Latin America& Caribbean
State of the market
2021

Bermuda, USD800m
Mexico, USD7.8bn
Barbados, USD8.5m
Colombia, USD1.3bn

Guatemala, USD1.2bn
Costa Rica, USD553m
Panama, USD553m
Ecuador, USD380m

Brazil, USD11.7bn

Peru, USD1.2bn
Supranational, USD3.4bn
Paraguay, USD300m

More than 5 GSS issuers
More than 10 GSS issuers

Argentina, USD1.3bn

Sovereign GSS bonds

Uruguay, USD376m

Financial corporate green bondLargest regional GSS market
Largest regional sustainability bond

Chile, USD17.8bn

Largest regional social bond market
Certified Climate Bond

Cumulative GSS issuance in the LAC region as at 30 June 2021

Prepared by the Climate Bonds Initiative

Supported by the Inter-American Development Bankand the International Finance Corporation
Latin America & Caribbean: Sustainable Finance State of the Market 2021 Climate Bonds Initiative1

Introduction
About this report
This publication is the second instalment of ourState of the Market series for the Latin America& Caribbean (LAC) region. The report describes
the shape and size of labelled Green, Socialand Sustainability (GSS) debt issued by entities
domiciled in LAC to the end of June 2021 (H12021). The market analysis is complemented
by an overview of key policy developments andopportunities for growth of sustainable financein LAC.

About the Climate Bonds
Initiative
The Climate Bonds Initiative (Climate
Bonds) is an international investor-focused
not-for-profit organisation working tomobilise the USD100tn bond market forclimate change solutions. We promote
investment in projects and assets needed
for a rapid transition to a low carbon andclimate resilient economy. Our mission
is to help drive down the cost of capitalfor large-scale climate and infrastructure
projects and to support governments
seeking increased access to capital markets
to meet climate and greenhouse gas (GHG)
emission reduction goals, as well as othersustainability objectives.

Contents
Methodology and scope 3
Key sustainable finance policy
milestones in LAC 4
LAC sustainable finance market
overview 5
Thematic deep dives 6
Spotlight: Transition finance 14
Spotlight: Support and opportunities
for market development 16
Agriculture 16
Transport 17
Adaptation and resilience 18
Taxonomy development 18
Market development support 19

Understanding green bonds
Green bonds and loans

Green definitions

Green bonds and loans are debt instruments
used to finance projects, assets and activities
that support climate change adaptationand mitigation. They can be issued bygovernments, municipalities, banks andcorporates. The green bond label can beapplied to any debt format, including forexample private placement, securitisation,
covered bond, and sukuk. It is global bestpractice for bonds and loans to be issued inline with the Green Bond Principles (GBP),
Green Loan Principles (GLP), the Climate
Bonds Taxonomy and Standard, as well as anumber of country-specific guidelines. The
key is that the use of proceeds is ring-fenced
to only finance green assets, projects and/or
activities.

While there is not yet a uniform set of global
definitions for eligible projects to be fundedwith green bond and loan proceeds, theClimate Bonds Initiative uses the Climate
Bonds Taxonomy, which features eight useof proceeds categories: Energy, Buildings,
Transport, Water, Waste, Land use, Industry
and ICT. The Taxonomy is derived from the
Climate Bonds Standard, which comprises
Sector Criteria developed with expert input
from the international science community
and industry professionals. Issuers can apply
to certify their green debt instruments under
the Climate Bonds Standard by employing an
independent Approved Verifier. The Verifier
provides a third-party assessment that theuse of proceeds complies with the objective of
capping global warming at 2 degrees Celsius.

Latin America & Caribbean: Sustainable Finance State of the Market 2021 Climate Bonds Initiative

Country overviews 21
Conclusions and outlook 30
Appendix 31
Endnotes 32

2

Methodology and scope
To reflect the extraordinary market conditions
brought about by the COVID-19 pandemic in
2020, as well as Climate Bonds’ growing database
coverage, this report includes an evaluation of thebroader sustainable finance market beyond green
bonds in LAC to the end of H1 2021. This includes
all years to this date, i.e. cumulative data sincemarket inception in 2016.
This report covers three overarching debt themes
based on the projects, assets and activities
financed: Green, Social, and Sustainability (GSS).
These data and the subsequent analysis are
predominantly based on the Climate Bonds
Green, Social and Sustainability Bond Databases.
For the purpose of our work and this report,
the sustainable debt market is defined by debt
instruments that (a) have a label, and (b) directly
finance sustainable projects/assets in the form ofuse of proceeds (UoP) bonds and labelled loans.

GreenAll deals carrying a variantof the green label have been
screened for inclusion in therelevant database. Screening isbased on a set of process rules
stipulated in Climate Bonds
Green Bond Database Methodology, summarisedin the following overarching criteria:• Deals must carry a variant of the green label,and• All net proceeds must verifiably (based on
public disclosure) meet Climate Bonds’ green
definitions based on the Climate Bonds
Taxonomy.
Only bonds with 100% of proceeds dedicated togreen assets and projects that are aligned with
the Climate Bonds Taxonomy are included in
our Green Bond Database and figures. If there isinsufficient information on allocations, a bondmay be excluded.

Social and Sustainability
Drawing on existing market
reference points and extensive
research, the inclusion ofsocial and sustainability bonds
provides broad guidanceon the eligible sectors andsubsectors that can be fundedwith labelled bonds fallingunder these themes. However,a comprehensive “social
taxonomy” or equivalentclassification and screening
system for debt instruments aiming to achieve
positive social outcomes has not yet beendeveloped, though work on this is underway

in the European Union and elsewhere. Socialand sustainability bonds’ use of proceeds are
therefore not screened against performancethresholds. Existing market guidance on these
two labels include the Social Bond Principles(SBP) and the Sustainability Bond Guidelines(SBG) by the International Capital Market
Association - ICMA. They are, however, classified
in accordance with the respective labels andcategorized as follows:

Social
The label is exclusively related to social projects,
e.g. Housing, Gender, Women, Health, Education,etc. Categories defined by the SBP.

Sustainability
The label describes a combination of green andsocial projects, e.g., Sustainable, Sustainable
Development Goals (SDGs), socially responsible
investing (SRI), environmental, social andgovernance (ESG), etc. The green project
categories in these instruments are screened inaccordance with the Climate Bonds Green Bond
Database Methodology.

Country definitions andamounts
For the purposes of this report, ‘country’ reflects
the country of the issuing entity; in our global
green bond database and statistics, ‘country’reflects the country of risk, which may bedifferent if the parent of the issuing entity is fromanother country. For example, AES Corporation
issued three green bonds in April 2019, October
2019 and February 2020 totalling USD708m;
in this report these are classified under ‘Brazil’,‘Chile’ and ‘Argentina’, but as ‘USA’ in the
database. Only those entities domiciled in LAC
are included in the analysis, unless otherwise
specified. Unless explicitly stated, the analysis
reflects the amount issued as opposed to thenumber of bonds or issuers.

screening criteria for KPI-linked instruments tocomplement existing market guidance, such as
the ICMA Sustainability-linked Bond Principles(SLBP) and LMA Sustainability-linked Loan
Principles (SLLP). The KPI-linked instrument
theme is discussed in the context of specific casestudy examples on pages 14 to 15. We expect toinclude additional content on these instrument
types in subsequent reports.

Transition labels
Transition finance describes
instruments financing activities
that are not low- or zeroemission (i.e., not green), buthave a shorter long-term roleto play in decarbonising anactivity or supporting an issuer in its transition to
Paris Agreement alignment. The transition label
can thus enable the inclusion of a more diverse
set of sectors and activities in the sustainablefinance universe. At present, transition bonds
predominantly originate from highly polluting
and hard-to abate industries. They do not fall into
the existing definitions of green but are a criticalcomponent of a transition to net zero. Example
sectors include extractive industries such as
mining; materials such as steel and cement;
industrials including aviation, and agriculture,
particularly livestock. Building specific KPIs andscreening indicators for transition activities isalready underway: Climate Bonds began thedefinitional work with the September 2020
release of the Financing Credible Transitions
Whitepaper. This was complemented by ICMA’s
Climate Transition Finance Handbook publishedin December focusing on process guidelines. In
light of these recent developments, we expect toinclude data and analysis on carrying any variantof the transition label in future reports. Please see
p. 14 for further details of our work in this area.

Deals analysed separately
KPI-linked instruments
KPI-linked debt instruments are excluded
from the main GSS market analysis. These
instruments raise general purpose finance andinvolve penalties around the cost or amountof debt to be repaid (e.g. coupon step-ups)
linked to not meeting pre-defined, time-boundsustainability performance targets. The twomain types of instrument are commonly referred
to as Sustainability-linked bonds (SLBs) andSustainability-linked loans (SLLs). Climate Bonds
does not yet comprehensively track or assess
the global market of SLBs or SLLs, preventing
inclusion of these debt categories in this analysis.
However, we are developing data coverage andLatin America & Caribbean: Sustainable Finance State of the Market 2021 Climate Bonds Initiative

3

Key policy milestones supporting sustainable finance across LAC
from 2019 to date
2019
Chile hosts the United
Nations’ COP 25 in December.
Previous LAC hosts include
Argentina (1998 and 2004),
Mexico (2010) and Peru (2014).

Argentinian banks sign a
Sustainable Finance Protocol
with the aim of building astrategy of sustainable financein the banking industry.

Chile’s pension regulator
passes new rules to integrate
ESG and climate risk as partof pension fund investment
analysis.

Mexico’s CCFV joins the
Financial Centres for
Sustainability (FC4S) network.
Colombia’s financial markets
regulator (SFC) joins the NGFS.

Chile becomes the first
country in LAC to issue asovereign green bond.

Honduras National Banking
and Insurance Commission
sets standards for financial
institutions to manage
environmental and social risk.

Panama Stock Exchange
releases its Green, Social andSustainable Bond Guide.

Mexico, Ecuador, Colombia,
Argentina, Paraguay, Costa
Rica, Dominican Republic,
Guatemala, Panama and
Uruguay endorse the Helsinki
Principles and the Santiago
Action Plan, becoming
members of the Coalition of
Finance Ministers for Climate.
The Dominican Republic’s
stock exchange launches agreen bond guide for issuers.

2020
Brazilian Central Bank joins
the NGFS and launches its
sustainability agenda.

BNDES includes green
concessional loans in its
portfolio.

Brazil also approves Decree
10.387/2020 to fast-track green
projects (e.g. renewables, lowcarbon transportation, andwater and sanitation) andfacilitate more issuance.

Quito Stock Exchange(Ecuador) publishes Greenand Social Bonds Guidelines
to guide market development.

Panama Stock Exchange
releases its Guidelines for
Voluntary Reporting andDisclosure of ESG Factors.

Ecuador issues the region’s
and world’s first sovereignsocial bond.

Paraguay’s National Value
Commission approves
Guidelines for the issuances of
SDG Bonds (Resolution CNV
CG N9/20). Paraguay’s Central
Bank joins the NGFS.
Mexico issues the firstsovereign SDG bond in LAC.
Ecuador launches its
Sustainable Finance Initiative
through public and private
institutions with the aim ofcatalyzing the national market.

Colombia’s Superintendencia
Financiera (SFC) published theGreen Bonds Best Practices
Guide and the Regulatory
Framework 028 of 2020 topromote the development of
the green bond market in the
Colombian capital market.
Dominican Republic’s
Superintendencia del Mercado
de Valores, produced thegreen bond guidelines tostandardize the good practices
for issuers.

2021
IDB launches Green Bond
Transparency Platform
to support green bondreporting harmonisation andstandardisation by providing
information on bondproceeds and environmental
performance.
In Mexico, the CONSAR (theNational Commission of the
Retirement Savings System)
issued a new resolutionthat requires pension funds(Afores) to incorporate ESG
criteria into their investment
strategy as of January 1, 2022.

Chile’s Ministry of Financeand the Green Finance PublicPrivate Roundtable (La Mesa)
prepare a Taxonomy Roadmap
to guide future taxonomy
development for the country.
SFC also launches mandatory
requirements for pension
funds to include ESG andclimate factors for investment
portfolios

Colombia advances thedevelopment of its taxonomy
to define economic activities
and assets with substantial
contribution to climate change
mitigation and adaptation.
The country’s Ministry of
Finance publishes a Sovereign
Green Bond Framework.
Brazil’s Central Bank launches
public consultation on Climate
Risk and TCDF.

Latin America & Caribbean: Sustainable Finance State of the Market 2021 Climate Bonds Initiative

Brazil’s National Treasury
signals the developmentof an ESG Framework for a
Sovereign issuance.
Brazilian regulator CVM
launches a public consultationon the public offerings forthe distribution of securities,
including green, social andsustainable labels.

4LAC sustainable debt market overview
The LAC sustainable finance market has morethan doubled since the first edition of Climate
Bonds’ Latin America & Caribbean: Green
Finance State of the Market report publishedin 2019.1 Green bond issuance in the region morethan doubled from USD13.6bn in September
2019 to USD30.2bn at the end of June 2021 – inless than two years. For social and sustainability
bonds, this growth is even more noticeablewith USD18.3bn in cumulative issuance to theend of H1 since the inception of this market
segment in 2016 – featured for the first timein this regional analysis. Despite the impact of
the COVID-19 pandemic, the LAC sustainabledebt market continued to soar throughout
2020 and 2021 across all main themes: total
GSS issuance in 2020 amounted to 16.3bn in2020 (+82% YoY from USD8.9bn in 2019), andhas already reached USD12.5bn in 2021 to date.
With economies beginning to pick up again andpledges for green and sustainable recoveries
being implemented across the region, there areplenty of opportunities for sustainable finance togrow in LAC.

Major economies lead with
Chile, Brazil and Mexico in top
three GSS
Building on a global trend, the LAC sustainablefinance market is becoming more diverse. Greenbonds continue to represent the largest sharein the market (62%) with significant growthsince 2019. The rise of social and sustainability
labels demonstrate broader potential in theregion, echoed by the strong participationof local denominated currencies indicating
the consolidation of domestic green markets
throughout LAC.

LAC sustainable debt market

Green

Total size of market

SocialSustainability

Total GSS

USD30.2bn

USD8.6bn

USD9.7bn

USD48.6bn

Number of deals

169

37

40

246

Number of issuers

91

28

26

132

Number of countries

12

10

9

14

Number of currencies

11

10

6

14

Chile (USD17.8bn) and Brazil (USD11.7bn) are
home to the largest GSS bond markets in theregion. Mexico is in third place with USD7.8bn of
combined GSS volume. Together the top three
countries make up 77% of all GSS issuance in the
LAC region.

Green driven by sovereigns
and corporates, numerous new
entrants
Brazil is also the region’s largest green bondmarket at USD10.3bn in cumulative issuance. Its
outlook for future growth is positive, especiallyacross government spending in infrastructure
and agriculture. The Brazilian National Treasury
has also begun discussions on building an ESG
framework and signalled its intent to issue alabelled bond in the medium term, though thiswould require regulatory changes (see page 25).
Chile (USD9.5bn) and Mexico (USD4bn) follow
Brazil as the second and third largest green

Latin America & Caribbean: Sustainable Finance State of the Market 2021 Climate Bonds Initiative

bond markets in LAC. The increase in Chile’s
issuance volume was driven by the country’s
Sovereign issuances, which continue to reflect
its strong climate commitments and the role ofsustainable finance in delivering these. In Mexico,
the increasing participation of non-financial
corporates in particular has boosted issuance.
New countries have also entered the green
bond market over the past two years: Barbados,
Bermuda, Ecuador and Panama issued theirfirst green bonds since 2019, bringing the total
number of GSS issuer countries in LAC to 14.

Social and sustainability bonds
follow green patterns
Chile is also the region’s largest social andsustainability (S&S) bond market (USD8.3bn).
Similar to green bond issuances, Sovereign
bonds also represent a considerable (61%) shareof Chile’s social and sustainability volume. Mexico
is the second largest (USD3.7bn) social andsustainability bond market. The country has seen
a diversification in labels particularly over 2020
and 2021, demonstrating an increasing appetite
for labelled bonds. Brazil completes the top 3
with USD1.4bn in S&S issuance, almost all of it(96%) coming from corporates.

5

Thematic deep dives

4

BrazilBarbados

Argentina

Colombia

Chile

BermudaMexicoCosta Rica

Uruguay

Peru

PanamaEcuadorSupranational
2

0
2014

2015

2016

2017

2018

2019

2020

H1 2021

Source: Climate Bonds Initiative

corporates issuing green bonds in Brazil alone
and the country leads in this category withalmost USD1.1bn in cumulative issuance.
The share of development banks fell to 14%
cumulatively from 18% since 2019, primarily
due to relatively low issuance (USD750m) in 2020.
Colombian development bank Financiera deDesarrollo Nacional (FDN) issued its first bondin July 2019 to finance public transport projects.
This takes the tally to eight development banks
and USD4.2bn in issuance so far. Other issuersin this category hail from Brazil (BNDES), Mexico(Nafin and FIRA), Colombia (Bancóldex), Peru
(Cofide), along with supranational issuers CAF(Corporación Andina de Fomento) and CABEI.
As of June 2021, Chile is the only country in
the region to have issued sovereign green

bonds. Public sector issuance in general islargely overshadowed by corporates. Public
sector issuers (sovereigns, local governments andgovernment-backed entities) together accountfor under 30% of the total green bond issuance todate (USD13.2bn from 15 issuers). This number
falls to 5% if the Chilean sovereign bonds are
excluded, underscoring the significance ofChile’s issuance programme. Brazil (Companhia
Riograndense De Saneamento Corsan, ISACTEEP) and Costa Rica (Banco Nacional de
Costa Rica) are the only two countries withgovernment-backed entities issuing green bondsin the region. Similarly, Mexico and Argentina
remain the only two countries with issuancesfrom local governments (Province of Jujuy andProvince of La Rioja from Argentina; Mexico City
from Mexico), with no new deals since 2018.

Corporates, sovereign dominate, new countries enter the market
Sovereign

Non-Financial Corporate

Government-Backed Entity

Local government

Financial Corporate

Loan

Development Bank

100%
80%
60%
40%
20%

Latin America & Caribbean: Sustainable Finance State of the Market 2021 Climate Bonds Initiative

Su
Pe
pr
ru
an
at
io
na
l
Ur
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ua
y

Ri
ca
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do
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ex
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o
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a

a
Co

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m
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Ch
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Co

il
Br
az

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a

0%

rb
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Corporate and sovereign issuanceboosts growth
Corporate and sovereign issuers prevail inthe market. Non-financial corporates (39%) andsovereigns (25%) maintain the top spots amongissuer types in cumulative terms, thanks to largescale issuances from Brazil and Chile. 2020 was
also a landmark year for these issuer types withhighest recorded yearly green bond issuance of
USD3.8bn for sovereigns and USD3.4bn for nonfinancial corporates. Financial corporates also
set an annual record in 2020 at USD900m, which
has already been exceeded in H1 2021. Brazil and
Mexico are the two major markets with the mostidentifiable issuer type diversity; other countries
continue to demonstrate a relatively limited
issuer mix. The former is aided by Brazilian
financial corporates finally making their debut
in the green bond market in 2020, beginningwith two bonds from Total Eren in February
and a Certified Climate Bond (CCB) from Banco
Votorantim in March. There are now five financial

6

tin

The number of LAC countries that have seen
green bond issuances also rose to 12 (fromeight in our 2019 analysis). The newly identified
markets are Barbados, Bermuda, Ecuador andPanama. Of the cumulative issuance so far, Brazil
continues to dominate, albeit with a reduced
share of 34% compared to 41% in 2019. Chile is inclose second at 31%, followed by Mexico at 13%.
In terms of numbers of deals and issuers, Brazil isthe clear leader accounting for almost half of thenumbers in both cases (78 of 169 deals and 44 of
91 issuers).

8Ba

Top three remains the same, new countries
enter the market
The rapid development of LAC’s green bondmarket is benefitting not just from existing
issuers but also from the influx of new issuers
every year. Since the beginning of 2020, 25 newissuers have entered this market with their green
bond debuts. Most of these issuers belong to Brazil(17), followed by Mexico (3). 19 of these 25 issuers
are corporates, indicating the increasing desire ofcompanies to access this unique form of financing.

