News from 2021-05-04 / KfW Development Bank
New online platform for transparency of "green bonds" in Latin America
Latin America and the Caribbean are severely affected by climate change, with storms, floods, and droughts occurring frequently. The Inter-American Development Bank (IDB) wants to use a new digital tool to help facilitate more investment in environmental and climate projects in the region. It is launching the "Green Bond Transparency Platform", where potential investors can find out how and where the funds from "green bonds" are used and what effects the projects achieve. KfW Development Bank is a partner of the platform and was involved in its development. Many of the major investors and issuers of green bonds in the region have also announced their support.
To combat climate change and its consequences in Latin America, government investment and aid money are not enough. The IDB and KfW have therefore set themselves the task of increasingly mobilizing private funds for climate and environmental projects. "Green bonds" make an important contribution to this. Worldwide, "green bonds" worth USD 1.1 trillion were issued by the end of 2020, but only 2% of these were issued in Latin America. The "Green Bond Transparency Platform" is now intended to help facilitate more "green investments" in the region by providing information.
KfW department head Claudia Arce emphasizes that the new platform provides a lot of information and data for potential investors. "This increases transparency in the use of 'green bonds' and makes projects comparable." For KfW, she said, it was a very exciting experience to be involved in setting up and launching the platform. The digital tool will play an important role in planning future projects, she added. Juan Antonio Ketterer, IDB's head of department for financial market development, emphasizes that the transparency enabled by the new platform is key to increasing investment in climate and environmental protection projects in Latin America. Potential investors will thus have more certainty in their engagement in the region.
According to Ketterer, the platform is the first digital tool that makes information on the use of "green bonds" accessible and comparable free of charge. Blockchain technology is also used in the process. On the platform, interested parties can find out who issued the bonds and for which projects the funds are used. In addition, the following questions can be clarified: What effects do the projects have on the climate and environment, for example for sustainable energy production or the protection of forests? Were there independent audits and by whom? How do the projects affect markets and economic development in the region?
The initiative is supported by the German government from both the Federal Ministry for the Environment (BMU) and the Federal Ministry for Economic Cooperation and Development (BMZ).