Global Green Bond Initiative and Inter-American Development Bank Partner to Boost Green Bonds in Latin America and the Caribbean

Global Green Bond Initiative and Inter-American Development Bank Partner to Boost Green Bonds in Latin America and the Caribbean

(IN BRIEF) A coalition of development finance institutions and multilateral organizations, known as the Global Green Bond Initiative (GGBI), has partnered with the Inter-American Development Bank (IDB) and IDB Invest to collaborate on promoting green bond markets in Latin America and the Caribbean. The GGBI aims to facilitate private capital flow into climate and environmental projects in EU partner countries. It will provide technical assistance to green bond issuers in emerging markets and develop a de-risked fund to attract private investors, potentially driving up to €15-20 billion in green investments. The partnership seeks to strengthen green bond markets and enhance local capital markets in developing countries.

(PRESS RELEASE) LUXEMBOURG, 7-Sep-2023 — /EuropaWire/ — The coalition of development finance institutions and multilateral organisations making up the Global Green Bond Initiative (the European Investment Bank (EIB), the European Bank for Reconstruction and Development (EBRD), Italy’s Cassa Depositi e Prestiti, the Spanish Agency for International Development Cooperation (AECID), Germany’s KfW development bank, PROPARCO of the AFD Group, acting as a consortium of European development finance institutions and the Green Climate Fund (GCF)), today launched a strategic partnership with the Inter-American Development Bank (IDB) and IDB Invest to cooperate on technical assistance for promoting green bond markets in Latin America and the Caribbean, at an event attended by representatives of the European Commission. The declaration was signed in Cartagena, Colombia, at the Finance in Common Summit, held from 4 to 6 September.

This new strategic partnership is intended to be part of the technical assistance programme of the Global Green Bond Initiative (GGBI) announced by President of the European Commission Ursula von der Leyen in June 2023.

The Global Green Bond Initiative will facilitate the flow of private capital from institutional investors into climate and environmental projects in EU partner countries, thereby increasing their access to capital. It will do so notably by providing technical assistance to green bond issuers in emerging markets and developing economies (EMDEs) and by crowding in private investors through a dedicated de-risked fund, which will act as an anchor investor in these economies’ green bonds. The fund’s anticipated impact could spur green investments totalling up to €15-20 billion.

To further strengthen the technical assistance arm of the Global Green Bond Initiative, the GGBI coalition seeks to work together with strategic partners including regional and local development banks across the globe, in particular, to support the origination of green bonds, the development and identification of pipelines of green projects and the development of credible and coherent green bond frameworks.

This new strategic partnership between the GGBI coalition, the Inter-American Development Bank and the IDB Invest is a first step in that direction.

Green bonds are debt sold to investors with a commitment to use all the proceeds for green investments. First launched in 2007, they have become globally recognised as a key tool in mobilising capital from private investors for projects with environmental impact, thus helping to finance sustainable development. The GGBI coalition also sees potential in green bonds for developing and strengthening local capital markets in developing countries.

Full details about the involvement of the participating organisations in specific deals and activities will be worked out under this framework for cooperation.

Green bonds are globally recognized as a key tool in mobilising capital from private investors for investments with environmental impact and in contributing to financing a sustainable recovery. In the presence of the European Commission, the European Investment Bank (EIB), the Cassa Depositi e Prestiti (“CDP”), the Spanish Agency for International Development Cooperation (“AECID”), the European Bank For Reconstruction and Development (‘’EBRD’’), Germany’s development bank KfW (“KfW”) , Société de Promotion et de participation pour la coopération économique (“PROPARCO”) for the whole Agence Française de Development (“AFD”) Group, acting as a a consortium of European Development Finance Institutions as well as the Green Climate Fund (GCF), all together being the Global Green Bond Initiative Coalition (“WE”), intend to join forces to cooperate on technical assistance to support green bond markets in emerging markets and developing economies (EMDEs) and enable the development and strengthening of local capital markets through the Global Green Bond Initiative (“GGBI”).

The GGBI intends to combine different types of possible interventions to strengthen the green bond markets so as to deliver maximum impact. Amongst others, the GGBI intends to:

• mobilise private investors through a dedicated public-private fund, which would act as anchor investor acquiring a portion of green bonds issued by private, sovereign, and sub-sovereign entities in EMDEs and attract further investors at transaction level;
• support green bond issuers by providing capacity building and technical assistance at country level. This may include helping partner countries develop credible and interoperable green bond frameworks to identify a pipeline of green projects (including infrastructure projects) and to carry out the issuance ensuring high quality reporting.

In this context, the consortium of European Development Finance Institutions and the GCF (via its Project Preparation Facility window) are looking forward to collaborating with strategic partners including regional and local development banks across the globe that can contribute to the GGBI technical assistance programme.

The promotion of green bonds in the LAC region, through the GGBI, is also an important part of the EU-LAC Global Gateway Investment Agenda which was launched during the EU-LAC summit of 17/18 July 2023. So, today, WE intend to start building the network of strategic technical assistance partnerships with the Inter-American Development Bank (“IDB”) and the Inter-American Investment Corporation (“IDB Invest”).

Since 2016, IDB and IDB Invest have been extensively supporting the development of Thematic (Green, Social and Sustainable) Bond Markets in their member countries in Latin America and the Caribbean (“LAC”). The array of IDB and IDB Invest supports include: working with public and private sector issuers, governments and regulators on enabling the business environment necessary for the development of sustainable capital markets, generating technical capacity at market level on green lending through Sustainable Finance Roundtables and Councils across, providing issuers, both public and private technical support to access and/or develop green, social and sustainable markets; and, since 2021, transparent and standardized reporting via IDB’s Green Bond Transparency Platform, IDB Invest recent work supporting voluntary private sector efforts in building pre compliance green, social, and sustainable taxonomies in several countries.