10

USD Billions

The LAC market achieved its
highest green bond numbers in
2020, and is on track for similar
figures in 2021. Continuing thegreen bond resurgence that began
in 2019, the region saw issuances exceeding
USD9.4bn in 2020 (up 33% from 2019). Thisdevelopment was primarily supported bysovereign issuance from the Republic of Chile(USD3.8bn) and by various issuers from Brazil(USD2.5bn). Republic of Chile also had the largest
individual deal size of EUR1.3bn/USD1.4bn in
2020. Overall, the region’s cumulative green bondissuance stands at USD30.24bn as of June, 2021.

2020: Record year for LAC Green Bonds

Ar
ge
n

Green

Source: Climate Bonds Initiative6

Allocations diverge between countries andissuer types – though Energy prevails
Cumulatively, Energy continues to be the mostfunded UoP category in almost all countries.

Industry

ICTTransport

Water

Develop- Sovereign
ment
Bank

ABS

Waste

Land Use

100%
80%
60%
40%
20%
0%
Government- Local
BackedgovernEntity
ment

Public Sector

Loan

Financial
NonCorporate Financial
Corporate

Private Sector
Source: Climate Bonds Initiative

New countries prefer energy, existing ones diversifying
EnergyBuildings

Industry

ICTTransport

Water

Waste

Land Use

Unspec. A&R

100%
80%
60%
40%
20%

Latin America & Caribbean: Sustainable Finance State of the Market 2021 Climate Bonds Initiative

na
l
Ur
ug
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y

m
bi
a
st
a
Ri
ca
Ec
ua
do
r
M
ex
ic
o
Pa
na
m
a
Co

lo

Ch
ile

0%

Co

As noted in our previous analysis, the Landuse category benefits from relatively highcumulative allocation in the LAC region(12.1% or USD3.7bn), compared to the global
share (3.8%). After a 2017 peak (USD1.1bn),
allocations to this category have remained
steadily high but have not crossed the USD1bn
mark. This, combined with increasing allocations
towards other categories such as transport, has

Buildings

ilMore than a quarter (28%) of LAC green bonduse of proceeds to date has been allocated toTransport projects. The largest contributors tothis category are the CCBs from the Republic ofChile, whose related allocations include public
transportation projects such as metros, buses
and related infrastructure. Rumo SA, a logistics
company from Brazil, is another large financierof this category with USD500m allocations in
2020. We discuss the outlook for low-carbon
transportation in LAC in more detail in a
dedicated spotlight section on p. 17.

EnergyBraz

Use of proceeds in LAC diversifies
Energy is once again the most funded sector
in the LAC region, accounting for 44%(USD13.2bn) of the cumulative amount issued.
While the amount allocated has more than doubled
compared to the previous analysis (USD5.5bn),
energy’s share continues to be the same as before
at 44%. Bonds from six countries (Argentina,
Barbados, Bermuda, Costa Rica, Peru, and Uruguay)
allocated more than 95% of their funds towards
this category. 2020 was the most successful year
for Energy investment from green bonds with
USD3.2bn allocated. Examples of issuers withissuances post-2019 and large allocations to energy
include CMI Energia from Bermuda (USD700m),
Inversiones Latin America Power (USD404m) andArroyo Energy Investors (USD399m) from Chile. Last
year also saw the largest-ever allocations towards
Buildings (USD760m), Transport (USD4.2bn) and
Waste (USD360m).

Most public sector issuers tilt towards Energy, private sector more varied

tin
a
Ba
rb
ad
os
Be
rm
ud
a

Buildings 6%
Source: Climate Bonds InitiativeuTransport
28%

Among issuer types, there is a clear difference inallocation between private and public sector issuers.
Except the sovereign category (which comprises
solely of the Republic of Chile), most public sector
issuers tend to have majority allocations towards
energy. Transport, Water and Land use are the otherpopular choices among these issuers. Developmentbanks in particular have increased their project
portfolio since 2019 and have more Transportationand Water projects being funded since.

atioEnergy44%

The Buildings and Water categories marginally
improved their shares from 4% each in 2019 to
6% and 5%, respectively. This is in stark contrast
to global allocation numbers, where Buildings
is the second-most-funded category at 27% and
Water is fourth at 10%. 2020 was a successful
year for Buildings, with the highest-ever annual
allocation of USD7.6bn.

PerLand use
12%

In 2020 this trend continued, with the only exception
being Chile, primarily due to the sovereign bonds’
large allocation towards transportation. Since 2019
however, Mexican and supranational issuers haveseen increasing diversification in other sectors. Shareof energy dropped to under 60% in Mexico (from 80%
in 2019) and to 31% among supranational issuers(down from 40%).

pran

Industry 2%
ICT <1%Ar
gen

Water 5%
Waste 2%

resulted in the reduction of the share of land
use allocations from 20% in 2019. New issuers
since 2019 financing Land use include Coca-Cola
FEMSA (forest preservation and reforestation)and SLC Agricola (low-carbon agriculture and soil
conservation projects).

Su

Energy most funded, transport
allocation grows

Source: Climate Bonds Initiative

7

The private sector, on the other hand, tends
to be more diversified but the proportions in
Energy continue to increase. Compared to theprevious report, both financial and non-financial
corporates have seen increased allocations to
Energy, with the latter also having increased
their share of funds going towards green building
projects.
USD continues to dominate, currency
diversity increases
Nearly two-thirds (60%) of green issuancein LAC by amount is denominated in USD(USD18.2bn). This is a drop from 70% in theprevious analysis, mainly due to increasing
issuances in BRL and EUR since 2019. In termsof individual deals, BRL-denominated issuances
have caught up with USD, at 63 BRL deals
compared to 64 in USD. This is a positive sign oflatent demand for local currency denominatedbonds from the leading markets.
EUR-denominated deals are a relatively distantsecond at 16.6% (USD5bn). These are, however,
only six in number from three issuers (Republicof Chile, CAF and BRF SA), thereby making EUR
the currency with the largest average deal size inthe LAC region. Hard currency issuance in large
size is a natural way to cater to demand frominternational investors, particularly from Europe.
This is evident in for instance Chile’s sovereignissuance programme, of which the equivalent of
USD3.6bn (half of its total issuance to date) has
been issued in EUR.
The market has also seen an increase in theoverall diversity of issue currencies after 2019.
Green bonds denominated in ARS, BBD and CHF
appeared, albeit in small numbers. The CHF350m(USD384m) bond from the development bank
Corporacion Andina de Fomento (CAF) was thelargest among the debutants.
Across issuer types, non-financial corporates are
the most diverse in terms of currency with green
bonds denominated in nine different currencies,
followed by development banks at eight. USD is
the clear currency of choice among most issuer
types, except for sovereign.

Local currencies begin to challenge USD
ARS

BBD

BRL

CLF

USD

EUR

MXN

PEN

ZAR

CHF

100%
80%
60%
40%
20%
0%
2014

2015

2016

2017

Barbados

BermudaCosta Rica

EcuadorMexico0
2
USD Billions

4

2018

2019

2020

H1 2021

Source: Climate Bonds Initiative

Per-deal analysis reveals a relatively different
picture. Among non-financial corporates, BRLdenominated deals (63) are in a close second
place to USD (64). EUR is virtually invisible except
in the Chilean sovereign green bonds and a deal
each from BRF SA in Brazil and the supranational
issuer CAF.
Average deal size drops to below USD200m
Following the issuances of multiple small
green bonds since 2019, the average andmedian bond sizes have fallen by 26% and
40% respectively compared to the 2019 analysis.
Benchmark-sized deals, i.e. those of at least
USD500m equivalent, now account for 53%(USD16bn) of total volume, down from 61% in
2019. The number of benchmark-sized deals,
however, has doubled to 22. These come fromfive countries: Bermuda (1 deal, USD0.7m), Brazil(9 deals, USD5.3bn), Chile (8 deals, USD7.5bn),
Costa Rica (1 deal, USD500m) and Mexico (2deals, USD1.21bn) along with one supranational
deal from CAF (EUR740m/USD800m).
Similar to benchmark-sized deals, Brazil, Chileand Mexico lead among the smaller issuances
as well. These three countries account for 97

Smaller deal sizes preferred by more countries
Argentina

COP

BrazilChile

PanamaUruguay

6

8

Colombia

Peru

Supranational>1bn
500m-1bn
100m-500m
<100m
10

12

CASE STUDY: Corporación
Multi Inversiones (CMI)
green bond
CMI’s USD700m green bond from April 2021
is the largest bond from a new issuer in H1
2021. The energy business unit of the group,
CMI Energía, issued this 2029-maturity bondto high international demand in the USA andEurope. Under the renewable energy header,
it plans to finance projects related to:• Onshore wind
• Solar PV• Run-of-river hydropower• Renewable energy Power Purchase
Agreements (PPAs)
Most of the proceeds will be allocated tothe above. The company’s green bondframework, however, contains additional
eligible projects categories like energy
efficiency, LEED/BREEAM/HQE-certified
green buildings and clean transportationin the form of electric vehicles and vehicles
with emission intensity under 50gCO2/km.
The framework has received a Second Party
Opinion (SPO) from Sustainalytics.
This bond from CMI Energía is currently
also the only eligible green bond issued
out of Bermuda, thereby becoming thede facto demonstrative issuance for otherpotential market participants in the country.
A shift towards renewable energy would be
beneficial not just for the environment, butalso help provide a new, clean electricity
alternative to the 64,000 Bermudians
living there. Climate Bonds welcomes thisissuance and expects more such bonds
from Bermuda in the future.

Source: Climate Bonds Initiative

Latin America & Caribbean: Sustainable Finance State of the Market 2021 Climate Bonds Initiative

8

The biggest contributor to the long-dated debt
surge is the green sovereign programme from theRepublic of Chile. Its eight deals have a weightedaverage tenor of 19 years and amount to USD7.4bn
in total. Increased tenor can provide issuers withenough time to undertake larger, more capitalintensive projects at a steady cost of funding– especially relevant for the public sector. The lowcarbon transportation sector and the underserved
LAC green buildings industry is expected to growwith the help of such debt instruments.
External reviews common, certifications
on the riseOver 88% of the total issued amount, and
84% of deals in the region, have some formof external review. This is quite in line with the

Assurance

Certified

None

Reviewed by Sustainalytics, Coca-Cola
FEMSA’s framework reveals that the company
plans to finance a multitude of climate-friendly
projects. The list includes:• Energy efficiency improvements of 45% in
its facilities• Sorting and recycling facilities• Forest preservation and reforestation activities

SPO

80%
60%
40%
20%

at
io
na
l
Ur
ug
ua
y

Pe
ru

pr
an
Su

Ch
ile
Co
lo
m
bi
a
Co
st
a
Ri
ca
Ec
ua
do
r
M
ex
ic
o
Pa
na
m
a

il
Br
az

tin

a
rb
ad
os
Be
rm
ud
a

0%

Source: Climate Bonds Initiative

respective global numbers of 87% and 88%. The
range of reviews includes Second Party Opinions(SPO), green bond ratings, Certification under the
Climate Bonds Standard, and assurance. SPOs
continue to be popular, but the share of SPO
providers has changed significantly since theprevious analysis.
Until early 2019, Sustainalytics was the clear
leader among SPO providers, accounting for 42%of the total green bond issuance in the market.
It continues to be the leader in 2021, albeit witha reduced share of 32%. This is primarily due tothe increasing share of local player SITAWI (13%).
SITAWI has reviewed bonds worth USD3.8bn,
USD3.2bn of which have come after 2018. There
are also five new reviewers that have entered thefray of green bonds in the LAC region since then:Bureau Veritas (0.01% by amount), CICERO (1.8%),
CIPA (0.01%), Resultante (0.9%) and S&P (1.3%).2

CASE STUDY: Coca-Cola FEMSA inaugural green bondCoca-Coca FEMSA is a prominent beveragemaker in the Latin American region,
employing over 80,000 people in its
operations. It is also one of the first beveragecompanies to issue a green bond in theregion. This Mexico City-based company
developed its first green bond framework
in early 2020 and completed its inaugural,
USD705m deal in September that year.

Rating100%

Ba

Longer tenor bond issuances increase
Bonds with tenors above 10 years haveincreased since the last analysis. Specifically,
those with tenors between 10 and 20 years haveincreased from 14% previously to 30% (USD8.7bn)
in terms of cumulative amount issued at the endof June 2021. This share increase has come at thecost of medium-tenor 5-10Y bonds (from 44% to34%). This is especially interesting due to the factthat the 5-10Y category has seen the secondhighest number of issuers (14) after 2019, but theissued amount is less than 15% of issuances inthat period (USD1.9bn of USD14bn). This can becompared to the longer 10-20Y tenor category,
which has seen USD6.6bn of issuance from 13
issuers (20 bonds) in the same period.

External reviews common, certifications on the rise

Ar
ge
n

of the 147 non-benchmark deals. Brazilian
non-financial corporates alone have issued 42
deals with sizes under USD500m, 18 of whichhave been issued after our previous analysis in
2019. Frequent issuers in this category include
energy companies Taesa SA, Omega Geracao and
Iberdrola.

• Improved water management in its
beverage units, and• Solar, wind, geothermal and hydropower
energy (including PPAs)
The 12-year bond is expected to contribute
positively to the company’s 2030 sustainability
goals. Apart from GHG and renewable energy
targets, these also include the target of collecting
back 100% of its polyethylene terephthalate (PET)
packaging bottles in the market by 2030. The
issuer also plans to increase the share of recycledmaterials in its PET packaging to 50% in the same
period. This is pioneering effort by Coca-Cola
FEMSA in the circular economy category; we
recognise the ambition of these targets, andhope that this bond will lead to many more such
efforts in the future, both from Coca-Cola FEMSA
as well as other entities in this sector globally.

Latin America & Caribbean: Sustainable Finance State of the Market 2021 Climate Bonds Initiative

Vigeo Eiris is the clear leader of CCB Approved
Verifiers in LAC at USD7.8bn (83% of the total
Certified amount), followed by Sustainalytics at
USD1.3bn. This makes Sustainalytics the largest
overall reviewer in the region at USD10.8bn,
followed closely by Vigeo Eiris at USD8.4bn. Other
reviewers in the region include EY (USD24m) and
Pacific Corporate Sustainability (USD15m).
CCBs have seen the largest rise in market sharein recent years and have outpaced SPOs frommost top providers. Since early 2019, USD8.6bn
worth of green deals in the region have received
Certification, a close second place to the entire
SPO share of the market which amounted to
USD9.1bn in issuance. Cumulatively, USD9.4bn
worth of green deals in the region have received
Certification, second only to exclusive SPOs
which stand at USD15.2bn. The growth of
Certification is driven primarily by the Chilean
sovereign bonds, followed by Rumo SA’s
USD500m deal in July 2020.
It is interesting to note that when external
reviews are analysed across countries, there arejust two nations (Colombia and Mexico) withan observable diversity in review types. Issuers
from most countries seem to have a collective
preference to a specific mode of review e.g. SPOs
in Brazil and CCBs in Chile. It is important tonote here, however, that deal sizes significantly
influence this analysis. Costa Rica, for example,
has two bonds, one with a SPO and the otherwith a green bond rating. The green rated bond is
143 times the issue size of the other, which is why
it appears as if ratings dominate in Costa Rica.
Another reason is the heavy concentrations of thedeals themselves in Brazil and Chile, which leaves
other nations with two or three reviewer options
in most cases.

9In 2020, social bonds significantly exceeded
their sustainability-themed counterparts. Overthe 2020 and 2021 years, LAC has dramaticallyincreased the issuance of S&S bonds, totalling
USD18.8bn for the entire analysis period
and another 9.9bn from sustainability-linked
instruments. This section focuses on use ofproceeds instruments; we discuss SustainabilityLinked Bonds (SLBs) in a dedicated section ontransition financing on p. 14.
The amount issued among the social andsustainability themes is approximately
equally distributed at USD8.8bn and
USD9.7bn, respectively. Social bonds exhibit
greater diversity among number of issuers (28),while the sustainability theme has the larger
number of deals issued (40).
Five years of social and sustainability
issuance in LAC
LAC S&S bonds date back to 2016, when
Chilean financial corporate Banco Estado
launched two women social bonds in Japanese
yen to promote microfinance initiatives for
women entrepreneurs. The “Crece Mujer”
program promotes microfinance loans,targeted education, and training for women
entrepreneurs.
The following year, Mexico’s Nacional Financiera(Nafin) launched its first social bond for a tenorof five years in the Mexican stock exchange(BMV). The focus of this bond is to finance social
programs including education, financial services
for marginalized communities and micro loans
for women entrepreneurs and small and medium
enterprises (SMEs). During the same period,
Mexican development bank Banobras issued
two sustainability bonds focused on financing
affordable public service infrastructure, disasterrecovery, sustainable transport, renewableenergy, and water efficiency projects.
During 2018, the number of issuers in the

8Social7

Sustainability

6543
USD Billions

ESG investing, including inthematic bonds beyond the
traditional green label has beenon the rise in the LAC region
over the past couple of years. An
important propeller of this surge
has been the need to tackle bothclimate change and social challenges
simultaneously. More recently, the uncertainties
related to the Covid-19 pandemic has increased
the issuance of social bonds as sovereigns raced
to create sustainable economic relief packages toalleviate the social and economic effects causedby the pandemic in the LAC region. As at theend of H1 2021, social and sustainability (S&S)
issuance represented 37% (USD18.3bn) of total
green, social and sustainability (GSS) issuancesin Latin America. In 2020, S&S bonds represented
42% of the total GSS issuance that year.

LAC social & sustainability issuance soared since 2020

2
1
0
2016

2017

2018

2019

2020

H1 2021

Source: Climate Bonds Initiative

Social and sustainability bond issuers diversifying with sovereigns
and corporates in the lead8
Sovereign6

Non-Financial Corporate

Local government

Loan

Government-Backed Entity
4

USD Billions

Social & sustainability

Financial Corporate

Development Bank

2

0
2016

2017

2018

2019

2020

H1 2021

Source: Climate Bonds Initiative

region nearly doubled even though theissuance amount dipped. Argentina’s Banco deInversion y Comercio Exterior (BICE) launcheda sustainability bond aimed at financing
green projects related to energy efficiency andrenewable energy, as well as social projects
related to women empowerment, economic
development, SME’s microfinancing, andemployment generation. In Mexico, real estateagency Vinte introduced a sustainability bondaimed at developing sustainable and affordable
infrastructure in community housing, water andsanitation as well as educational facilities for
marginalized groups.
S&S issuance began to increase again in 2019,
where Chile led the way with nearly three fifths
of total issuance amount, followed by Mexico
and Colombia sharing one fifth of total issuanceeach. Chile’s ARAUCO forestry company issued
two sustainability bonds that year to financeprojects related to renewable energy (wind andbiomass projects), sustainable and efficientwater management, pollution prevention
and control, affordable housing projects for
employees and vulnerable target population,
as well as education, healthcare and public

Latin America & Caribbean: Sustainable Finance State of the Market 2021 Climate Bonds Initiative

safety initiatives. One of Colombia’s largest
private banks, Bancolombia, also issued its firstsustainability bond in 2019 with the supportof IDB Invest. The proceeds of this bond will
be used to finance 26 projects, 8 of which arelabelled as social projects focused on providing
basic public infrastructure, water sanitation, andaffordable housing.
In 2020, 10 Latin-American countries and one
supranational issuer participated in the issuanceof S&S bonds where Chile, Mexico and Guatemala
dominated as leading issuers. The beginning of
the year also saw a global first with Ecuador’ssovereign social bond (USD400m, January 2020)
financing access to affordable housing for morethan medium- and low-income families.3 Overall,
Chile represented 31% of the year’s issuanceamount where the Sovereign Republic of Chile
had a majority share. The use of proceeds of thesovereign bonds are to be allocated to social
expenditures in alignment with its Sustainable
Bond Framework which includes financial
support for the low-income families, access toaffordable housing, access to education, foodsecurity, alleviation of unemployment derived
from the coronavirus pandemic and access to
10

As with green, major economies areprominent in S&S bonds
Following similar trends to green bondissuance, three countries – Chile (USD8.3bn),
Mexico (USD3.7bn), and Brazil (USD1.4bn) –stand out as leaders in S&S issuance, but there
is notable diversity overall. Chile propels theregion, accounting for 45% of total S&S issuance,
followed by Mexico with 20% and Brazil with 8%.
The remaining 10 countries and supranational
issuers together represent approximately 27% of
total S&S issuance. Among the top issuers, Brazil
and Mexico exhibit a greater diversity of issuers
while Chile is more concentrated given sovereignissuance dominance.

