News from 2015-05-05 / KfW Development Bank, Sustainability
New ways to protect biodiversity
eco.business fund launches in Latin America
The eco.business fund is in business: the first contracts for "green" credits in Latin America have now been signed. Two banks from Costa Rica have each received credits of USD 10 million, which they are using to finance sustainable producers.
The fund was established by KfW in December 2014 on behalf of the Federal Ministry for Economic Cooperation and Development (BMZ). It enables companies and cooperatives in Latin America to finance investments that contribute to preserving biodiversity or to the sustainable use of natural resources. The Federal Ministry for Economic Cooperation and Development has provided USD 21 million for start-up capital and consulting services, which was paid into the fund through KfW.
Other partners include the US non-governmental organisation Conservation International (CI) and the German fund manager Finance in Motion. Alongside public funds, the eco.business fund is also to mobilise private funding to protect biodiversity. The first private investors have already shown an interest.
In Latin America, Costa Rica has been a pioneer in environmental protection for a long time. This means it is only natural for the first two banks entering into a partnership with the eco.business fund to be based there. Scotiabank de Costa Rica and Banco Davivienda have dedicated themselves to promoting sustainable agriculture and can now develop this line of business with the help of the fund.
Focus on sustainability
"We are entering into new territory with the eco.business fund by preserving biodiversity through the financial sector", said Stephan Opitz, Director of KfW Development Bank. "Alongside a financial return, which is necessary to attract further investors and for economic sustainability, the eco.business fund also aims to achieve an ecological return. This is achieved by supporting companies that use natural resources in an adequate way". For example, enterprises involved in sustainable farming, fishing, forestry and ecotourism. These companies are helped by the fund to make their business operations as environmentally friendly as possible. In this context the eco.business fund focuses in particular on companies that have obtained an environmental certification from an independent body, or which operate in conformity with the fund's biodiversity objectives.
"It is an honour for Scotiabank to enter into a partnership with the eco.business fund", said Jean-Luc Rich, Managing Director of Scotiabank Costa Rica. "We feel committed to initiatives that lead to sustainability via the co-existence of the environment and business."
Parallel to credits for investment purposes, the fund also offers its clients advisory services in a development facility. Here, the emphasis is placed on the support of partner banks in developing "green credit products", on aiding end-clients (e.g. with obtaining environmental certification) as well as on building and transferring know-how related to environmental funding. The Federal Ministry for Economic Cooperation and Development provided EUR 3 million for this purpose. Scotiabank de Costa Rica and Banco Davivienda are also benefiting from the development facility, as they have received consulting on environmental certification. Alongside existing bank clients, new clients who want to reorganise their production processes are also a target.
Further countries in Central and South America are to follow Costa Rica, ensuring the "green wave" sweeps across the entire region.