it all about?
The Brazil Green Finance Initiative (previously named Brazil Market Development Council) gathered on yesterday in São Paulo for the final meeting of 2017.
High on the agenda were strategies for the year ahea, aimed at increasing Brazil’s international presence in green finance, growing infrastructure investment and the domestic green bonds market.
The main objectives the BGFI will focus on in 2018 include:
- developing Brazil’s green investment pipeline,
- infrastructure assets across energy systems
- energy efficiency for existing buildings and
- water/sanitation were identified as the low hanging fruit to focus on
- mobilizing the local investor base and,
- building international partnerships on green finance.
Who’s saying what?
Statements after the meeting by BGFI members reflect a shared commitment building investment opportunities and green directions:
Sylvia Coutinho, CEO, UBS Bank:
“Despite the challenges Brazil faced in 2017, I see the green finance agenda evolving with better understanding of the market agents and some foreign benchmarks. Brazil has this indisputable potential to attract capital of this nature and we have to follow the stewardship of this initiative. Our group has all the expertise to make 2018 even better.”
Marina Grossi, President CEBDS:
“I’m extremely happy to see the consolidation on the Brazil Green Finance Initiative in 2017. The sector now offers many opportunities to leverage supply and demand and the challenge will be to have our actions coordinated to fully enjoy this scenario.”
“The discussions around the realization of COP 25 in Brazil in 2019 is proof of the enormous potential of the country in this agenda.”
André Salcedo, Capital Markets, BNDES:
“This initiative has an important role in capturing the potential Brazil has in green finance. 2018 will bring more opportunities in the use of capital markets to finance sustainable projects and this group has the mission to coordinate and mobilize different actors to push this agenda forward. I’m confident we have a promising year ahead of us.”
Justine Leigh-Bell, Director of Market Development, Climate Bonds Initiative:
"Brazil is on track to positioning itself as a future leader in green finance. The country has surpassed the 11 billion reais (USD3.7bn) mark in green bond issuances with emphasis on investments in low carbon agriculture, sustainable infrastructure and renewable energy.”
“We will continue to work hard on these agendas next year, identifying challenges and solutions for how to channel private capital flows (domestic and international) at scale to finance these projects."
The Last Word – 2017 A Year of Milestones for Brazil’s Green Finance
The Brazilian green bond market consolidated in 2017, surpassing the mark of BRL11 billion according to the second edition of the Bonds & Climate Change: State of the Market 2017 Brazil report, launched in October. From June 2015 until September 2017, Brazil has seen 9 green bond issuances, five of them in the international market.
Another important milestone for the country's sustainable investment agenda was the UK-Brazil 2nd Economic and Financial Dialogue and the launch of the UK-Brazil Green Finance Partnership in a commitment to promote sustainable economic growth.
UK Finance Minister and Chancellor Philip Hammond characterised the Partnership as:
"deepening the ties of sustainable development between the two countries, boosting innovation, ethical leadership and, consequently, increasing green capital flows".
2017 also saw creation of the Laboratory of Financial Innovation (LAB) which brings together public and private entities to improve financial instruments focused on sustainability. The initiative is led by the Inter-American Development Bank (IADB) in partnership with the Brazilian Securities and Exchange Commission (CVM) and the Brazilian Development Association (ABDE).
The LAB has organized its working groups around three main themes: green bonds, green finance and financial instruments for investments of social impact.
And no list of Brazilian green finance milestones during the year would be complete with noting the BNDES $1bn green bond for wind and solar.
There's a full rundown of all greens bond reports and market developments on our Brazil project page.
Brazil is Big
We’ve noted the numbers before but let’s have a reminder…
Brazil is big; it has the world’s largest area of arable land in a single country, is the biggest economy in Latin America and 9th largest internationally.
It's also the 5th in population. The largest city, São Paulo, is amongst the top 20 global megacities in 2016, and is set to remain there in 2030 with an estimated population reaching 25 million.
We expect a lot more milestones to come year with the support of the BGFI and other key players in green finance.
'Till next time,
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