4.0
3.5

Sovereign

Non-Financial Corporate

3.0

Loan

Government-Backed Entity

2.5

Financial Corporate

1.0
0.5

10
8

Sovereigns pioneer social bonds
in LACThe social bond theme is characterised bysovereign bond issuance, which comprises
60% of the total social market segment.
The three players in the sovereign field are theRepublic of Chile, Guatemala and Ecuador with
41%, 14% and 4% market share respectively.
Development banks and financial corporates
follow sovereigns with 22% and 11% respectively
where the Inter-American Development Bankand the Central American Bank for Economic
Integration largely contributed to the participationof development banks in social bond issuance.
The financial corporates contribution wascompleted by Banco Estado, Banco Santander
Chile, and Banco W from Colombia.

BermudaBrazilChile

Colombia

Costa Rica

EcuadorMexicoPanamaUruguay

Peru

Paraguay

GuatemalaSupranational

USD Billions

il
Br
az

am
a

u

Some examples of eligible projects include:• Development of green agriculture via
the production of organic agriculture,sustainable and ecological agriculture,including ecosystem restoration and soil
erosion prevention;• •Financing of water and wastewater
management infrastructure.

4
2
0
2018

Banco Continental, one of Paraguay’s largest
private banks, issued its inaugural sustainability
bond for USD300m and a maturity of 5 years.
Sustainalytics provided a SPO for the bond,confirming the issuer’s framework was inalignment with the ICMA Green and Social
Bond Principles of 2018. The bond’s use ofproceeds is distributed among seven eligible
green projects and three social projects.

• Financing the construction andremodelling of health care centres andpublic schools; and

6

2019

CASE STUDY – Paraguay’s
inaugural sustainability
bond from Banco
Continental• Investment in new telecommunication
technologies to improve internet accessto vulnerable communities;

Barbados

2020

Pa
n

Source: Climate Bonds Initiative

Argentina

H1 2021

Pe
r

or
Co
lo
m
bi
a
Be
rm
ud
a
Ar
ge
nt
in
a

co

Ec
ua
d

M
ex
i

at
io
na
l
Gu
at
em
al
a

pr
an

Ch
ile

0

16

12

Development Bank

1.5

Chile, Mexico and Brazil make up top three in socialand sustainability bonds

14

Local government

2.0

Su

The issuer type mix remained diverse over 202021. During the pandemic period, public sector
issuers (sovereigns, government-backed entities
and development banks) led the way in social& sustainability issuance across the region. The
Republic of Chile, Guatemala and the Federal
Government of Mexico were among the largest
contributors in sovereign issuances. Among
non-financial corporates, Brazilian agriculture,engineering and renewable energy companies
contributed to the most in issuances. Amongsupranational development banks, the InterAmerican Development Bank, the Development
Bank of Latin America and Mexican Banobras
were among the largest issuers, adding USD2.2bn
to the S&S market in 2020-21.

Social bonds boosted by sovereigns

USD Billions

essential health services. Guatemala came insecond with the sovereign issuance of USD1.2bn
in social bonds targeted to alleviate the effectsof the Covid-19 pandemic. Mexico followed with
the issuance of a USD888m sovereign SDG Bond
directed towards education and health services,clean water and sanitation, and renewable energy.

2017

2016

The issuance was an important demonstrationin Paraguay’s nascent thematic bond market
and exhibited some key characteristics tounderscore its credibility, including obtaining
a SPO. The bond’s UoP categories showed
important versatility in financing resilience
across the economy, for example by investing
in better internet connectivity for underserved
areas. We hope to see more such issuancesfrom Paraguay and elsewhere in LAC.

Source: Climate Bonds Initiative

Latin America & Caribbean: Sustainable Finance State of the Market 2021 Climate Bonds Initiative

11

4
Sovereign3

Loan

Financial Corporate

2

Non-Financial Corporate
Government-Backed Entity

Local government

1

Development Bank

USD and hard currencies dominate; but
local currency share plays a vital role. During
the 2016 period, hard currency dominated the
S&S bond issuance with Chilean BancoEstado
issuing two social bonds totalling JPY25bn(USD245m). In 2017, Mexican local governments
and development banks entered the market
issuing the totality of bonds in Mexican Pesos,
appealing to the local investors. 2018 showed
the most diversity in currency issuance, which
was split between Chilean, Colombian and
Mexican Pesos, and a small share of US dollars
issued by Argentina.

USD share predominant over the last three years

Subsequent years show a clear dominancein market share of hard currencies, mainly
dollars, euros and Japanese Yen, which allows
for additional international flow of capital frominvestors involved with thematic bond issuance.
Over the last five years, Brazilian bond issuancewas dominated by hard currency in USD (91%market share) while Chile had more diversity ofcurrency issuances mainly in USD (51%), CLP(26%) and EUR (18%). Mexican issuances havebeen split between EUR (23%) and the MXN(76%). Other countries in the region such as
Colombia and Peru have efficiently sourced local
investors in more than 70% of issued amount,thus, there is still opportunities to open themarket for international investors for a share ofthematic bond issuances.

20%

Ur
u

gu
ay

Pe
ru

in
a
Co
lo
m
bi
a
Pa
ra
gu
ay
Co
st
a
Ri
Su
ca
pr
an
at
io
na
l

il

Ar
ge
nt

Br
az

M
ex
i

co

0

Ch
ile

Sustainability bond issuance is driven by
the sovereign and non-financial corporate
issuer types. Chile and Mexico led the way forsovereign sustainability bond issuances while
non-financial corporate issuers were led by Chile,
Brazil and Argentina. Amaggi, Brazil’s largest
grain and fibre company contributed to the to thesustainability bond issuance devoted for socioenvironmentally projects in the agribusinesssupply chain.4 Argentina’s online retailer Mercado
Libre launched its first sustainability bonds
for USD400m devoted for financial inclusion,
reduction of greenhouse gas footprint, social
inclusion and empowerment through education.

Sustainability bonds led by corporates and sovereigns

USD Billions

Corporates more prevalent insustainability bonds

Source: Climate Bonds Initiative

100%

80%

60%

40%

0%
2016
ARS

BRL

2017
CLP

2018
COP

EUR

2019
UF

2020
JPY

USD

2021
MXN

PEN

Source: Climate Bonds Initiative

CASE STUDY: Chile’s USD1.5bn Sovereign Sustainability BondIn April 2021, Chile launched a sizable
sustainability bond of USD1.5bn with a
32-year maturity. Chile’s investor base has
broadened with the bond being the firstsovereign thematic deal to be listed on the
Taipei Exchange. Vigeo Eiris provided the SPO
on the Republic of Chile’s Sustainable Bond
Framework, which has been prepared by the
Chilean Ministry of Finance with the support of
the Inter-American Development Bank.

• Promoting food security for vulnerable
groups

The framework features nine social eligible
project categories, with examples including
the following:

Areas of green financing include cleantransportation, energy efficiency, renewableenergy, conservation of natural resources
and land use and marine areas, water
management, and green buildings. Overall thisframework is very broad and a great example
of a sovereign issuer building a large pipelineof investable sustainability-themed assets,
projects, activities and expenses to facilitate
the achievement of multiple SDGs.

• Financing support to disadvantaged groups(elderly, indigenous and marginalisedcommunities) via pension schemes;• Support for low-income families and victimsof human rights violations via subsidies andcontributions

Latin America & Caribbean: Sustainable Finance State of the Market 2021 Climate Bonds Initiative• Access to essential education and healthservices via preventive and curative healthinitiatives, and• Disaster recovery programs related
to socioeconomic crisis such as thecoronavirus pandemic through SME andmicrofinance programs.

12Bond tenor also shows much variancegeographically. For instance, almost 60% of
issued amount under the S&S header in Chile
has a long-term tenor (>20 years) while in Brazil
the tenor is relatively lower: the 5-10 Y and 1020 Y bracket with 54% and 30% market share,respectively. Mexican bonds are of similarly shortduration, where 53% of all issuances fall underthe 5-10 Y bracket and 31% fall in the less than
5-year tenor grouping. Guatemala and Colombia
share similar trends to Chile where majority of
their bond tenors are 10 years and above. All
else being equal, the longer the bond tenor, theriskier the bond, thus, the higher the interest
rate. In the case of sovereign bond issuances, thevariances of bond tenors among countries reflect
in part, the perceived macroeconomic stability
by investors.

Social and sustainability tenors
10

8SocialSustainability

6

4

USD Billions

There is significant diversity in tenors among
countries and bond themes. S&S bondmaturities are mostly concentrated in mid-level
tenors of 5-10 years (35% by issue amount),followed by long term tenor of 20 years and more
(29%) and 10–20-year tenor (19%). The lowest
share is the short term of (up to five years). For
the social theme, long term tenure predominateswith more than 50% of issued amount covered
under it. The sustainability theme also displays
similar divisions, with long-term tenors
accounting for nearly 50% of the amount andmid-term tenures at 31.7%.

2

0
0-5Y

5-10Y

10-20Y>20Y

Total
Source: Climate Bonds Initiative

CASE STUDY – CABEI’s first internationally issued social bond
The Central American Bank for Economic
Integration (CABEI) issued its first social bond
– a USD500m 5-year deal with a Sustainalytics
SPO – in the global capital markets in February
2021. The deal saw participation of a diverse
group of investors from Europe, Asia, North
America and the Middle East.
The proceeds of CABEI’s inaugural social
bond are intended to contribute to financing
access to essential health and educational
services; affordable basic infrastructure (e.g.
clean drinking water, sanitation, electrification,

Latin America & Caribbean: Sustainable Finance State of the Market 2021 Climate Bonds Initiativesocial housing, disaster prevention andrecovery); along with employment generationand SME microfinancing. The framework
also considers gender inclusion funding forsustainable food systems that contribute tofood security for low-income populations.
The categories are broad-ranging and provide
excellent examples of the varied benefits ofsocial bonds and their overlap with green
bonds especially from a resilience angle, suchas in the cases of disaster prevention andresilient food systems.

13Spotlight: Transition Finance in LAC
The green and sustainable bond markets
continue to grow apace and while the breadth ofassets and activities are becoming increasingly
diversified, large GHG emitters are still largely
absent from the green finance market.
And yet, large GHG emitters have a vital role toplay in reducing global emissions. They are also
often key constituents in mainstream investment
portfolios making them critical to the transitionof those investment portfolios.
To date, green and sustainable bond markets
have been focused on financing assets andactivities that are already low carbon. While
this has been valuable in kick-starting a market,
focusing on these activities alone will be unable
to deliver the goals of the Paris Agreement. Every
entity in every sector needs to be aligned withzero carbon emissions by 2050 for the world tolimit global warming to 1.5 degree.
Currently only a small number of economic
activities operate at zero or near zero emissions
today. For some high-emitting activities, feasible
low- or zero-emissions solutions are available orcredibly envisaged within a reasonable time frame- transition should be towards those solutions. For
others, there are no such solutions, but substitutelow-emission activities exist or are in development- transition should be away from those activities
and towards the better alternatives.
The implications of the transition are enormous– investors all around the world are no longer
questioning if a shift will happen but rather how
quickly it will happen and how it will play out.

Defining transition

The mood is already shifting among investors
as demonstrated by a recent planned South
Korean won (KRW) bond sale from South Korea’s
Samcheok Blue Power. The KRW100m deal failed
to attract any institutional investors during thebookbuilding process, in part, due to the entity's
coal business (and related credit rating down
grade) which includes the building of a new coalfired thermal power plant.5

To address the anxiety in the investment sector
as they look to invest in this new area with newrisks and opportunities, the credibility of transition
plans is important. Climate Bonds has begun
outlining a framework for transitions. A set oftransition principles were featured in the 2020
discussion paper Financing Credible Transitions(see below), and a subsequent series of blog
posts.6,7 The overarching requirements andcharacteristics can be summarised as follows:

As investors seek to align their portfolios, investingin organisations that have a credible transition
plan is becoming essential. Clearly then it isimperative for issuers and investors to continue
to access and allocate capital in a way that leaves
no sector behind, is relevant, and avoids green or“transition-washing”. At the heart of this shift is theneed to standardise the definitions for transition
and to ensure they are applicable to activities aswell as to whole entities.

The focus and starting point of the framework
is on a ‘climate mitigation transition’, i.e. thetransition that entities, activities and assets
need to transform from current operations toalign activities to meet net zero by 2050. This
is in line with the climate focus – though notnecessarily the level of ambition – of mosttransition-labelled bonds to date. Climate
Bonds continues to work with existing
frameworks to develop standardised definitions
and provide the clarity needed by investors.
This will lay the foundations for capital
markets to adopt a comprehensive, robust
and implementable concept of transition,
which we hope will result in greater clarity andconsistency of how the term is used.

Three common features
for Transition• Ambitious – this means in line with 1.5
degrees or has a significant emissions
reduction potential• Flexible – applicable to whole entities,
everything they do, and a range ofassociated financial products

Below we summarise current examples of thedifferent mechanisms for transition at the entitylevel (Sustainability-linked bonds) and asset
and activity-level (green and transition bonds)
and that have already been used in the LAC
sustainable finance markets.

• Inclusive – allow all sectors and activities
to participate as long as they demonstratecompliance with the principles andframework outline

5 principles for an ambitious transition
1. In line with 1.5 degree trajectory
All goals and pathways need to align withzero carbon by 2050 and nearly halving
emissions by 2030.

2. Established by scienceAll goals and pathways must be led byscientific experts and be harmonised
across countries.

3. Offsets don’t countCredible transition goals and pathways
don’t count offsets, but should count
upstream scope 3 emissions.

4. Technological viability trumps
economic competitivenessPathways must include anassessment of current and expected
technologies. Where a viable technology
exists, even if relatively expensive, it should
be used to determine the decarbonisation
pathway for that economic activity.

5. Action not pledges
A credible transition is backed by operating
metrics rather than a commitment/pledge
to follow a transition pathway at some pointin the future. In other words, this is NOT atransition to a transition.

Latin America & Caribbean: Sustainable Finance State of the Market 2021 Climate Bonds Initiative14

Transition instruments

Sustainability-linked Bonds

Transition bonds

Sustainability-linked
transactions are general
purpose bonds, where thecost of finance moves up
or down depending on
the achievement of key
performance indicators (KPIs) of the issuingentity. The Sustainability-linked bond (SLB)
market can play a vital role as a complementary
tool that allows issuers to attract finance toachieve entity-level KPIs as part of their transition
strategy. While these are not specifically labelled
as ‘transition’, they are seen by the market as atransition instrument as they support an entity’s
overall goals/strategy rather than financing
specific assets.

Transition bonds are use ofproceeds bonds designed toallow high emitters to fundtheir shift towards cleaner,more sustainable operations
and strategies.
Global transition bonds issued to date havereceived mixed responses from investors withsome concerned that some transactions using
the label do not represent a significant departurefrom business as usual.
Though not the same as green bonds, whenthoughtfully constructed, these debt instruments
can be pivotal in supporting a global, economywide transition to the Paris Agreement targets.
This can be supported by better market guidance- ICMA and the Climate Bonds Initiative haveboth put out initial guidance in this space. As
noted, Climate Bonds will release more guidancetargeted specifically at entities in late 2021.

CASE STUDY – Eneva
issues dual-tranchetransition bond
In September of 2020, Brazilian energy
company Eneva launched the second
transition bond from LAC following the 2019deal labelled as a Sustainable Transition
Bond from meat producer Marfrig.
Eneva’s BRL948m (USD178m) issuancewas structured as a two-tranche deal.
The use of proceeds cover two projects:
the first is an expansion of an existing gas
power generation plant through the use ofgeothermal energy, which will increase thepeak capacity of the plant from 178 MW to
268 MW through a renewable energy source.
The second project related to theconstruction of a thermoelectric plant
based on natural gas which will substitutethe existing plant that uses diesel oil asfuel. By transitioning from diesel to gas,
the plant will further reduce greenhousegas emissions. According to second party
opinion provider Sitawi, this transition
signifies a reduction of 99% of nitrogenoxide emissions to the atmosphere and areduction of more than 20% of greenhousegas emissions.
Though these projects do not add new fossil
fuel capacity, they are nonetheless examples
of interim transition measures that shouldhave a sunset date in the near future in order
to align with a 1.5-degree future.

This type of bond can allow for an enhanced
commitment and accountability given thepricing of the instrument is adjusted based on
the achievement of the KPIs established by
the issuer. There have, however, been someconcerns around the growth SLBs. In particular,that for some deals, the KPIs set not sufficiently
ambitious or are difficult to assess againstalignment with broader goals such as the Paris
Agreement. Nevertheless, if structured well,they can be a valuable addition the green andtransition finance landscape.
In the LAC region, a total of USD10bn of SLBs
have been issued to the end of H1 2021.
Pioneering issuers in this segment all comefrom Brazil, Mexico, and Chile with 63%, 32%,
and 5% of this market segment, respectively.
The top three issuers, forestry company Suzano(Brazil – also a green bond issuer), food retail andbottling company FEMSA (Mexico – also featured
as a green bond issuer above) and industrial
conglomerate Orbia Advance Corp (Mexico)
jointly represent nearly half – USD4.25bn or 48% of all SLB volume.

CASE STUDY – Suzanoissues USD2.3bn in
Sustainability-linked bonds
in 2020 and 2021
Suzano, a Brazilian industrial pulp andpaper company, issued its inaugural
USD1.25bn Sustainability-linked Bondin 2020. The issuance, which at the time
marked the first in the region, sector andemerging markets overall, the instrument
was tied with a KPI of reducing thecompany’s Scope 1 and 2 GHG emission
intensity to 0.190 tCO2e/ton of unit
produced by 2025 from a 0.213 tCO2e/
ton 2015 baseline. The company said its
issuance was aligned with its long-termtarget of reducing GHG emission intensity
by 15% by 2030. The deal received a SPO
from ISS ESG.
In 2021, the company issued an additional
SLB for USD1bn which saw new KPIs: thefirst one was a goal to reduce Suzano’s
industrial water withdrawal intensity by
12.4% by 2026 from a 2018 baseline. The
second target aimed at achieving women
representation in leadership positions to
30% by 2025.
Overall Suzano’s targets show an interesting
variety and are a good reminder thata green transition needs to ultimately
encompass all the material impacts of anissuer’s operations; in the case of pulp
and paper for instance, water usage iscrucial. The emissions intensity target isa commendable start, but will need to berevised in the future to encompass Scope
3 emissions to allow an appropriate andholistic view of the company’s transition
pathway against that of its industry.

SLBs in LAC come predominantly from corporates
including the aforementioned top three followed
by JBS, the continent’s largest animal protein
producer, and Body Shop parent company Natura
Cosmeticos SA.
Likely due to its skew toward corporate issuers,
the LAC SLB segment is more aggressive intargeting international investors via currency
denominations: 96% of the total USD10bn was
issued in USD or EUR. The remaining 4% wasissued in local BRL. Out of the 24 number ofbonds issued, 70% were issued in Brazil (70%),
followed by Mexico (25%) and Chile (5%).

