Climate Bonds & Banco Central do Brasil sign agreement to develop sustainable finance agenda

Climate Bonds & Banco Central do Brasil sign agreement to develop sustainable finance agenda: New partnership to share technical knowledge on climate & financial sector

The partnership aims to share technical knowledge about financial instruments and sustainable capital markets

The Central Bank of Brazil (Banco Central do Brasil) and Climate Bonds Initiative have signed a new Memorandum of Understanding (MoU) with the objective of promoting a sustainable finance agenda and integration of socio-environmental and climatic risks in the national financial sector.

The MoU will build cooperation between both organisation and is aimed at promoting the exchange of experiences and best practices regarding sustainable finance instruments and mechanisms, such as the incorporation of international criteria and taxonomies into the systems used by the Central Bank.

In addition, the agreement aims at analyzing and developing tools to measure and mitigate climatic and socio-environmental risks, which can foster the sustainable finance market in the country, possibly attracting more national and international investors in search of green investments.

The Sustainability Dimension

The Memorandum was signed at the online  launch event of the BC Sustainability Dimension Agenda, held on Tuesday 8th September.

Roberto Campos Neto, President of the Central Bank of Brazil, participated in the signing ceremony along with Justine Leigh-Bell, Deputy CEO Climate Bonds Initiative, Larry Fink, CEO of BlackRock and Mark Carney, Special Envoy of the United Nations for Climate Action and Finance.

Carola Schuler, Director of Moody's, Marcio Lopes, Brazilian Organization of Cooperatives and Isaac Sidney, President of the Brazilian Federation of Banks were also present at the event.

Roberto Campos Neto, President of the Central Bank of Brazil

“The BC has a long history of working on measures aimed at sustainability, and the inclusion of the pillar in the BC # Agenda aims to keep us on that frontier. The BC # Agenda is dynamic, and today we are incorporating the sustainability dimension. The environmental theme is important and arouses interest in society. The topic was definitely on the agenda”.

Mark Carney, Special Envoy of the United Nations for Climate Action and Finance

“Transition is one of the greatest commercial opportunities of our time because there will be significant investments made in Brazil and around the world to move from where we are to where we need to go and two major determining factors are value and risk [...] if a company is on the wrong or right side of the history of climate change ”.

Larry Fink, CEO, BlackRock

“ESG risk factor will be integrated into the investment process, it will not be one or the other, it will be a component of how we think, how we invest and how we evaluate risk. ESG will be part of an entire investment base”

Justine Leigh-Bell, Deputy CEO, Climate Bonds Initiative

“We need the banking sector to have a mission to expand the labelled thematic debt market, more green business need to be done, green credit lines need to be placed on the market. Financial institutions need to incorporate climate risk analysis with an internal procedure to attract more financial resources to green industries and redirect financial resources from carbon-intensive industries and to identify, quantify and avoid climate-related risks.”

What's to come

This is the fourth Memorandum of Understanding (MoU) signed between the Climate Bonds Initiative and the Federal Government of Brazil. In September 2019, the Ministry of Infrastructure signed the first agreement to review their infrastructure portfolio.

In November 2019, the Ministry of Agriculture signed an MoU to develop a green bond market for agriculture  and to identify green and sustainable opportunities for the sector.

In July 2020 the Ministry of Infrastructure announced the 1st program of green bonds for transport in Latin America, with the objective of decarbonizing the transport matrix & investing Brazilian railways.

Last week, the Ministry of Regional Development also signed an agreement, aimed at qualifying the portfolio of MDR infrastructure projects for financing through the issuance of green bonds.