This partnership between the consortium of European Development Finance Institutions, IDB and IDB Invest is intended as a strategic reinforcement to the GGBI technical assistance program for its deployment in LAC, given their in depth and valuable experience. The experience of the IDB and IDB Invest in LAC labelled debt market brings tools and knowledge to promote, for example, support for pipeline origination, development of national taxonomies, capacity building and reporting through the Green Bond Transparency Platform and use of credit enhancement instruments. IDB Group’s work contributes to supporting market development by designing incentive and risk-sharing systems to promoting best practices in the market on annual reporting, verification processes and alignment with national and international impact development goals and to delivering impact by strengthening harmonized impact reporting globally, and scale of the Green Bond Transparency Platform concept through regional partners (GBTP 2.0).

The Signatories acknowledge and agree that this present letter of intent is not a binding agreement and does not represent any commitment with regard to funding on the part of the Signatories. Any cooperation between, and commitments by the Signatories that may be formalized will be subject to separate agreements that may be executed by the Signatories’ authorized representatives pursuant to each of the Signatories’ policies and procedures and their internal approvals. The IDB Group’s potential support shall be conducted in accordance with the policies and procedures of each IDB group institution.

Background information

About AECID

AECID, the Spanish Agency for International Development Cooperation, is the main management body of the Spanish Cooperation, aimed at poverty reduction and sustainable human development. Its strategic roadmap, in line with Agenda 2030, is the 5th Master Plan for Spanish Cooperation, based on a human rights approach; it pays special attention to three cross-cutting issues: gender, environmental quality and respect for cultural diversity. AECID’s toolbox includes technical assistance and financial cooperation, managed through FONPRODE (Fondo para la Promoción del Desarrollo). Launched in 2011, it includes grants and loans, and implements both debt and equity operations.

About Cassa Depositi e Prestiti

Cassa Depositi e Prestiti (CDP) is the national promotional institute, that has been supporting the Italian economy since 1850. The main goal of CDP is to accelerate the industrial and infrastructural development of Italy to boost its economic and social growth. CDP focuses its activities on sustainable development at local level, supporting the innovation and growth of Italian enterprises, also in the international arena. It partners with local authorities, in a financing and advisory capacity, to create infrastructures and improve services of public value. CDP also participates actively in international cooperation initiatives to realise projects in developing countries and emerging markets. www.cdp.it

About the GCF

The Green Climate Fund (GCF) is the world’s largest dedicated climate fund. GCF’s mandate is to foster a paradigm shift towards low emission, climate-resilient development pathways in developing countries. GCF has a portfolio of $12.8 billion ($48.3 billion including co-financing) delivering transformative climate action in more than 120 countries. It also has a readiness support programme that builds capacity and helps countries develop long-term plans to fight climate change. GCF is an operating entity of the financial mechanism of the United Nations Framework Convention on Climate Change (UNFCCC) and serves the 2015 Paris Agreement, supporting the goal of keeping average global temperature rise well below 2°C.

About the European Bank for Reconstruction and Development

The EBRD is a multilateral bank that promotes the development of the private sector and entrepreneurial initiative in 36 economies across three continents. The bank is owned by 71 countries as well as the European Union and the EIB. EBRD investments are aimed at making the economies in its regions competitive, inclusive, well-governed, green, resilient and integrated.

About the European Investment Bank

The European Investment Bank (EIB) is the European Union’s long-term financing institution, owned by its Member States. We finance sound investments that contribute to EU policy goals. We support projects in infrastructure, innovation, climate and environment, and small and medium-sized enterprises. EIB Global carries out our operations outside the European Union. As a key partner in the EU’s Global Gateway, we aim to support at least €100 billion of investment by the end of 2027, one third of the strategy’s target. With offices across the world, EIB Global is close to local people, firms and institutions, and fosters strong Team Europe partnerships with development finance institutions.

About the IDB

The Inter-American Development Bank is devoted to improving lives. Established in 1959, the IDB is a leading source of long-term financing for economic, social, and institutional development in Latin America and the Caribbean. The IDB also conducts cutting-edge research projects and provides policy advice, technical assistance, and training to public- and private-sector clients throughout the region.

About IDB Invest

IDB Invest, a member of the IDB Group, is a multilateral development bank committed to promoting the economic development of its member countries in Latin America and the Caribbean through the private sector. IDB Invest finances sustainable companies and projects to achieve financial results and maximize economic, social, and environmental development in the region. With a portfolio of $15.3 billion in asset management and 375 clients in 25 countries, IDB Invest provides innovative financial solutions and advisory services that meet the needs of its clients in a variety of industries.

About KfW

KfW Bankengruppe, founded in 1948, is the German promotional bank and one of the world’s leading promotional banks. It is 80% owned by the German federal government and 20% by the federal states.

The business sector KfW Development Bank carries out financial cooperation (FC) projects with developing countries and emerging economies on behalf of the German federal government, especially on behalf of the Federal Ministry for Economic Cooperation and Development (BMZ). KfW Development Bank employs approximately 1,200 people at its head office in Frankfurt am Main and 400 specialists at more than 60 international locations, who cooperate with partners all over the world. Their goal is to combat poverty, secure peace, protect the environment and the climate and ensure fair globalisation. KfW Development Bank is a competent and strategic advisor for current development policy issues.

Media Contact:
Enrico Possenti
e.possenti@eib.org
+352 4379 – 82144

Press Office
press@eib.org
+352 4379 – 21000

SOURCE: European Investment Bank