Latin America & Caribbean: Sustainable Finance State of the Market 2021 Climate Bonds Initiative15

Spotlight: Support and opportunities forsustainable finance market development in LAC
Land Use
Issuances in the Land use
category represent 12%of the LAC green bondmarket. Forestry, agriculture,bioenergy and foodproduction companies are
key contributors to this category.
While, issuances from agriculture are still
incipient, the sector remains as one of themost important in many major LAC economies.
Agriculture accounts for 5 to 18% of GDP
in 20 countries across LAC, considering foodsystems this percentage increases.8 32 green
bonds have been issued under the Land Use
category in this region.9
Brazil leads as a major commodity producer. The
country is the world’s largest sugar, coffee and beef
producer, and the second in soy. Despite othercountries, such as Argentina, Chile and Mexico,also being amongst top agriculture producers,
Brazil has led green land use-related issuances in
LAC, with a total USD 4.3bn from 17 deals.

Pulp and Paper Lead Issuances in LAC
Forestry companies lead LAC issuances, with
USD3.4bn. Brazil pulp and paper companies leadissuances. Suzano Papel e Celulose was the firstcompany in the sector to issue green bonds, thefirst in July 2016 (USD500m) and the second in
November 2016 (USD295m). The company also
was responsible for another two issuances in
2017, with a combined USD900m.
Another five issuances from Brazilian pulp
and paper companies came to market between
2017 and 2020: Klabin (USD500m/September
2017; USD500m/April 2019; USD200m/January2020); Celulose Irani (USD131/August 2019)and The Forest Company do Brasil (USD10m/
September 2019). The Climate Bonds“Agriculture Sustainable Finance State of theMarket” highlights how all issuances from pulp
and paper companies went towards products
certified by either the Forest Stewardship Council– FSC or PEFC; with a largest part of proceeds
financing pulp and paper production and asmaller portion to conservation efforts.

Food Production Issuers also accessthe Market
Food production companies in LAC also havea significant participation within the Land Use
category. Companies from the sector have issued
USD1.4bn. The inaugural issuance came from
Brazil, in 2015, with BRF (USD564m) being thefirst financial corporate in LAC to allocate themajority of its use of proceeds on any type ofindustrial production. Agrosuper, a Chilean meatproduct manufacturer, borrowed USD100m via
a green loan to fund sustainable fisheries. Brazil(Katayama) and Mexico (Coca-Cola FEMSA) were
responsible for the other two issuances. Katayama
Alimentos, a Brazilian poultry company, issued
a USD3m green bond in January 2020 to financeorganic fertilizer production from animal waste
and Coca-Cola FEMSA,11 issued a USD705m,
the largest bond from the sector, in September
2020 to finance or refinance eligible projects that
reduce its carbon footprint, water stewardship andcircular economy (recycle resin in PET bottles andcollect beverages packages).

Bioenergy Issuers also direct proceeds
towards Land Use
Bioenergy companies are also increasing
their participation within this category. The
two issuances with UoP going towards Land
Use came from Brazil (FS Bioenergia) witha combined USD 600m. FS Bioenergia, thelargest corn ethanol producer in the country,
issued a USD550m green bond in December
2020. The deal was 1.8x oversubscribed
and the proceeds were allocated for the
production, commercialisation, processing andindustrialisation of corn, eucalyptus biomass andother agricultural products. In January 2021, FS
Bioenergia issued a USD50m bond for working
capital towards the same use of proceeds.

Dedicated Agriculture Issuers
enter the Market

SLC Agrícola also issued a green CRA at USD94m.
The use of proceeds was aligned with the Green
Bond Principles and will be used to financedigital and low carbon agriculture, including
the purchase of modern and more efficientmachinery and equipment, that require lessnon-renewable resource consumption andherbicides; no-tillage, and integrated croplivestock (ICL) systems for soy and cotton.
A third green CRA was issued by Gaia
Securitizadora. The USD11m will finance sevenagriculture producers from the Brazilian Midwest
to preserve over 24,000 hectares of protected
land with native vegetation. The CRA was also
certified under the Climate Bonds Standard
Agriculture Criteria. Solinftec, an agriculturaltechnology firm, issued the fourth green CRA,
being the second one to receive the Climate
Bonds Certification under the Agriculture Criteria.
The proceeds from the deal will go towards
improving and developing digital and prediction
agriculture technologies focused on mitigation
and adaptation.

LAC Potential to scale Land Use issuances
LAC countries are important agriculture
producers and the world largest net foodexporting region.12 By 2030, approximately 34%
of LACs agriculture production is projected to beexported.13 While agriculture and food systems
in the region are diverse and vary in scale,sophistication and economic importance, there
are opportunities to scale sustainable agriculture
production.
Public investment in agricultural researchand technological innovation has triggered
productivity in LAC. To expand production further
investment will be needed in sustainable andintegrated models. A few known sustainableagriculture practices include crop rotation, use ofcover crops, no-till and reduced-till, integration of
livestock and crops and agroforestry systems.14

Agriculture companies debut in the green bondmarket. The four issuances in LAC are from
Brazil. The share from agriculture is small, with a
combined USD137 issued from August 2020 to May
2021. The first green bond, for USD5m, was issued
by Rizoma Agro, the largest Brazilian organic grain
producer. It was also the first issuance under the
Climate Bonds Standard’s Agriculture Criteria,
being a milestone in the market. The deal was
structured by Ecoagro as a green CRA. Under thisstructure Ecoagro issues the CRA and transfers thefunds raised to Rizoma Agro. The proceeds fromthe CRA will finance row crops and agroforestry
production, irrigation systems, the productionof biological inputs, post-harvest infrastructure,research and development and agriculture
management platform.

LAC Countries are already looking at developing
low carbon agriculture as part of their climate
commitments. In Argentina, the National Forest
Management Plan with integrated Livestock
has set technical guidelines for native forest
management and livestock management. The
country also published, in 2019, a National
Forestry Strategy 2030 to protect native forestand promote forest plantations.

Latin America & Caribbean: Sustainable Finance State of the Market 2021 Climate Bonds Initiative

16

Chile’s CMPC, the fourth largest pulp and paper
producer in the world,10 also issued a green bondin 2017, for USD500m. The company was thethird pulp and paper producer in LAC to issue agreen bond. The deal went to finance sustainable
forestry, sustainable water management,
industrial energy efficiency and waste
management projects related to its operations.

Argentina, Brazil, Colombia and Chile havesupport schemes for biofuels, such as
compulsory biofuel mandates. This can support
further expansion of biofuels issuance in theregion for sustainable feedstock production.

Low Carbon Transport
Growing GHG Emissions
Transport is one of the largest
and fastest-growing sourcesof global GHG emissions.
According to the International
Energy Agency (IEA), fuelcombustion from transportation – primarily road,air and marine – is responsible for 24% of global
CO2 emissions.15 Road passenger and freighttransportation is the largest contributor to thoseemissions, with 73%.16 The movement of people
and goods is central to enabling economic
activity and maintaining competitiveness. Thus,
demand for transport infrastructure and services
will continue to increase in both developed andemerging markets over the next decades – anincrease which may result in a 60% jump intransport-related CO2 emissions by 2050.17,18
Drastic measures will be required to meet thisdemand while reversing the GHG emissions
trajectory, meaning that existing solutions must
transition towards low-carbon alternatives andfuture infrastructure must incorporate climate
mitigation and resilience principles. Known
initiatives include switching to zero-emission
fuel sources, fuel efficiency, and modal shifts.
According to the UNFCC’s Climate Action Pathway
for Transport, zero carbon in land transport isfeasible. An 85% reduction in CO2 emissions
could be achieved through existing and emerging
policies and technologies.19

Funding Transport through Green Bonds
Transport is the second most funded categoryof the LAC green bond market, with 28%. Chile’s
Sovereign issuance is responsible for thisparticipation. Other issuers from the region suchas development banks, non-financial corporates,
financial corporates and local government havealso issued bonds to fund rail, subways and BRT
systems. GHG emissions from the transport sector
is fast growing in LAC countries, accounting for
35% of total GHG emissions in the region.20 This iseven more significant compared to global transport
emissions, where LAC accounts for 24%.21
LAC’s transport sector includes a large fleet ofroad transportation for freight and passengers,
with a smaller share of rail concentrated incountries such as Brazil, Chile, Colombia and
Mexico. The quality and performance of thisinfrastructure varies across LAC countries. While
50% Dominican Republic’s and Bahama’s road
network is paved, in Brazil, Bolivia and Peru, thispercentage decreases to around 15%.

Largest share comes fromSovereign Issuances
Allocations for transport across the sustainablelabels are rising. Green issuances have been
the main label for assets from the sector, with
30 green bonds directing part of their UoP to

low carbon transport. There were 11 issuanceswhere more than 90% of UoP went towards
transportation projects: Republic of Chile’s
Sovereigns (8 deals), Rumo SA (1 deal), MetrôRio(1 deal) and Transmilenio (1 deal).
The Chilean Sovereigns have a strongtransportation component. Around 92% of
the eight deals have gone towards low carbon
transportation. Chile’s Green Bond Framework
highlights that the proceeds will be directed
toward public and multimodal transport
solutions, with eligible assets being modal shift,electric public transportation, electrified metro
lines, electric buses, trams and trains, intermodal
infrastructures and subsidies that support theimplementation of low carbon transportation.

Exclusive deals come from Brazilian NonFinancial Corporates
Only three green bonds were fully dedicated to
low carbon transportation. Two deals came from
Brazil. The first was from Rumo SA, the largest
independent freight rail operator in the country,
issued a USD500m green bond in July 2020. This
was the first bond for freight rail in LAC to be
Certified under the Climate Bonds Standards Low
Carbon Transport Criteria. The use of proceeds
will be allocated towards increase in energy
efficiency of the network, upgrading rail network
infrastructure and the purchase of new rollingstock (locomotive and wagons).
The second issuance from Brazil was MetrôRio,Rio de Janeiro’s metro company. The company
issued a USD220m green bond will finance urban
mobility. UoP will go towards rolling stock forelectrified public transport as such as rails, trams,
trolleybuses and cable cars; and dedicatedinfrastructure. The deal received an SPO from
Sitawi Finanças do Bem.
The third exclusive issuance came from Colombia’s
Financiera de Desarrollo Nacional (FDN)(Transmilenio). The USD41m deal will be used
to purchase up to 741 compressed natural gas(CNG) buses for operation on up to four corridorsof Transmilenio’s BRT system. The bond will be
repaid using future cash flows from Transmilenio
journeys, although a 12% contingency liquidity line
will also be provided by FDN.

Other deals also benefit low carbon
transportation
Other issuers in LAC are also funding low carbon
transportation. Development Banks, Financial
Corporates, Local Governments and NonFinancial Corporates have also included theseassets within their deals.
• Development Banks: CAF, CABEI and
Bancóldex have issued a combined USD1.8bn
across eight deals. CAF is the largest issuer
with six of the eight deals. Funding has gone
towards land transport such as electric rail,
metros and tramways.

Latin America & Caribbean: Sustainable Finance State of the Market 2021 Climate Bonds Initiative• Financial Corporates: BTG Pactual, BradescoSA, Banco de Bogotá, Banco Pichincha,
Banco Galicia and Bancolombia have issued
a combined USD1.2bn across eight deals.
The share of transport within these deals
are smaller – around 13% to 33% - but havealso been important to fund low carbon
transportation.
• Non-Financial Corporates: Klabin (Brazil)
issued USD1.2bn across three deals (2017,2019, 2020) to fund the transport infrastructure
for the transportation of pulp, including theacquisition of locomotives and train wagons toreplace trucks and railway lines.
• Local Government: Mexico City issued
USD104m across two deals. Proceeds weredirected toward metro systems, expansionof the Metrobús lines, electric transportation,light rail and BRT.

Infrastructure funding gap
LAC has a significant infrastructure and related
investment gap. While countries have directed
investments to improve transport systems22, thelevel of investment needed to bridge this gap issignificant. Public sector investment alone will
not be able to provide the resources to increase
the stock and quality of transport infrastructurein the region, with sustainable capital markets
playing an important role to mobilise the muchneeded long-term funding for transport assets23.
Public-private partnerships have been used to
attract investment to infrastructure projects.
Chile for instance has used the PPP model forthe operation and maintenance services of its
eBuses. This is part of the country’s commitment
to replace its public transport fleet to fully electricby 2040.

Bridging the gap through low carbon
solutions
Growing urbanisation in LAC has increased
demand for private and public transport services.
The region has an 80% urbanisation rate andthe number of people living in cities has grownconsiderably24; according to the United Nations
approximately 654 million people live in LAC
urban centres. Four cities in the region are
already ranked amongst the ten most congested
in the world - Bogotá, Mexico City, Rio de Janeiro
and São Paulo – and by 2030, motorisation rates
are expected to increase by 40%25. This highlights
the need for improved urban mobility as a key tomitigate emission within LAC cities.
Low carbon transport solutions are being
implemented throughout LAC countries. Oneof the leading urban mobility alternatives are
Bus Rapid Transit (BRT) transport systems. LAC
countries have pioneered BRT deployment,with 54 cities across Argentina, Brazil, Colombia,
Mexico, Chile and Peru with operating BRT
systems26. Though BRTs are not sufficient todeal with all transportation demand, they have17

proven to be a cost-effective solution as it ischeaper than metro systems. There is potential
to continue to expand BRT networks to other
cities, reducing the demand for private vehicles
and consequently GHG emissions.

Scaling low carbon transport in LAC
Low carbon transport has the potential tocontribute to climate commitments. Mexico’s for
instance aims to reduce black carbon emissions
by 51% by 2030 and recognizes the importance ininvesting in low carbon alternatives. Government
has implemented measures to standardize
environmental norms and regulations for existingand new vehicles, as set out in its Nationally
Determined Contribution. Costa Rica’s National
Decarbonisation Plan also low carbon transport,with dedicated bus lanes, intermodal stations,fast charging stations and electric passenger
trains27. In addition, expanding and building
quality infrastructure is also linked with thedelivery of the Sustainable Development Goals(SDGs)28.
Low carbon transportation can also improve
resilience to climate impacts. Transport
infrastructure throughout LAC is vulnerable toextreme weather events, as flooding, intense
rain, landslide and extreme temperatures.29
This disrupts transport services and damages
infrastructure. In 2010-2011, Colombia was hit
by the La Niña and extreme rainfall damaged 98
major roadways, leading to delays in distribution
and driving up commodity prices in the country.
This resulted in an economic loss of USD1.9bn inthe transport sector alone.30 Therefore, there isa clear opportunity to invest in climate-resilient
infrastructure, both existing and new.
Electrification is also perceived as a solution for LAC
countries. Electric Vehicle penetration has beensmall, though a few measures have been put into
place by a few countries, including tariff reduction
for electric vehicles. Argentina, Brazil, Colombia,
Costa Rica, Ecuador and Mexico are a few of thecountries that have lowered these tariffs.
Electrification of fleets are also part of transport
strategies. Costa Rica legislation for fossil-fuelfree transportation mandates public charging
infrastructure and an EV sale targets for 2030
(5%) and 2040 (50%). While Chile’s national
strategy aims for a 40% private electric fleet by
2040. Multilateral development banks are further
supporting electric mobility projects in theregion. The International Finance Corporation(IFC), for instance, has been supporting Brazilian
municipalities on how to move forward withthese projects by providing technical, financial
and institutional advisory.
There is also potential for electrification of railsystems in the medium term, particularly for freight.
Rail network is limited to Brazil, Mexico, Colombia
and Chile, but there is a significant potential to growand reduce demand for road transport.

Adaptation and resilience

Agriculture

While no GSS bonds from
LAC have yet been labelled
as climate resilience bonds,
green bonds can and do have a
climate-resilience component.
One of the reasons for the low
volume of dedicated resilience bonds is thelack of a common taxonomy for adaptation,
nonetheless, in 2019 the Climate Bonds Initiative
published the Climate Resilience Principles,31 toguide the market.

IPCC predicts that the negative
impacts on crop yields will
become more common, withchange in rainfall patterns
and longer periods of droughts causing wildfire.
These climate-related hazards will cause severe
disruption in food production (IPCC 2014).

Increasing vulnerability to
climate impacts
In addition to mitigation, there are opportunities
to finance adaptation and resilience in LAC,
which is highly vulnerable to the physical andeconomic effects of climate change. In the
coming years LAC economies will face increasingclimate impacts, and extreme weather events,
such as rising temperatures and changing rainfall
patterns. Climate change could cost between
1.5% to 5% of GDP per year in the region.32 It isestimated that an annual 1.7% of GDP has been
lost in Latin American countries due to climaterelated impacts in the last twenty years, in the
Caribbean this figure is around 3% of GDP.33
The region is already experiencing extreme
weather events. Nicaragua, Honduras andColombia were devastated by Hurricane lota
in November 2020. The IDB estimates that
LAC could suffer climate-related damageof USD100bn per year by 2050. Funding foradaptation is very limited. Adaptation costs indeveloping countries are estimated at USD70bn,
and this is expected to increase to USD140-300bn
by 2030 and USD280-500bn by 2050.34 Public
investment can only cover a small share, withprivate investment increasing in importance.

Addressing adaptation and resilience in
LAC through GSS
There have been a few GSS bonds with anadaptation and resilience elements, and thereis the potential to expand the resilience labelsin sectors such as Water, Agriculture andInfrastructure.

Water
According to the IPCC in
its latest report from 2014,
rain patterns have alreadybeen changing with further
disruption in the hydrologicalsystem to happen, affecting
the water resources available. In June 2017,
the Mexican-based company Grupo Rotoplas
issued a sustainable bond (USD243m) to financeprojects that provide resilient infrastructure thatguarantee access to drinking water supply tovulnerable communities35.

Latin America & Caribbean: Sustainable Finance State of the Market 2021 Climate Bonds Initiative

Infrastructure
A report developed by Global Centre on
Adaptation estimated that the investment inresilient infrastructure for the LAC countries
should be UDS13bn annually. Currently, thetransport and energy infrastructure have lost an
average of USD2bn per year in the last 10 years
and households and businesses have had direct
damages of almost USD100bn to climate-related
disasters. Athon Energia, a Brazilian company,
issued in 2019 USD11m in green debentures. The
proceeds will be used to finance six small-scale
distributed solar energy projects. The issuance wasthe country’s first green bond for distributed solar
power and aims to ensure network resilience.

Drawing best practices fromInternational Experiences
The European Bank for Reconstruction andDevelopment (EBRB) issued the first dedicatedclimate resilience bond at USD700m in 2019.
Proceeds from the five-year deal went to financeexisting and new climate resilience projects(infrastructure, business and commercial
operations, and agriculture and ecological systems).
There was demand from around 40 investors from15 countries. The EBRD Bond was aligned to the
Climate Bonds Climate Resilience Principles (CRP),
demonstrating the practical application of the CRP.
Other deals that have funded climate adaptation
and resilience include the Kanagawa Prefecture(Japan), who issued a Green Bond in 2020 tofinance projects related to rivers, coasts, anderosion control under the “Kanagawa Prefecture
Flood Disaster Prevention Strategy.” The othergreen bond also came from Japan, with Central
Nippon Expressway issuing a USD400m deal tofinance bridges and earth work. These categories
fall under “Climate Change Adaptation Projects”
under ICMA’s Green Bond Principles.

Taxonomy Development in LAC
The rise of local taxonomies
Guidelines to select eligible green projects andassets are being implemented across the globe
to support issuers and investors, including in LAC.
Chile, Colombia, Mexico and Dominican Republic
are currently developing their own taxonomies. The
rise of local taxonomies demonstrates the interestof countries and their governments in mobilizing
capital flows towards sustainable and climate
resilient development. However, harmonization
between taxonomies is fundamental to facilitate18

this exchange, as there must be a common global
language for what is green and sustainable.
Taxonomies from jurisdictions such as the EU,
together with the Climate Bonds Initiative’s,
have been used as benchmarks for taxonomy
development in LAC. The IFC and the Inter-American
Development Bank have been active in supporting
local taxonomy development in the region.

Taxonomy Development Across LAC
Chile
In May 2021, the Climate Bonds
Initiative (CBI) prepared aTaxonomy Roadmap for Chile,36
together with the Inter-American
Development Bank. The
Roadmap was requested by Chile’s Ministry of
Finance, who is leading the Chilean Green FinancePublic Private Roundtable “La Mesa”, and wassponsored by the International Climate Initiative (IKI).
The Roadmap assesses the best approach on
developing a national taxonomy, including itsalignment with international best practices.
Priority sectors to be included in taxonomy
are construction, transport, buildings andindustry. In addition, the Roadmap highlights
the opportunities and challenges to leverage asustainable finance agenda for the country. One
opportunity for Chile is to lead global discussions
on indicators for mining and nature-based
solutions given their relevance in the country.
With the Roadmap ready, the institutions involvedin the Chilean Green Taxonomy will now prepare
the next steps to develop the Taxonomy.
Colombia
Colombia began developing
its green taxonomy in 2019.
The process has been led
by the Colombian Financial
Regulator, (Superintendencia
Financiera de Colombia), the Ministry of Finance,
the Department of Planning, the Department of
Statistics and the Ministry of Environment andSustainable development which are all part of theSupervisory Committee. The Colombian Green
Taxonomy endorses economic activities and assets
with substantial contribution to Paris environment
commitments and to government strategies
and policies and seeks to be a catalyst for thedevelopment of green financing instruments.
The Taxonomy is being developed with a similararchitecture to the EU Taxonomy. It focuses
primarily on climate change mitigation andadaptation components, including Do No
Significant Harm (DNSH) principles; and also
complies with minimum social safeguards.
By the time of this report’s writing, the taxonomy
was still under development and expected to be
published for public consultation in August or
September 2021.

Green Taxonomy Development
Taxonomies by definition are scientificclassification and definition schemes, this is nodifferent within the sustainable finance market.
A Green Taxonomy classifies and defines assets
and projects according to their climate credentials
and environmental benefits, providing themarket with a science-based foundation andguidance to credible green investments
In order to achieve Paris targets and diminish
climate change impact and the associatedfinancial risks within, the world economy must
transition and reduce substantially the GHG
emissions. Green taxonomies provide asset
level quantifiable and science-based guidance
to channel capital flows towards credible
transitions and sustainable impact.

Dominican Republic
In March 2020, IFC signed
a memorandum of
understanding (MOU) with theSuperintendence of Securities
and Stock Market of the
Dominican Republic (SIMV).
The Parties expressed their willingness to cooperate
in a project that comprises the development ofa taxonomy for climate change (mitigation andadaptation), capacity building and coordination
mechanisms for green finance market development.
Since the subscription of the MOU, SIMV and IFC
expanded the stakeholder reach, including the
Ministry of Environment as an additional signatoryof the project. Other government agencies havebeen involved as members of the taxonomy’s
steering committee, including the Superintendenceof Banks and the Ministry of Finance. It is expectedthat the steering committee will lead the processof developing a consolidated taxonomy for climatechange in the Dominican Republic.
MexicoAs part of the 30 by 30 zeroprogram, the World Bank
Group will support the Ministryof Finance (Secretaría deHacienda y Crédito Público-SHCP) of Mexico to develop a sustainabletaxonomy for the country. SHCP has identified
a critical need for a standard sustainabletaxonomy to define the activities that should
qualify as improving and aligning with Mexico’stransition to a low carbon economy and financial
ecosystem.
In 2020, the Committee on Sustainable Finance,
part of the Ministry of Finance’s financial risk
and stability committee, established four
working groups that aim to build, and eventually
implement, a sustainable finance agenda forthe country through: 1) taxonomies, 2) ESG
disclosure, 3) risks and 4) capital mobilisation.

Latin America & Caribbean: Sustainable Finance State of the Market 2021 Climate Bonds Initiative

In 2013, the Climate Bonds Initiative released theworld’s first Green Taxonomy. Regularly updatedwith the latest global climate science and green
criteria, the global Climate Bonds Taxonomy
serves as a harmonisation approach to the many
local taxonomies arising across the globe and theorganization’s experience in conducting groups ofspecialists is also supporting these local efforts.
The first local taxonomy was published by
China in 2015, the “Green Bond Endorsed
Project Catalogue”, with the purpose ofboosting the low-carbon transition in thishighly regulated market. Later, in 2016, theEuropean Union started its efforts to build its
own local taxonomy, which culminated in the
publication of the European Union’s taxonomy
of sustainable activities, in 2020.
The 30 by 30 zero program aims to help thefinancial sector to scale up private sector financing
for climate-related projects in line with the
NDC unconditional targets being funded by theGerman ministry of environment IKI/BMU and
implemented by the World Bank Group (WB & IFC).

Market Development support
in the region
IDB Green Bond Transparency Platform
The Inter-American Development Bank (IDB)
launched the Green Bond Transparency
Platform (GBTP) in April 2021 as a tool to provide
comprehensive information on LAC green bonds
and support the harmonisation of reporting,including UoP and impact data (see below).37
The GBTP developed standardized upload
templates38 which draw on different best-practicereporting frameworks39 and experiences by
issuers to ensure the reporting templates areapplicable. All the data reported in the GBTP
is first-hand information, directly provided by
the issuers and external reviewers. The Climate
Bonds Initiative is an advisor to the GBTP.
The GBTP was created in close cooperation with
key international, regional and local market
players. Its data management, templates andinformation have been piloted with over 40
market actors including issuers, investors, stock
exchanges, standard setters, external reviewers
and certifiers.
The platform is taxonomy-neutral, data is publicly
and freely available and downloadable, andprovides a benchmark for best practice disclosure
with benefits from different market actors• For issuers, it increases the visibility of the green
project financed and facilitates reporting on theuse of proceeds and impacts of their bonds ina simple format and standardised way, at boththe project and project category level. For newprospective issuers, the GBTP can provide a19simple first stop shop to understand what otherissuers have done with the proceeds and how
they reported. This can provide a motivation
for the issuer to participate in a race to the top
in both reporting and application of the bondproceeds over time. For external reviewers, it
provides a way to present their work with issuers(pre- and post-issuance) and the conclusions ofthese reviews.
• For investors, it enables analysis on theenvironmental performance and the use ofproceeds of specific bonds.
• For public sector authorities, the GBTP is anevidence-based data tool to inform discussions
on taxonomies and regulation, and to monitor
progress in green finance.
• For researchers, the GBTP data can deepen theunderstanding of the links between greennessof a bond, investor holding behavior andpricing in the primary and secondary market.
• For registered issuers and external reviewers,
the GBPT provides free-of-charge assistancethrough its User Support Team.
The GBTP includes both public and private
placements, green bonds and sustainable bonds
with green use of proceeds, bond issuancewhich have already reported their impacts anddisbursements, and those issuances which haverecently issued and commit to report in the next
12 months.

IFC Technical Assistance
In 2018, IFC created the Green Bond Technical
Assistance Program (GB-TAP) to accelerate thegrowth of green bonds in emerging markets to

support climate smart investments and green
transition of the local economies. In partnershipwith SECO, SIDA, and the Ministry of Finance of
Luxembourg, the GB-TAP supports the Amundi
Planet Emerging Green One (AP EGO) Fund whichaims to deploy US$2 billion into emerging markets
green bonds over its seven-year lifetime. The
EGO Fund and GB-TAP are expected to have long
lasting impact and provide great benefits for theenvironment and local economies. In the past
three years since its inception, AP EGO and GB-TAP
jointly impacted the issuances of 56 Green, Socialand Sustainability bonds in the amount of $3
billion spanning across 33 countries.
GB-TAP offers a range of activities and initiatives
to stimulate the supply of emerging market green
bonds, both in terms of volume and quality. Someof its key activities includes the following:
1. Executive Training: The program has
trained over 500 key green bond market players/
professionals from over 30 countries. In 2021
GB-TAP trained 69 bankers from 21 financials
institutions from from Chile, Colombia, Ecuador,
Mexico, Peru, Costa Rica, El Salvador, Guatemala,and Panama.
2. Encouraging Disclosure: IFC initiated a projectto encourage emerging market bond issuers todisclose material ESG information. It aims tocollect the ESG information as defined by IFC’s
ESG Performance Indicators and make it publicly
available as a global public good for the analyticaluse by the investors and asset management firms.
3. Improving the Quality of Reporting: IFC isdeveloping the Green Finance Review Protocol(GFRP), a voluntary procedure to enhance qualityof disclosures and impact reporting by issuers inemerging markets. GFRP plans to create templates
on data disclosure for issuers and second-opinion
providers to standardize impact reporting andexternal review reports. This enhances thereporting quality and allows investors to compare
data across the issuers.
4. Advisory Service for Policy Makers andIssuers: Under the GB-TAP Green Finance/Green
Bond Policy Support, IFC helped 11 emerging
market countries to develop green guidelines andtaxonomies. GB-TAP has provided direct technicaladvisory services to 18 financial institutions, 10 ofwhich issued debut green bonds totaling $1,329
million as of December 2020.
5. Knowledge Sharing: More than 20 knowledge
sharing events with about 10,000 participants from
1,000 organizations from 118 countries. Over 11
research papers/article/case studies produced firstof its kind and flagship including most recently
a case study on the evolution of thematic bondsin Colombia and their impact on the country’s
capital market.
In addition to GB-TAP, IFC-Green Banking
Academy is the brand for the advisory andcapacity building services offered by IFC
Climate Finance team in Latin America and The
Caribbean to support financial institutions in theirtransformational journey towards sustainable
and responsible banking. Since it was launched,
IFC-GBAC has trained several hundreds of bankers
across the region in renewable energy and energy
efficiency financing through a scholarship program,convened thousands of participants in the Ctrl-AltDel: Green rebuild webinar series, among otheractivities, and provided customized green banking
consultancy services to several LAC banks.

Post issuance reporting

According to Climate Bonds’ latest global
study of post-issuance reporting practices ,LAC’s green bond market displays a weakeravailability of reporting compared to otherregions, with 9 out of 17 issuers representing
just over 50% of the amount issued reportingat the time of analysis. Regions with larger,
more mature green bond markets tend to havehigher reporting shares. As well as having ahigher number of large issuers that are more
likely to report, more developed markets also
tend to have more robust and consolidated
issuing practices, including around reporting.

The GBTP takes a larger and real-time sample
where the share of reporting increases on parwith other regions. In the GBTP, more than 90%

of deals issued over 12 months ago havereporting on both allocations and impacts.

Higher reporting share in regions with more mature markets
100%

ReportingNon-reporting

11.5

7.3

5.9

0.8

0.1

89.5

54.4

26.8

0.9

0.1

14.0

EuropeAsia-PacificNorth
America

Latin
America

AfricaSupranational

80%

0.9

60%
40%
USD Billions

One of the primary objectives of the GBTP is
to improve the availability and quality of postissuance reporting among LAC green bonds,
by providing a centralised way for issuers tocommunicate information on the UoP and
impacts as well as supporting documentation
in a timely manner. Compared to otherregions, LAC’s green bond market displays aweaker availability of post-issuance reporting.

20%0%Latin America & Caribbean: Sustainable Finance State of the Market 2021 Climate Bonds Initiative

Source: Climate Bonds Initiative

20

Country overviews
GSS Scorecard by Country
Country

Amount of GSS
debt Issued USD% of LAC GSS
bond market

Number ofIssuers

Number of
Instruments% Benchmark
issuance by amount

Average Instrument
Size USD

Chile

17.8bn

36.6%

16

33

76%

540m

Brazil11.7bn

24.1%

53

90

30%

130m

Mexico

7.8bn

16.0%

20

43

20%

181m

Peru

1.2bn

2.4%

7

10

0%

118m

Argentina

1.3bn

2.6%

11

13

0%

97m

Guatemala

1.2bn

2.4%

1

2

58%

600m

Paraguay

300m

0.6%

1

1

0%

300m

Bermuda

800m

1.6%

2

2

88%

400m

Colombia

1.3bn

2.7%

9

16

0%

80m

Costa Rica

554m

1.1%

3

3

0%

185m

Uruguay

376m

0.8%

2

3

0%

125m

Panama

380m

0.8%

4

13

0%

29m

Ecuador

570m

1.2%

3

3

0%

190m

Barbados

9m

0.02%

2

2

0%

4m

3.4bn

6.9%

3

12

47%

281m

132

246

45%

198

Supranational

48.6bnLatin America & Caribbean: Sustainable Finance State of the Market 2021 Climate Bonds Initiative

Sovereign
GSS Bond
Y

Y

Y

Y

21

ChileChile has accelerated its
progress on sustainable financesince our/Climate Bonds’
previous regional report.
Despite the pandemic and theeconomic challenges, it hasbrought about, the country’s market has seencontinued green bonds issuances as well as
debuts in social, sustainability and sustainabilitylinked labelled bonds. Chile is the only sovereignissuer globally with deals labelled under all threemain GSS themes. The country’s sustainablefinance market reached a cumulative USD18.3b
across these labels.

in 2020, four bonds were issued by the Republicof Chile (USD3.8bn) and one loan was obtainedby Arroyo Energy Investors (USD400m), a powerand energy infrastructure focused firm. Of thethree deals issued up to June 2021, two werefrom the Republic of Chile (USD1.2bn) and one
from Inversiones Latin America Power (USD404m), a renewable energy producer.

long tenors, with three deals above 20 years
and six deals with tenors between 5 to 12 years.
Chile’s entire sovereign green bond programme is
Certified under the Climate Bonds Standard (60%of the market), while the remaining deals with an
external review benefit from SPO (30%). The only
deal without an external review is Arroyo Energy
Investors’ loans.

Transport heavily featured in
Chile's green bond UoP

S&S growth speeding up
Social and Sustainability Bonds are also growing
within Chile’s sustainable finance market (45%),
with a cumulative USD8.2bn since 2016. Boththemes share a similar percentage in termsof issuance volume: social stands at 23%(USD4.2bn) and sustainability at 22% (USD4bn).

Water 2%
Waste 1%
Land use 5%
Industry 1%
ICT 1%

GreenSocialEnergy14%

Chile Social Scorecard

Chile Green Scorecard
LAC Ranking

2

Cumulative amountissued

USD9.5bn

Number of entities

9

Transport
72%

LAC Ranking

1

Cumulative amountissued

USD4.2m

Number of entities

6

Repeat issuers

Repeat issuers
Number of deals

17

Average size

USD562m

Biggest issuer

Republic of Chile(USD7.4bn)

Green bonds represent more than half ofChile’s thematic debt issuance volume (52%).
Between inception in 2017 and end of H1 2021,
the amount issued via green bonds grew from
USD500m to USD9.5bn, with a total of 17 deals
and 10 issuers. The growth in the Chilean market
was driven mainly by its sovereign issuances,though the majority of issuers (80%) in the
country are non-financial corporates.
As of our previous report, five issuers have cometo market: three non-financial corporates, oneloan, and one Sovereign. The last couple years
have brought greater issuer type diversification,with issuances from AES Corporation, Arroyo
Energy Investors, Inversiones Latin America andSonda; the Republic of Chile continues as thelargest repeat issuer.

Chile second on podium for green
Chile continues to be the second-largest LAC
green bond market, with USD5.9bn issued
from January 2020 to June 2021. The share ofSovereign deals remains high, representing 86%
of the total issue volume. Of the five green deals

Buildings 6%
Source: Climate Bonds Initiative

Transport dominates in Chile – thanks tosovereign bonds
Due to the predominance of Chile’s sovereigndeals, which mainly finance extensions andimprovements to Santiago’s metro system,
Transport remains by far the most funded sector
within Chile’s green bond UoP mix. It represents
72% of the total issue volume, followed byRenewable Energy (14%), Low Carbon Buildings(6%), Land Use (5%) and Water (2%). The
categories of Waste, Industry and ICT continue tobe negligible.
With the refinancing cycle of Chile’s Government
slowing down in the coming years, and as thecountry’s green bond market is accessed by agreater variety of issuers operating in different
sectors, an increasing diversification of projecttypes is expected.

Sovereign issuance in EUR prevails; local
currency makes up rest
57% of Chilean issuance is denominated in USD
and 42% in EUR, largely driven by the country’s
Sovereign deals – however, AES Corporation,
Arroyo Energy Investor and Inversiones Latin
America Power also issued in hard currency. The
remaining 1% was denominated in Chilean Peso
and came from Sonda’s deal.
Chilean green bonds also tend to have relatively

Latin America & Caribbean: Sustainable Finance State of the Market 2021 Climate Bonds Initiative

Number of deals

11

Average size

USD382m

Biggest issuer

Republic of Chile(USD3.6bn)

Chile’s first social bonds were issued in 2016 by
Banco del Estado de Chile (BancoEstado), theonly state-owned bank in the country – the firstfor USD150m and the second for USD96m, bothto finance female empowerment.40,41
In 2018, another four deals came to market, ofwhich two again by BancoEstado, for USD83m
and USD94m. Based on BancoEstado’s Social
Bond Framework developed, all the proceeds are
destined to support women, micro-, small- andmedium-sized enterprises (MSMEs), access tofinancial services, and social housing.42 The otherbonds were issued by Caja de Compensación
Los Héroes (USD39m) to finance a social credit
scheme for people excluded from the financial
system43,44), and Aguas Andinas (USD59m)45
to finance drinking water supply, resilient
infrastructure and sewage sanitation46).
The number of Chile’s social deals doubled
from 2020 to June 2021, with six deals coming
to market; three in 2020 and three in 2021. In
October 2020, BancoEstado issued a USD94m
social bond to improve women entrepreneur’saccess to a credit scheme.47 Later in the year, inNovember 2020, the Republic of Chile issued
two sovereign social bonds, with a combined22

value of USD2bn. According to the Social Bond
Framework, the proceeds are to be used inprojects linked to women empowerment, SMEs,
social housing and access to financial systems.48
This year, the Republic of Chile issued anothersocial bond for USD1.5bn, while Banco
Santander de Chile became the first commercialbank to issue social bonds in the country, withtwo deals (USD100m and USD50m) to provide
funding for women-led SMEs.49,50

Sustainability

Chile Sustainability
Scorecard
LAC Ranking

1

Cumulative amountissued

USD4.0bn

Number of entities

3

Repeat issuers
Number of deals

5

Average size

USD812m

Biggest issuer

Republic of Chile(USD3bn)

Chile’s first sustainability bond came tomarket in 2019 by Esval, a water utility
company. The USD61m bond finances water
treatment and supply, resilient infrastructure
for water-related facilities, sewage treatment(building new facilities or improving existingprocesses), access to basic services for urban
and rural areas and efficiency of energy, fuel andwater use. Two other sustainability bonds were
issued in the same year by Celulosa Arauco yConstitucion SA, a pulp and paper manufacturer,
each for USD500m. The UoP of both deals is
aimed at a wide range of projects, including
sustainable land use and forest management,sustainable water management, preservation ofnatural resources and biodiversity, renewableenergy, affordable housing, access to essential
services, social economic advancement andempowerment and local entrepreneurship.
In 2021, two other sustainability bonds were
issued, both by the Republic of Chile (USD1.5bneach). The January deal was listed on the
Luxembourg Stock Exchange and the London
Exchange, with funds destined to projects that
qualify as eligible according to the Green and/or Social Bond Frameworks.51 The April deal
was listed on the Taipei Exchange and theLondon Stock Exchange, becoming the firstsustainability bond to be publicly listed in Taipei
by a Sovereign.52 Chile’s Sovereign has also beenhighlighted in the Ministry of Finance’s 2021
Debt-Financing Plan.53 The Ministry highlights
the diversification of thematic bonds in the
country and the growing participation of thesetypes of bonds within the Central Government’s
debt stock (15.5% at the time of the publication
15.5%).

Sustainability-linked
Sustainability-linked deals are also incipient
within Chile. The first SLB was issued by CMPC,a pulp and paper producer, for USD500m. The
company was the first Chilean company toissue an SLB in the international market. CMPC
issued the country’s first green bond and also
pioneers as the first SLB.54 The SLB Framework
is composed of the following environmental
sustainability goals that are linked to mitigation
and rational use of resources target: 23.5% CO2
emission reduction by 2025 and 25% industrial
water use by 2030 (2018 baseline).55
Green bonds and other labels can further support
the country in its shift towards carbon neutrality.
The Chilean updated Nationally Determined
Contribution set a carbon neutral target for2050. Chile’s Sovereigns continue sending animportant signal to market in its climate andwider sustainability commitments. Within thethematic labels there have been new issuers,
but there is potential for greater diversificationin the country’s issuer base. Energy, transportand buildings remain as priority sectors for
Chile, and thematic labels across these themes
could further benefit the financing gap. For
instance, to meet its carbon neutrality target
there is the need for the electrification of end-use
technologies, including electromobility. In thebuilding sector, the recently approved Energy
Efficiency Law (January 2021) sets a rating systemmandate for all new buildings in the country.
An opportunity to raise GSS issuance for low
carbon buildings. Although water does not rank
as high as other sectors, it could be prioritizedconsidering adaptation and resilience. There isalso considerable potential for transition bonds,
particularly from the mining sector, which iscentral to Chile’s economy.

building on climate risk management and a local
taxonomy proposal.56 La Mesa requested support
from the Climate Bonds Initiative and theInter-American Development Bank to develop
a Taxonomy Roadmap Report with the primary
purpose of assessing the best pathway fordeveloping a sustainable taxonomy in Chile. The
Roadmap was launched in May 2021, and points
Chile Government towards a national taxonomy
that is aligned with international references(especially those of the EU) and that prioritizes
energy, transport, buildings and – uniquely –mining.
Additionally, since 2018, the Santiago Stock
Exchange (BCS) – a La Mesa member – has given
special visibility to thematic bonds with a section
dedicated to green and social bonds based
both on the Green Bond Principles (GBP) andthe Social Bond Principles (SBP).57 In July 2019,
BCS joined the Luxembourg Stock Exchange(LuxSE) in a joint effort to promote cross-listingand exchange of financial securities between thejurisdictions, particularly among green and social
deals.

Policy as a catalyst for Chilean
sustainable finance
Chile’s Ministry of Finance is playing a leadingrole in the green finance scene. In 2019, themember of the Coalition of Finance Ministers for
Climate Action published the country’s Climate
Change Financial Strategy and created theGreen Finance Public-Private Roundtable“La Mesa” to develop Chile’s long-term green
finance agenda. La Mesa comprises major
market players, such as the Central Bank and thePension Funds Superintendency.
Important milestones achieved under the
La Mesa Group include members’ capacity

Latin America & Caribbean: Sustainable Finance State of the Market 2021 Climate Bonds Initiative23

BrazilBrazil use of proceeds

Brazil is the second-largest
GSS bond market in LAC andthe largest green bond market.
As of our previous LAC report,
Brazil’s green bond issuancesnearly doubled. The country’s
sustainable debt market grew significantly overthe past seven years, with USD18bn issued acrossthe four thematic bond categories.

Industry 3%

Brazil Sustainability
Scorecard

Land use
25%
Energy50%

GreenTransport
10%

Brazil Green Scorecard
LAC Ranking

1

Cumulative amountissued

USD10.3bn

Number of entities

44

Repeat issuers
Number of deals

78

Average size

USD132m

Biggest issuer

Suzano Papel
e Celulose(USD1.7bn)

Green bonds continue to dominate the country’s
market with USD10.3bn issued between 2015 and2021. As of our previous report, the country had
59 more issuances and a higher diversification in
the use of proceeds led by benchmark issuancesfrom Attend Ambiental BRL55m for water
infrastructure, Rumo USD500m for low carbon
freight transport, Rizoma Agro BRL25m for low
carbon agriculture, Metrorio BRL1.2bn for urban
mobility, and Ciclus Ambiental BRL 450m for
waste management.
During 2020, Brazil briefly lost the number one
position in LAC green bond market to Chile
due to its aggressive sovereign issuances. The
Brazilian green bond market soon recovered
and accumulated 23 deals and the volume of
USD2.5bn. In this same year, financial corporates
debuted, a further and important milestone in
the form of a new issuer type. While non-financial
corporates still dominated, financial corporates
included BV (USD50m), followed by BTG Pactual(USD50m) and Banco Bradesco SA (USD232m).
2021 has already seen 20 deals adding up
to USD1.7bn. ABS issuance has increased
significantly, with seven deals from energy andagriculture companies: Colombo (USD65m),
Rio Amambai (USD11m), Ferrari Agroindustrial(USD15m), Produzindo Certo (USD12m), Solinftec(USD26m), Origo (USD33m) and Echoenergia

Water 4%
Waste 4%Non-financial corporates also leadsustainability issuances

LAC Ranking

3

Cumulative amountissued

USD1.4bn

Number of entities

6

Repeat issuers

Buildings 4%
Source: Climate Bonds Initiative(USD26m). BTG Pactual also issued a secondbond for USD500m to finance categories ranging
from renewable energy to sustainable water/
wastewater management and affordable housing.
Most green deals are externally reviewed. Of thegreen bonds issued in Brazil, 40 have SPOs and
12 are Certified Climate Bonds

Social Bonds entered the market
one year ago

Brazil Social Scorecard
LAC Ranking

10

Cumulative amountissued

USD34.2m

Number of entities

9

Repeat issuers
Number of deals

12

Average size

USD9m

Biggest issuer

Banco ABC(USD24.9m)

Social bonds represent a small share of Brazil’s
GSS market with USD34m issued. The firstissuance was from Banco ABC which issued
USD525m in September 2020, with the proceeds
being used towards SME loans. An USD8.8m deal
followed in October by Gyra+, a fintech company
which gives credit to SME business owners. It was
structured by Vert Securitizadora. Gyra+ issued
a second bond in June 2021 for USD25m, with athree-year tenor. Both deals aimed to increase
job generation and to reduce unemployment by
providing credit to SMEs specially those led byblack women over 60 years old.

Latin America & Caribbean: Sustainable Finance State of the Market 2021 Climate Bonds Initiative

Number of deals

8

Average size

USD174m

Biggest issuer

AmaggiLuxembourg
International
Sarl (USD750m)

The sustainability theme is also increasing its
participation in the Brazilian GSS market, witheight deals and a total of USD1.4bn issued
between July 2020 and June 2021.
The producer of agricultural goods Amaggi andthe finance corporate Itaú Unibanco issued
the largest deals. Amaggi issued a USD750m
in January 2021 to finance renewable energy
and land use; employment generation andsocioeconomic empowerment.58 Itaú Unibanco
issued a USD500m bond to finance projects
eligible within the bank’s Sustainability Finance
Framework that comprises several categories
including renewable energy, land use, water,
low carbon transport, employment generation
among others.59 Non-financial corporates
operating in the water and sanitation sector
represented the majority of deals, but only 6% of
the issue volume.

SLB rise as the second most used
instrument
SLB is the second-largest segment in Brazil’s
sustainable debt market with USD6.3bn issued,or 35%. FS Bioenergia issued the country’s first
SLB in June 2020, a small USD6m deal. On thelarger end, Suzano debuted in the international
market with a USD1.2bn deal in September
2020, committing for a 15% reduction
in GHG emissions by 203060 followed by
Grupo Boticário who issued a USD1bn bondin December2020 to supply 100% of theelectricity of their factories and distribution
centres from renewable sources.61 SLB
issuance exploded in 2021, with 14 deals
representing USD4.9bn issued in H1. Natura(USD1bn), Suzano (USD1bn), JBL (USD1bn) andTIM (USD1.6bn) were the largest issuers. . Rumo
also came to market, becoming the first freight24

rail company to access the SBL market(twoUSD750m deals). Viavarejo (USD772 andUSD228m), Suzano (USD 1.25bn and USD 1bn)
and Simpar (USD 650mn and BRL 450mn) arealso repeated SLB issuers with two bonds each .

agenda. Finally, Brazil’s Ministry of Economy does
not fall behind and published in 2020 the Decree
10.387/2020 that established a fast track to theissuance of infrastructure debentures with social
and/or environmental benefits.

Public and Private Sector take Leadership
across GSS

The Brazilian Federation of Banks(FEBRABAN), the main representative of theBrazilian Banking Industry, is also engaged
in greening the local economy. In 2020, it
published its own Green Taxonomy to classify
banking credit operations according to social,environment and climate credentials. In 2021,
FEBRABAN signed an MoU with the IFC todevelop a Sustainable Finance Programme andalign the banking sector to Brazil`s NDCs.

Key Brazilian governmental institutions
are making substantial progress in theirgreen finance agendas. The Ministries ofInfrastructure and Regional Development
both signed MoUs with CBI respectively
in September 2019 and September 2020,
aiming to work towards assessing climate andenvironmental risks in their portfolios andpotential funding via green bonds. Brazil’s
Ministry of Agriculture, which also signed an
MoU with CBI – in November 2019 – to scale up
finance for sustainable agriculture in the country,
has also been promoting the green financeagenda closely with Brazil’s Central Bank (BCB)
by integrating green indicators, taxonomies andclimate risk into the national financial system
for rural credit. In 2020, BCB joined the Central
Banks and Supervisors’ Network for Greening
the Financial System (NGFS) and signed a MoU
with Climate Bonds as part of its sustainability

Furthermore, the National Bank for Economic
and Social Development (BNDES), a repeat
green bond issuer, is working closely with the IDB
to establish a normative framework that supports
green funding to eligible projects, and with CBI ina technical cooperation aimed at strengthening
the Bank’s sustainable finance capacity. In
addition, to stimulate companies to decarbonise,
the Bank reduced the interest rates on its credit
lines for selected sectors. The first sector was
biofuel, with lower rates accessible if it GHG
emission reduction targets are met.62

BNDES also announced it would no longer invest
in any thermal power plants and also launched
a new Sustainability-Linked credit line. The
programme named “BNDES ASG Credit” is forentities that commit to reduce GHG emissions
and increase sustainable indicators.The credit
line will support deals of up to BRL 150mn thatwill have up to 0,4% in interest discount if theborrower achieves targets.63
In addition, the Brazilian National Treasury
has begun discussions on building an ESG
Framework. The government has signalled its
intent to publish its framework in 2022. While
this is an ongoing process, a regulatory barrier
would need to be overcome to earmark
proceeds as green, as Resolution Nº 20/2004
foresees that all proceeds from sovereign bonds
must be directed towards paying off the national
debt and therefore allocated under the federal
budget. Finally, the sustainable finance agenda
in Brazil also counts with great support fromthe country’s National Monetary Council(Conselho Monetário Nacional - CMN) who
has put in place resolutions64 for financial
institutions that endorse environmental andsocial risk assessment and integration into
decision-making.

MexicoThird in LACs GSS
Ranking
The third LAC market to have
had a green bond issued (after
Peru and Brazil), Mexico also
holds the third position in volume issued with
USD11bn across the green, social, sustainable
and sustainability-linked themes. Following thesame trend as in other established markets,
the green label represent the most significant
share with 37%, followed by sustainability-linked
bonds at 29% and not too far off sustainability
bonds, with 28%. The share of social bonds is
considerably lower (6%).

Mexico Green Scorecard

Mexico Social Scorecard

LAC Ranking

3

LAC Ranking

3

Cumulative amountissued

USD4bnCumulative amountissued

USD678m

Number of entities

12

Number of entities

3

Repeat issuers

Repeat issuers

Number of deals

21

Number of deals

4

Average size

USD192m

Average size

USD170m

Biggest issuer

Fibra Prologis(USD825m)

Biggest issuer

FIRA(USD331m)

Green
Since the last publication of LAC State of theMarket, Mexico had eleven more deals coming
to market. So far, 2020 was the best year for thegreen bond market in the country, with five deals
totalling USD 1.3bn. FEFA issued its second bond
(USD159m) to finance protected agriculture andirrigation systems. Vinte Viviendas Integrales
borrowed USD20m via a green loan to financegreen buildings. In September, Coca-Cola Femsa
raised USD705m to finance energy efficiency,
renewable energy, low carbon buildings, waste
and land use projects, and in December two
issuers accessed the market: Fibra Prologis
issued a USD375m deal to finance wind andsolar energy, energy storage system and green
buildings, while Corpovael issued a USD25m deal
to finance low carbon buildings.
The market has shown signs of further growthin 2021, with five green bonds issued in H1,three by Fibra Prologis and two by Fibra Storage.
Fibra Prologis issued USD80m, USD70m and a
USD300m deals with similar eligible categories
as before, whereas Fibra Storage’s USD17m and
USD59m operations had proceeds going towards
low carbon buildings.
82% of allocations have been to renewableenergy. Buildings and Land use are the next-

Latin America & Caribbean: Sustainable Finance State of the Market 2021 Climate Bonds Initiativelargest categories, each accounting for 7%,
while Transport and Water account for 2% each.
Development bank FEFA’s Certified Climate Bondis the only one funding sustainable land use,
while Mexico City’s deals finance the widest rangeof categories within a single bond.
With seven deals totalling more than USD1.4bn
While most green bonds have been issued in
Mexican Pesos, they represent 30% of volumeissuance, with the larger USD deals representing
70%. Non-financial corporates dominate thecountry’s market.

25Social labels issued in the domestic market
Social bonds represent a smaller share of
Mexico’s sustainable finance market. The firstdeal was issued by Nafin in July 2017, a USD227m
deal to finance various social categories: access tofinancial services, employment generation throughfinancing of MSMEs, socio-economic advancement,
resource efficiency in low-income households andrecovery of MSMEs impacted by natural disasters.
Mexico’s second social bond came three years later,
with FIRA issuing a USD155m deal and returning
to market in 2021 raising another USD176m. IDB
Invest has also issued this year, its MXN2.5bn(USD121m) bond aimed at financing genderequality related projects. All social bonds were
issued in Mexican Pesos.

Sustainability

Mexico Sustainability
Scorecard
LAC Ranking

2

Cumulative amountissued

USD3.07bn

Number of entities

8

Repeat issuers
Number of deals

18

Average size

USD171m

Biggest issuer

Banobras(USD1.38bn)

The Mexican sustainability bond market has
shown strength, with USD3bn issued between
2017 and June 2021. Four deals came to themarket in 2017, the first by Grupo Rotoplas(USD39m) in June to finance projects that are
related to SDG 6 (sustainable management ofwater) and SDG 9 (resilient infrastructure)65.
The remaining three in September: two by
Banobras for USD220m and USD330m to financeeligible projects according to their framework,
which includes basic infrastructure, renewableenergy, water management, sustainabletransport among others;66 and a USD11m
one by Mexico City to finance projects of thefollowing categories: renewable energy, pollution
prevention and control, water management,
biodiversity conservation, sustainable transport,
climate change adaptation and energy efficiency
In 2018, state-owned development bank Banco
Nacional de Obras y Servicios Publicos – SNC(USD138m) and Vinte Viviendas Integrales (USD42m)
issued bonds, with both returning in 2019; Banobras
with two more deals (USD129m and USD219m)
and Vinte with a smaller USD15m transaction.

2020 saw five deals between February andNovember by Vinte (USD19m), Rotoplas(USD185m) and Banobras (USD120m and
USD240m), all recurring issuers in the Mexican
market. As of end H1 there were no deals this year.

The world’s first sustainability sovereign
The most significant sustainability bond was
Mexico’s Sovereign bond in September 2020
that raised USD888m and was the first sovereign
bond with an SDG label. Mexico became the first
country in the world to issue a sovereign SDG
Bond. According to the Framework developed by
the Ministry of Finance (Secretaría de Hacienda),
the proceeds will fund selected SDGs (goals 2
Zero Hunger; 3 Good Health and Well-Being; 4Quality Education; 6 Clean Water and Sanitation;
7 Affordable and Clean Energy; 13 Climate Action;
8 Decent Work and Economic Growth; 9 Industry,Innovation and Infrastructure; 11 Sustainable
Cities and Communities; 14 Life Below Water
and 15 Life on Land) and the social expenditure
will target regions in the country with larger
SDGs gaps. Mexico issued a second sovereign
SDG bond In July 2021, a 15-year USD1.5bn deal
denominated in EUR.

Sustainability-linked in hard currencies only
Several SLBs have been issued by Mexican
entities, all in 2021. The first two deals weresenior notes issued by FEMSA in April, a
USD849m and a USD606m deal linked toperformance under two KPIs: achieving zero
operational waste to landfill by 2030andincreasing the consumption of electricity fromrenewable sources to 65% by 2025 and 85% by2030. Metsala became the second issuer to cometo market with a USD300m deal, followed by
two from Orbia for USD500m and USD600m, inwhich the sustainability objectives are to reduce
sulphuric oxide (SOx) emissions by 44% by 2023
and 60% by 2025. The other SLB in the Mexican
market was issued by Corp Inmobiliaria Vesta
for USD305m in 2021, with the performancemeasured by the increase in percentage of Gross
Leasable Area (GLA) certified as sustainable.
Social, Sustainability and SustainabilityLinked Market Overview
The development bank Banobras represents
45% of 2021’s social, sustainability andsustainability-linked issued amount with four
sustainability issuances of: USD53m, USD97m,
US209m, and USD129m to fund or refund
projects in eight sectors: infrastructure that
benefits vulnerable people or in extreme poverty;
public infrastructure; natural disaster recovery;sustainable transports; renewable energy;
projects that reduce energy consumption or
improve energy efficiency; water and wastewater
management as well as pollution prevention
and control. Non-financial corporates represent
the majority of deals, yet represent only 4%of the issue volume. The country’s Sovereignissuance represent 29% of issuance volume,

Latin America & Caribbean: Sustainable Finance State of the Market 2021 Climate Bonds Initiative

followed by government-backed entities with
16%. All sustainability deals were also done in
Mexican Pesos. Mexico’s three largest SLBs aredenominated in USD. The currency represents
71% of issuance, the rest being in MXN. This is
not surprising, given the volatility of the Mexican
Peso and the country’s close ties with the USA.
Six of eight bonds are USD100m or above, but
only the first green bond issued in the country– Nafin’s inaugural USD500m 2015 deal – wasbenchmark-sized.

Market development led by industry
initiatives
In the region, Mexico was one of the firsts
countries to have voluntary initiatives aiming
to develop the local green bond market. In
2016, Mexico’s Banking Association (ABM)launched a sustainability protocol that now
counts with 25 signatories committed to social orenvironmental targets in their portfolios.
In 2018, Mexico’s Central Bank BANXICO joined
NGFS. Voluntary initiatives from financial entities
also supported initial efforts to develop thecountry’s green market. Mexico’s stock exchange(BMV) was the first in LAC to give more visibility
to green bonds through a separate listing.
Investors, Development Finance Institutions,
Associations and international partners formed
the Climate Finance Advisory Board (CCFV)in 2016, which in 2018 resulted in creationof the MX Green Bond Principles and two
investor declarations: one in favour of green
bond financing and another on ESG corporate
disclosure. In 2019, CCFV became the first LAC
member in the global FC4S network.
In 2020, the stress in the market caused by
COVID-19 led the country’s Financial System
Stability Council (CESF), composed of
Mexico’s financial system authorities (Ministryof Finance and Public Credit, BANXICO, theNational Banking and Securities Commission
and the National Commission for the Retirement
Savings System), to approve and establish the
Sustainable Finance Committee in June 2020.
The Committee works to leverage a sustainablefinance transition and adopt international bestpractices. Since its launch, the Committee has
already indicated its interest in developing agreen taxonomy for Mexico.

26

Colombia
Green leads the GSS market
Colombia has issued USD1.3bn
across GSS bonds. Like therest of LAC, the green themeis the most established in
Colombia, with 52% of the total issue volume.
Yet sustainability and social labels are increasing
their share in the country with a relatively evenshare, respectively 26% and 22%. Colombian
issuers have not tapped international markets; allissuances across all GSS bonds are denominatedin Colombian Pesos.

Number of green bonds increases in 2020
vs 2019
As of our previous report, two issuers have cometo market: one non-financial corporate and one
financial corporate. Financial-corporates continue
to represent the majority of green bond issuersin the country, with 65% of the cumulative
issue volume. The number of green bonds
increased in 2020 compared to 2019 with threegreen bonds coming to market. Two in August
by Interconexion Electrica, whose USD38m
and USD43m deals to funded solar and windenergy projects. The other bond was issued in
September by Banco de Bogotá in two tranches.
Its USD48m and the USD30m tranches went
towards renewable energy, low carbon buildings,
low carbon transport and land use (agriculture
and forestry). Of the three green bond deals
issued in 2020, the two issued by Interconexion
Electrica received SPO, while the bond issued by
Banco de Bogotá received no external review.

Social bonds also pick up in 2020
Both social and sustainability bonds have been
issued in Colombia. The first social bond in the
country was issued by Bancóldex (USD140m)
in May 2018, Ito fund SME and women-led
businesses67. The next issuances only happened
two years later, in August 2020 with Davivienda’s
deal of USD100m to finance small and medium
business owned by women68 and in September
2020, when Banco W, issued a USD41m deal.

Sustainability bonds debut
Two sustainability issuances have been recordedin the country. The first by Findeter (USD120m)
in 2019, a Government-Backed Entity to fundimprovement of the population socioeconomic
conditions through investment in basic
infrastructure69. The second issuance, also in 2019,was made by Bancolombia (USD204m), a financial
institution. It was a milestone deal for being the first
one from a private financial corporate in Colombia.
It was the first issuance from a private financial
entity in Colombia. The proceeds are destined
to eight projects focusing on basic infrastructureand social and affordable housing and ten
projects classified as green towards sustainable
construction, clean energy and energy efficiency.70

Initiatives aligned with international trends
Colombia has developed one of the first Green
Protocols for the financial system, the Protocolo
Verde de Asobancaria in 2012, an agreement
between the national government and the financial
sector. The Protocol contains over 20 financialorganisations with the objective of implementing
policies and practices that are in accordance withsustainable development.71
In 2019, the country showed leadership bybecoming the first country in LAC to initiate efforts
to build its own local Green Taxonomy. The public
consultation is expected to happen in September
2020. The Financial Regulator has also shownleadership to promote the development of thegreen bond market by releasing the Green Bonds
Best Practices Guide and the Regulatory Framework
028 of 2020.72

Argentina
Argentina’s sustainable finance market reached acumulative USD1.3bn from its
first issuance in 2017 throughto June 2021. Green bonds
represent more than half of
the issue volume (58%), withan increasing participation ofsustainability bonds (34%) and social bonds (8%).
85% of issuances from the country’s sustainablefinance market are dollar denominated. Only two
issuances – one green (Central Puerto) and one
social (Banco de la Ciudad de Buenos Aires) were
issued in Argentine Pesos.
The issuer types in Argentina are diversifying.
Ten issuers were responsible for the 13 issuancesacross all three GSS labels. Non-financial
corporates represent 42% of Argentinean issuers,
with Local Governments representing 42% andFinancial Corporates 18%.

New green issuances in 2020
Since the country’s first issuances in 2017, there
has been a diversification of issuers, with nonfinancial corporates and financial corporates
also coming to markets; though issuances fromlocal governments represent 68% of the total
cumulative issue volume in Argentina’s green
bond market. The first financial corporate toenter the market was Banco Galicia in June
2018. The Bank issued a USD100m deal tofinance energy efficiency, renewable energy
and sustainable construction, structured
and subscribed by the International FinanceCorporation - IFC.
As of our previous report on LAC, it took two
years for another three bonds to be issued inArgentina. In February 2020, AES Argentina issued
a USD48m bond to conclude the construction of
the Vientos Neuquinos wind farm (Parque Eólico
Vientos Neuquinos)73. Later in the year, Central
Puerto issued two bonds, a USD35 deal and a

Latin America & Caribbean: Sustainable Finance State of the Market 2021 Climate Bonds Initiative

USD15m deal to finance wind energy projects.
Both received ratings from Fix Ratings, an affiliateof Fitch Ratings.74

New labels enter the market
Not only did green bond issuances pick up in
Argentina in 2020, but the first social bonds
also came to market that year. Banco de laCiudad de Buenos Aires issued a USD43m deal
to finance a credit line to alleviate the impacts
from COVID-1975. The Bank went to market once
again in October with a USD52m bond to grantloans to small and medium-sized companies
in Argentina76. The country’s latest social bond
was issued by Fideicomiso Financiero FECOVITA,
a federation for winemaking cooperatives.
The USD3m deal went towards the purchaseof agricultural inputs for improvement of thevineyards of small rural producers associatedwith Fecovita77.

Second country to issue an SDG bondBesides the green and social labels, anothersustainability bond from the region besides
Mexico’s sovereign SDG bond came from
Argentina. The inaugural bond was issued
by Banco de Inversion y Comercio Exterior in
December 2018. The USD30m deal went towards
projects with high positive environmental impact
and the issuance contributes to 7 out of the 17
Sustainable Development Goals78. It took almost
three years for another sustainability labelledbond to come to market. In January 2021,
Mercado Libre issued the largest bond in the
country so far, a USD400m deal to fund eligible
green projects that includes clean transportation,
land conservation and preservation, energy
efficiency, renewable energy, green buildings
and pollution prevention and control, andeligible social projects that seek to address or
mitigate social issues with positive outcomes tovulnerable population.79

GSS Guidelines set by regulator
Regarding milestones to boost the theme ofsustainable finance in the country, in 2019, 18
banks signed up the Protocolo de Finanzas
Sostenibles (Sustainable Finance Protocol)
in which the institutions seek to build asustainable finance strategy in the country’s
banking industry.80 In May 2021, the Argentinian
government, through its Ministry of Finance,
approved the Roadmap for Sustainable Financein the country. The guideline presents the next
steps and highlights the themes that will beprioritized. Among them are the development oftaxonomies and fostering the market for green,social and sustainable bonds81.

27

Ecuador
Financial institutions
inaugurate the market
Ecuador’s sustainable financemarket is relatively recent
with the first green bondissued in December 2019 by Banco Pichincha,
the largest bank in the country, at the Quito
Stock Exchange. The USD150m deal will financerenewable energy, low carbon buildings, lowcarbon transportation, waste and industry.82
The International Finance Corporation (IFC),IDB Invest, and Proparco (French development
agency), were investors, with a participation of
USD50m each.83 In addition, external sources
highlight IDB Invest provided technical assistanceto the Bank in designing a conceptual framework
and SPO by Deloitte.84 A summary of the Banco
Pichincha Framework is available on the Bank’s
website,85 but at the time of writing the SPO was
not available online. The Banks 2020 Annual
Report and Sustainability Report, publishedin May 2021, details a few of the outcomes ofthe deal, including 314 thousand m2 of EDGE
certified construction project; 7.2 thousand tonsof CO2 avoided; 20.515MWh of energy and 271,5
thousand m3 of water savings.

First social sovereign in the region
In addition to its inaugural green bond, Ecuador
has also issued social bonds. An importantmilestone in the market was the issuance of the
Republic of Ecuador Social Sovereign Bond for
USD400m. It was the first Social labelled Sovereign
bond in the world and was backed by a guarantee
from the Inter-American Development Bank.86
According to the Social Bond Framework for
Affordable and Decent Housing87 proceeds fromthe bond will finance the country’s social housing
programme,88 that aims to provide sustainable
and affordable housing for over 24 thousandmedium and low-income families. Ecuador’s
Sovereign received a SPO from Vigeo Eiris.89
The country’s second social bond was a
USD20m issuance by Banco Guayaquil.90,91 It
was the first social bond issued by a private
financial institution. The deal was structured
and subscribed by IDB Invest. As part of theissuance process, IDB Invest provided support on
the framework design, including the selection,
monitoring and evaluation criteria. It also
supported Banco Guayaquil with an SPO issued
by Vigeo Eiris.92 Proceeds from the bond will
finance small and medium-sized enterprises.93
At the time of writing, neither the Framework nor
the SPO were available online.

Market guidance set for GSS bonds
To further develop the labelled bond market, theQuito Stock Exchange developed a Green, Socialand Sustainable Bonds Guideline in August
2019.94 The guide includes information on how
to issue GSS bonds in the country. It includes

information on the various definitions, thestandards accepted by the stock exchange, suchas the alignment with the Green Bond Principles
and the use of an external verification byaccredited companies under the Climate Bonds
Initiative. The same rationale is valid for theissuance of social and sustainable bonds, whichshould be aligned, respectively, to ICMA’s Social
Bond Principles and Green Bond Principles, anduse a CBI approved verifier.

consolidated label with 92% of the issue volume,
followed by the social and sustainable labels,
with 6% and 3%, respectively. Most of Peru’s GSS
bonds received some type of external review.
Three received ratings (two from S&P and one
from Moody) and two other deals received an
SPO. This represents 50% of the 10 deals issued
across all three labels.

Paraguay

Since our last Report, Peru had only one
green issuance in 2020, a USD 200m deal
from Consorcio Transmantaro S.A. for powertransmission.The country responsible for theregion’s first green bond in December 2014 haveaccumulates six green issuances in total.

Financial institution issues
first Green Bond
Paraguay debuted in thethematic bond market in
December 2020. Banco
Continental issued a USD300m sustainability
bond to finance projects across the following
green and social categories: efficiency, green
buildings, clean transportation, natural resources
and land use, sustainable water and wastewater
management, renewable energy, affordable
basic infrastructure, access to essential services
and employment generation.95 The Bank is
the country’s largest commercial lender. The
Bank published its Sustainability Framework in
December 202096 and Sustainalytics issued an
SPO for Banco Continental’s Framework97.

Financial sector sets sustainablefinance initiatives
Although the issuance is still incipient in the
country, Paraguay has seen some developmentin the green finance sector. In 2012, the Mesa deFinanzas Sostenibles del Paraguay (Sustainable
Finance Roundtable of Paraguay) was launchedwith 17 institutions from the Paraguayan financial
sector.98 In 2018, Paraguay’s Central Bank
approved a guideline for environmental and social
risk management to be included in the crisis
risk analysis made by financial institutions - the
Guide for the management of environmental andsocial risks for entities regulated and supervisedby the Central Bank of Paraguay (Guía para lagestión de riesgos ambientales y sociales paralas entidades reguladas y supervisadas por el
BCP).99 Recently, in March 2021, the Paraguayan
national securities regulatory body (CVM) issued
a resolution with new financial instruments that
promote social and environmental benefits
through sustainable bonds.100

PeruPeru’s sustainable financemarket has increased
significantly since the firstgreen bond issuance in 2014.
With social and sustainability
labelled deals coming tomarket, cumulative issuances across GSS
reached USD1.2bn. Green bonds are the most

Latin America & Caribbean: Sustainable Finance State of the Market 2021 Climate Bonds InitiativeNon-financial & energy deals dominate themarketNon-financial corporates represent the majorityof green bond issuers in the country, five outof the six. Cofide is the only development bankto have issued a green bond in the country,
which was in 2019 to finance renewable energy
projects. Energy is also the most funded sector
in the country via green bonds. All deals except
for one had 100% of the UoP going towards
financing green energy. Protisa Peru, a pulp andpaper company was the one deal (PEN 100m)that also financed water management andpollution prevention.

Incipient sustainability and social markets
Peru entered the social bond market in 2019. The
country’s first social bond was issued by Banco
Pichincha in February. The USD13m deal was
structured and subscribed by IDB Invest101.
Almost a year later, in December 2020, Caja
Arequipa issued the second social bond from afinancial corporate. The USD16m deal went tofund the growth of enterprises led by women.102
Among the social label, financial corporates
represent the majority of issuers; two out of thethree.
In early 2021, Cofide issued Peru’s third social
deal, a USD39m bond to strengthen financial
access for micro and small-sized businesses
affected by the COVID-19 pandemic. 103

Sustainability bonds debut
Cofide was also the first and only Peruvian
institution to issue a sustainability bond in
October 2019. A USD30m deal to finance microenterprises, alternative vehicles, and wastewater
treatment plants.104
Non-financial corporates represent the majorityof green bond issuers in the country, four out of
the five. Cofide is the only development bankto have issued a green bond in the country, andwas responsible for the only sustainability bond.
Among the social label, financial corporates
represent the majority of issuers; two out of thethree. The GSS market has still not taken off in
Peru, but there is potential to grow the market.

28

Uruguay
Uruguay debuted in thesustainable finance market
in July 2018. Since then, USD
376m have been issued acrossthe green and sustainability
labels. The first green bond
was a USD108m private placement by Atlas
Renewable Energy to refinance the El Naranjal
and Del Litoral solar Plants. Atlas Renewable
Energy was also responsible for the country’s
second green deal (2020), another private
placement, worth USD253m, to finance asolar photovoltaic park. It received a ratingfrom Moodys. Uruguay also debuted in thesustainability bond market in February 2021 witha USD15m deal from BBVA Uruguay. This was thefirst deal from a financial corporate. The deal
was supported by IDB Invest and aims to financeenergy efficiency, sustainable agriculture, SMEs,
clean transport, sustainable construction, andbusiness owned by women and young people.

Central America &Caribbean
Green, Social and Sustainability issuances in
the Central America & Caribbean represent 6%of the LAC market. With a cumulative USD3.4bn
the growing number of bonds and diversificationof issuers and proceeds demonstrate a growing
appetite from investors in the region, particularlyas 90% of deals were dollar denominated. In thispart of the LAC region, social and sustainablebonds represent 55% of total issue volume andgreen bonds represent 45%.

Barbados
Barbados first green bond wasissued by Williams Caribbean
Capital, an investment andbusiness development
company, in January 2019. The
USD2m Private Placement went
toward solar energy projects and certified against
the Climate Bonds Standard Solar Energy Criteria,with Sustainalytics as the approved verifier. The
company issued a second green bond in March
2021. The USD7m deal was once again a private
placement and was also Certified. The UoP of bothissuances went towards solar energy projects andwere done in Barbados Dollars (BBD).

BermudaBermuda entered thesustainable finance market witha USD100m social bond in May
2020. The country’s first labelledissuance was done by MetroCat
Re, a special purpose insurer.
The three-year deal is a catastrophe bond andcomprises related insurance-linked securities (ILS).

In April 2021, a USD700m green bond was issued
by Corporacion Multi Inversiones, a financial
corporate. The eight-year deal received an SPO
from Sustainalytics. UoP under the green bondwere directed toward renewable energy projects,
including solar, wind and small hydropower.

Costa Rica
The first green bond in the
country was issued in April
2016 by Banco Nacional de
Costa Rica, a GovernmentBacked Entity. The USD500m
deal received a green ratingfrom Moody’s, with the UoP going toward
renewable energy – wind, solar and small hydropower – and waste water management. The
second green bond from Costa Rica was issuedin August 2019 by Ecosolutions. The USD4m deal,a private placement, was the first from a nonfinancial corporate with UoP financing renewableenergy and energy efficiency. Ecosolutions green
bond received an SPO from CIPA. The tenors ofboth bonds were between 5 and 12 years andboth were issued in USD.
Costa Rica also entered the wider labelled bondmarket with a sustainability bond issuance inJanuary 2021. Banco Promerica de Costa Rica,
the fourth largest financial institution in the
country, issued a USD50m deal. This was the firstdeal from a financial corporate, and the bondreceived a SPO from Vigeo Eiris. The issuance wascarried out on the Panama Stock Exchange105.

Guatemala
Guatemala debuted in
the labelled bond market
in August 2020 with a
USD1.2bn Sovereign Social
Bond targeting the impactsof Covid-19. The deal was
split into two tranches: a USD700m aggregate
principal, due in 2050, to be used for budgetary
purposes, and the second a USD500m bond.
The UoP from the bond will finance investment
directly or indirectly related to the prevention,
containment and mitigation of the Pandemic106.
It has been considered a landmark issuancefor being the first in the LAC region to include
Covid-19 response measures within a SovereignSocial Bond Issuance.

PanamaPanama is the country with thelargest number of green andsustainability deals in Central
America & the Caribbean,
with 12 issuances. Cumulativeissuances under the green andsustainable label reached USD380m USD. Green
Bonds represent 87% and social bonds 13%.

2019: a USD50m social bond from Banistmo,
a subsidiary of the Bancolombia Group107. The
bond was the first social gender bond in LAC andreceived an SPO from Vigeo Eiris. The 5-year deal
was structured and bought by IDB Invest108.
Green bonds also came to market in 2019,with four issuances from CIFI - Corporación
Interamericana para el Financiamiento de
Infraestructura, a non-bank financial institution.
The first in September, for USD27m, and theother three in December, combining USD15m. Allwith a five-year term. The deals will finance waste
management, sewage, wastewater treatment
and renewable energy generation.
In 2020, the number of issuances increased
with eight deals coming to market with a greenlabel. The first issuance was done by CIFI in
February for USD1m, to finance once again
water and waste management and renewableenergy. In August, CIFI issued two other bonds
at USD1m each and Panasolar was the first
non-financial corporate to issue a green bondfor USD15m. The deal was certified against the
Climate Bonds Standard Solar Energy Criteria109.
Verification was provided by the Pacific Corporate
Sustainability, PCS. In October 2020, CIFI issued
two green bonds, one for USD4m and the otherfor USD2m, with the same UoP as previous deals.
In December, InterEnergy Holdings issued thelargest green bond in the country at USD263m.
The second deal from a non-financial corporate.
CIFI also issued a green bond in the same monthfor USD1m. Until June 2021, CIFI had issued atotal of USD52m in green bonds.
All issuances in Panama were USD denominated,with the majority of deals (7) with tenors between
3 and 5 years. Of the 12 deals, 10 received SPOs
from Sustainalytics (CIFI deals), one was certified(Panasolar) and one (InterEnergy Holdings) did
not get an external review of any kind.
The 13 green and social deals in Panama were
issued by four issuers, with financial corporates
being responsible for 85% of issuances andnon-financial corporates for 15% of issuances.
The UoP from these deals have gone towards
renewable and water management.

Dominican Republic
While there have been no GSS
issuance by the Dominican
Republic, BVRD, the country’s
stock exchange published a
Green Bond Guide. In 2019,
BVRD had launched its first‘Green Finance Forum’, which brought together
stakeholders from the financial, corporate andpublic sector. The aim of the Forum is to develop
green finance instruments.

The first labelled bond came to market in August

Latin America & Caribbean: Sustainable Finance State of the Market 2021 Climate Bonds Initiative

29

Conclusions and outlook
Growth of sustainable finance in the LAC region
has continued on a triumphant path. Since ourinaugural analysis in 2019 and in less than two
years, the region’s green bond market has morethan doubled from USD13.6bn in September
2019 to USD30.2bn at the end of June 2021. This
growth has been driven by the entrance of newissuers from new countries, now totalling 14, andin particular the continued growth of sovereignissuance from regional pioneer Chile.

access sustainable capital markets to fundsectors such as low carbon buildings, low carbon
transportation and sustainable agriculture. Whilethese are mature markets, they will continue
to benefit from technical assistance to unlock
issuances, particularly in innovative labels (e.g.
SLB and transition). The same is true, for other
LAC countries, which will require support inframework development, external reviews andpost-issuance reporting.

New segments in the thematic bond market,
social and sustainability bonds, have shown
equally promising growth with a total USD18.3bn
in cumulative issuance to the end of H1 since theinception of this market segment in 2016. The
presence of sovereign issuance has been evenmore pronounced in terms of diversity with LAC
boasting the world’s first two sovereign social
bonds (Ecuador and Guatemala) and an SDG
Bond (sustainability bond) from Mexico. Chile has
also issued against the full trio of labels – Green,
Social and Sustainability or GSS – and more is in
the pipeline as Brazil gears up for its debut in thenext couple years, and Colombia and Peru having
announced their intent to issue down the line.

3. Debut of climate resilience bonds. Building
resilience in the region will be critical as climatechange will escalate extreme weather eventsand other natural hazards. While green bonds
can also benefit climate resilience, they haveprimarily focused on GHG mitigation. Thus, it isimportant to direct investments that improve
the adaptability and transformation of projects,
assets and systems, reducing climate risks
and exposure. Countries in Central America
are particularly vulnerable with devastating
hurricanes hitting the region in November
2020, leaving more than half a million people
displaced110. Resilience bonds labelled bonds
could leverage finance for LAC countries
adaptation objectives.

The increasing ESG agenda in LAC countries, hashelped spur activity in the private sector withissuers like Coca-Cola FEMSA, Suzano and Fibra
Storage. The outlook for the region is positiveand moving forward the Climate Bonds expects
to see:1. Increase in Sovereign Issuances. There
have been Sovereign issuances against all GSS
labels. Four LAC countries have entered the
GSS Sovereign Club. Sovereign labelled bonds
continue to be perceived as an instrument
to catalyze local market development andattract new investors, as well as communicate
government’s commitments to address social
inequalities and/or mitigate the impacts ofclimate change. With the need of building backbetter, labelled Sovereign Bonds can be used topromote green economic recovery and increase
climate resilience across LAC countries, moving
economies toward a more sustainable-focused
pathway. In addition, Sovereign GSS can also
facilitate an economy wide transition in linewith a net zero carbon future. Further labeledissuances should come to market in the shortand medium term.
2. Diversification in thematic labels. Althoughgreen continues to lead issuances amongst GSS
labels, social and sustainability bonds were
responsible for 38% of deals throughout 2020
and 2021. This diversification, including theentry of new labels such as SLBs, SDG-Bonds
and transition bonds, will allow for a continued
growth in the region’s sustainable financemarket. Brazil, Chile and Mexico will remain
as the largest markets, with opportunities to

4. Rise in sustainable agriculture investment.
GSS bonds can be a powerful mechanism tomobilize further funding for sustainable projects
and assets in LAC. Agriculture represents asmall percentage within the Land Use category,though there have been dedicated issuances in
Brazil and Mexico. Policies to drive investment
in sustainable agriculture, should be a priority
across the region. Financial institutions could
play an increasing role in funding sustainableagriculture projects within their portfolios, Banco
do Brasil, Brazil’s largest public sector bankpublished its Sustainable Finance Framework,
which also includes agriculture and forestry
projects that will contribute to the country’s
Low Carbon Agriculture Plan. While MultilateralDevelopment Banks (MDBs) could continue tosupport via loans, guarantees and technicalassistance. Other organizations can also provide
technical and financial support, such as theInternational Centre for Tropical Agriculture(CIAT), International Fund for Agriculture
Development (IFAD), Responsible Commodities
Facility & Green Fund.
5. Expansion low carbon transport
investment. Issuances in low carbon transport
in LAC has been driven by Chile’s Sovereign, yetthere is a significant infrastructure gap that needs
to be addressed in both passenger and freighttransportation. Funding for transport modes that
produce low carbon or zero direct emissions arealso being funded in Brazil, Mexico, Colombia,
and Ecuador, such as BRT systems, electricvehicles, urban passenger and freight rail. Further

Latin America & Caribbean: Sustainable Finance State of the Market 2021 Climate Bonds Initiative

sustainable investments in the transport sector
could be facilitated through the consortium debt
arrangements, via PPPs or other public private
financing structures. These funding structures areavailable in LAC countries and could encourage
private sector involvement.
6. Taxonomy development. At least four
countries in LAC are developing local green
taxonomies, with this process in different
stages of development. There is a growinginterest from other countries in the region to
begin working on their own definitions andmetrics for sustainable/green projects andassets. Guidance and technical assistance on
taxonomy is being supported by organizations
such as the IFC, IDB and GIZ. Local taxonomies
are becoming more popular as countries seek
to provide clarity on eligible activities based on
their national contexts. These developments arewelcome to build a sustainable finance market,
but harmonization is fundamental to facilitatecross border investments and comparability. It
is important for countries define a clear scope
for their taxonomies e.g. climate change or
wider environmental objectives (e.g. adaptation,
circular economy, pollution, biodiversity, social
objectives), eligibility criteria e.g. quantitativeor qualitative, and standardize data to assess
compliance.
7. Greater role of Central Banks. Central
Banks are being increasingly recognized as key
agents within climate action. 8 Central Banksin LAC have joined the Network for Greening
the Financial System (NGFS). The growth inparticipation indicates the prioritization ofgreen finance by central banks and supervisors.
Since 2020, globally central banks have madeprudential adjustments to green monetary
policies and mandates. In LAC, the Brazilian
Central Bank launched its sustainability agenda
and held public consultations to facilitate green
bond issuance in the agricultural sector andincorporation of climate risk.
GSS bonds have been around for just over a
decade, but can still be considered a novelty
in LAC countries. This requires the need forcontinued market outreach and engagement
to unlock investments across key sectors of theeconomy. Sustainable investments can support
the region’s green economic recovery and direct
funding towards low carbon solutions.

30

Appendix
Overview of LAC GSS market
Country
BrazilUSD Issue
Number of Issuers

Chile

USD Issue
Number of Issuers

MexicoUSD Issue
Number of Issuers

Peru

USD Issue
Number of Issuers

Argentina

USD Issue
Number of Issuers

BermudaUSD Issue
Number of Issuers

Colombia

USD Issue
Number of Issuers

Costa Rica

USD Issue
Number of Issuers

Green

SocialSustainability

Country

10.3bn34m

1.39bnUruguay

44

3

6

9.5bn

4.20bn4.06bn

9

6

3

4.0bn

678m

3.07bn12

3

8

1.08bn

68m

30m

5

3

1

735m

99m

430m

6

3

2

700m

100m

-

1

1

-

684m

280m

324m

7

3

2

504m

-

50m

2

-

1

Green

SocialSustainability

361m

-

15m

1

-

1

330m

50m

-

3

1

-

150m

420m

-

1

2

-

8.5m

-

-

Number of Issuers

1

-

-

USD Issue

-

-

300m

Number of Issuers

-

-

1

USD Issue

-

1.2bn

-

Number of Issuers

-

1

-

1.82bn1.51bn

30m

2

2

1

USD Issue
Number of Issuers

PanamaUSD Issue
Number of Issuers

EcuadorUSD Issue
Number of Issuers

Barbados

Paraguay

GuatemalaSupranational

USD Issue

USD Issue
Number of Issuers

Latin America & Caribbean: Sustainable Finance State of the Market 2021 Climate Bonds Initiative31

Endnotes
44. Pacto Global Chile 2019 <https://pactoglobal.cl/2019/caja-losheroes-realiza-emision-de-dos-bonos-sociales-para-promover-eldesarrollo-de-las-personas/>
45. Green and Social Bond Report 2021 <https://www.
aguasandinasinversionistas.cl/~/media/Files/A/Aguas-IR-v2/bondissuances/es/informe-2020-seguimiento-bvs-serie-bagua-ac-2018.
pdf>
46. Marco de Bono Verde y Social de Aguas Andinas <https://www.
aguasandinasinversionistas.cl/~/media/Files/A/Aguas-IR-v2/bondissuances/es/aguas-andinas-marco-bono-verde-social-series-abac-2018.pdf>
47. https://www.corporativo.bancoestado.cl/investor-relations/newsroom/news/2020/5191
48. Bonos Sociales de la República de Chile 2020 <file:///Users/
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49. Green Finance for Latin America and the Caribbean <https://www.
greenfinancelac.org/resources/news/banco-santander-chile-placesits-first-sustainable-bond/>
50. Banking Exchange <https://www.bankingexchange.com/recentarticles/item/8569-santander-chile-issues-sustainable-bond>
51. https://www.hacienda.cl/areas-de-trabajo/finanzasinternacionales/oficina-de-la-deuda-publica/bonos-sostenibles/
bonos-sociales/2021-eur-2027-eur-2036-eur-2051-usd-2033-usd2041-usd-206152. https://www.ca-cib.com/pressroom/news/credit-agricole-cibsupported-chile-inaugural-sustainable-formosa-bonds
53. https://hacienda.cl/english/news-and-events/news/chile-issuesusd1-5-billion-in-sustainable-bonds-in-international-markets
54. https://cib.bnpparibas/opportunity-knocks-for-esg-in-latinamerica/
55. https://www.cmpc.com/en/cmpc-is-the-first-chileancompany-to-issue-a-sustainability-linked-bond-slbin-international-markets/#:~:text=The%20CMPC%20
Sustainability%2Dlinked%20Bond,climate%20change%20and%20
the%20environment.&text=The%20SLB%20includes%20a%20
mechanism,KPIs%20by%20the%20set%20date.
56. https://www.hacienda.cl/areas-de-trabajo/presupuesto-nacional/
estado-de-la-hacienda-publica/estado-de-la-hacienda-publica-2020/
capitulo-11-finanzas-verdes
57
58. CBI 2021. Agriculture Sustainable Finance State of the Market <https://www.climatebonds.net/files/reports/cbi-brazil-agri-sotmeng.pdf
59. CBI 2021. Agriculture Sustainable Finance State of the Market <https://www.climatebonds.net/files/reports/cbi-brazil-agri-sotmeng.pdf
60. CBI 2021. Agriculture Sustainable Finance State of the Market <https://www.climatebonds.net/files/reports/cbi-brazil-agri-sotmeng.pdf
61. <https://relatoriogrupoboticario.com.br/wp-content/
uploads/2021/07/RA_IMPACTO_BOTICARIO_12_0707_PORT.pdf
62. BNDES vai reduzir juros para setores que se comprometam com corte de emissões <https://www1.folha.uol.
com.br/mercado/2021/08/bndes-vai-reduzir-juros-parasetores-que-se-comprometam-com-corte-de-emissoes.
shtml?pwgt=kzl4kiw0sredvsngxpuzk5ox6zkpniu538s0o57bkh9j7fnm&utm_source=whatsapp&utm_medium=social&utm_campaign=compwagift>
63. https://www1.folha.uol.com.br/mercado/2021/08/
bndes-vai-reduzir-juros-para-setores-que-se-comprometamcom-corte-de-emissoes.shtml?pwgt=kzl4kiw0sredvsngxpuzk5ox6zkpniu538s0o57bkh9j7fnm&utm_source=whatsapp&utm_medium=social&utm_campaign=compwagift
64. CMN Resolutions: 4.327/2014; 4.557/2017; and 4.769/2019.
65. https://mstar-sustops-cdn-mainwebsite-s3.s3.amazonaws.com/
docs/default-source/spos/sustainability-bond-second-opinion_
rotoplas_final.pdf?sfvrsn=de42a442_3
66. https://mstar-sustops-cdn-mainwebsite-s3.s3.amazonaws.
com/docs/default-source/spos/banobras-sustainability-bondframework_second-opinion-by-sustainalytics_final-english.
pdf?sfvrsn=22c35b99_3
67. https://mstar-sustops-cdn-mainwebsite-s3.s3.amazonaws.com/
docs/default-source/spos/10851_bancoldex_bono_social_segunda_
opinion.pdf?sfvrsn=9b34d659_
68. https://sostenibilidad.davivienda.com/wp-content/
uploads/2020/10/MarcoBonoSocial.pdf>
69. https://www.findeter.gov.co/system/files/internas/Informe%20
de%20Bonos%20Sostenibles%202019.pdf
70. https://www.idbinvest.org/es/medios-y-prensa/bid-invest-apoyagrupo-bancolombia-en-la-emision-del-primer-bono-sostenible-deuna-entidad
71. Protocolo Verde Asobancaria <https://www.asobancaria.com/
wp-content/uploads/2017/12/Protocolo-Verde-Versi%C3%B3n-firmapresidencia.pdf>
72. https://bvcsostenible.bvc.com.co/ckfinder/userfiles/files/
SUSTAINABILITY%20GUIDANCE%20-%20GRI%20BVC(1).pdf
73. AES Argentina press release <https://www1.aesargentina.com.
ar/es/aes-argentina-aporta-al-desarrollo-sostenible-del-pais-con-laemision-del-primer-bono-verde-en-el>
74. https://www.centralpuerto.com/es/subsidiarias-de-energiarenovable-de-central-puerto-emiten-bono-verde-por-us-50-millones/
75. Banco Ciudad 2020 <https://www.byma.com.ar/wp-content/
uploads/2021/01/BCIUN-Bono_SVS_Nov-2020.pdf>
76. https://www.moodys.com/research/Moodys-asigna-la-calificacinCaa2B1ar-a-las-notas-Clase-XXII--PR_430691
77. Informe de Segunda Opinion <https://www.byma.com.ar/wpcontent/uploads/2020/12/FECOVITA-Segunda-Opinion.pdf>
78. IDB Invest <https://www.idbinvest.org/en/news-media/idb-groupsupports-bice-issue-first-sustainable-bond-argentina>
79. Mercado Libre Sustainability Bond Framework <https://investor.mercadolibre.com/static-files/cc7fb321-3150-48ae-ae0cc4e3e620f48f>
80. https://www.idbinvest.org/es/medios-y-prensa/bid-investpromueve-protocolo-de-finanzas-sostenibles-en-argentina
81. https://www.argentina.gob.ar/noticias/se-aprobo-la-hoja-de-rutapara-el-desarrollo-de-las-finanzas-sostenibles-en-argentina
82. https://www.idbinvest.org/en/news-media/idb-invest-supportsbanco-pichincha-first-issuance-green-bonds-ecuadors-stock-market
83. https://www.idbinvest.org/en/news-media/idb-invest-supportsbanco-pichincha-first-issuance-green-bonds-ecuadors-stock-market
84. https://www.idbinvest.org/en/news-media/idb-invest-supportsbanco-pichincha-first-issuance-green-bonds-ecuadors-stock-market
85. https://www.pichincha.com/portal/Portals/0/Transparencia/
report-framework-green-bond-banco-pichincha-may-2020.
pdf?ver=2021-05-26-105545-180
86. https://www.greenfinancelac.org/resources/news/ecuadorissues-worlds-first-sovereign-social-bond-with-the-support-of-anidb-guarantee/
87. https://www.finanzas.gob.ec/wp-content/uploads/2019/11/
Marco_Bono_Ecuador_ENG.pdf
88. https://sec.report/lux/doc/101464878/
89. https://www.bourse.lu/security/XS2107382157/300153
90. https://www.bolsadequito.com/uploads/mercados/emisores/
prospectos/A-B/BANCO%20GUAYAQUIL/OBLIGACIONES/BCO%20
GUAYAQUIL%20OBL%202020.pdf
91. https://www.redceres.com/post/banco-guayaquil-y-bid-investapoyan-las-mipyme-del-ecuador-con-un-bono-social-de-us-20millones
92. https://www.idbinvest.org/en/news-media/idb-invest-and-bancoguayaquil-support-ecuadors-msme-20-million-social-bond
93. https://www.idbinvest.org/en/projects/guayaquil-social-bond
94. https://www.bolsadequito.com/documentos/marketing/guia_bonos_bvq.pdf
95. https://www.bancontinental.com.py/Files/Banco%20
Continental%20Sustainability%20Bond%20Framework_
November2020.pdf
96. https://www.bancontinental.com.py/Files/Banco%20
Continental%20Sustainability%20Bond%20Framework_
November2020.pdf
97. https://www.sustainalytics.com/corporate-solutions/sustainable-finance-and-lending/published-projects/project/banco-continental-s-a-e-c-a/banco-continental-sustainability-bondframework-second-party-opinion/banco-continental-sustainabilitybond-framework-second-party-opinion-pdf
98. http://www.mfs.org.py/es/nosotros/
99. https://www.bcp.gov.py/riesgos-ambientales-y-sociales-i657
100. https://www.cnv.gov.py/normativas/resoluciones/res_cnv-09CG-20.pdf
101. https://semanaeconomica.com/que-esta-pasando/
articulos/329667-banco-pichincha-emitio-bono-social-por-us13millones
102. https://www.idbinvest.org/en/news-media/idb-invest-and-cajaarequipa-promote-microenterprises-led-women-peru
103. https://www.cofide.com.pe/noticia_detalle.php?id=48104. https://www.cofide.com.pe/COFIDE/files/Bono%20
sostenible%20COFIDE%20-%20Oct19.pdf
105. https://www.idbinvest.org/en/news-media/idb-invest-andbanco-promerica-costa-rica-join-forces-issue-sustainable-bondspanama
106. https://www.ifre.com/story/2329243/guatemala-draws-us8bn-indemand-for-two-part-us12bn-bond-sources-l2n2c90sq
107. https://www.idbinvest.org/en/news-media/idb-invest-andbanistmo-subsidiary-bancolombia-group-announce-first-genderbond-latin
108. https://vigeo-eiris.com/vigeo-eiris-provides-second-partyopinion-on-the-first-gender-bond-issued-in-latin-america-bybanistmo-in-collaboration-with-idb-invest/
109. https://www.climatebonds.net/resources/pressreleases/2020/09/certification-panasolar-155m-green-bond-firstsolar-central-america
110. https://www.climatebonds.net/resources/reports/green-financeopportunities-central-america-caribbean-2021-oportunidades-de

Latin America & Caribbean: Sustainable Finance State of the Market 2021 Climate Bonds Initiative32

1. https://www.climatebonds.net/resources/reports/latin-americacaribbean-green-finance-state-market-2019
2. The data for Second Party Opinions do not include reviews
associated with CCBs; only exclusive and separate SPOs have beencounted.
3. https://publications.iadb.org/en/5-key-points-ecuadors-sovereignsocial-bonds
4. https://www.amaggi.com.br/wp-content/uploads/2021/01/
AMAGGI-Sustainability-Bond.pdf
5. https://blinks.bloomberg.com/news/stories/QV2VBUDWLU6G
6. https://www.climatebonds.net/resources/reports/financingcredible-transitions-white-paper
7. https://www.climatebonds.net/2021/03/financing-credibletransitions-flexibility-core-feature-will-shape-transition-finance-part-3
8. https://documents1.worldbank.org/curated/
en/942381591906970569/pdf/Future-Foodscapes-Re-imaginingAgriculture-in-Latin-America-and-the-Caribbean.pdf
9. https://documents1.worldbank.org/curated/
en/942381591906970569/pdf/Future-Foodscapes-Re-imaginingAgriculture-in-Latin-America-and-the-Caribbean.pdf
10. https://www.cmpccelulosa.cl/cmpccelulosa/interior.
aspx?cid=365&leng=en
11. https://coca-colafemsa.com/wp-content/uploads/2020/08/4.KOF-GB-Framework.pdf
12. https://reliefweb.int/sites/reliefweb.int/files/resources/Future%20
foodscapes%20-%20Re-imagining%20agriculture%20in%20Latin%20
America%20and%20the%20Caribbean.pdf
13. https://reliefweb.int/sites/reliefweb.int/files/resources/Future%20
foodscapes%20-%20Re-imagining%20agriculture%20in%20Latin%20
America%20and%20the%20Caribbean.pdf
14. https://ebrary.ifpri.org/utils/getfile/collection/p15738coll2/
id/134262/filename/134472.pdf
15. https://www.iea.org/reports/tracking-transport-2020 R
16. https://www.climatebonds.net/files/files/CBI_Background%20
Doc_Transport_Jan2020%20.pdf
17. https://unfccc.int/sites/default/files/resource/2020_Yearbook_
final_0.pdf
18. https://www.ipcc.ch/site/assets/uploads/2018/02/ar4-wg3chapter5-1.pdf
19. https://unfccc.int/sites/default/files/resource/ExecSumm_
Transport_1.pdf
20. https://idbdocs.iadb.org/wsdocs/getdocument.
aspx?docnum=EZSHARE-515119216-37
21. https://www.ilo.org/wcmsp5/groups/public/---americas/---rolima/documents/publication/wcms_752069.pdf
22. https://publications.iadb.org/publications/english/document/
Urban-Transport-Systems-in-Latin-America-and-the-CaribbeanChallenges-and-Lessons-Learned.pdf
23. https://publications.iadb.org/publications/english/document/
Financing-Infrastructure-in-Latin-America-and-the-Caribbean-HowHow-Much-and-by-Whom.pdf
24. http://hdl.handle.net/11362/46908
25. https://publications.iadb.org/publications/english/document/
From-Structures-to-Services-The-Path-to-Better-Infrastructure-inLatin-America-and-the-Caribbean.pdf
26. https://publications.iadb.org/publications/english/document/
Climate-policies-in-latin-america-and-the-caribbean.pdf
27. https://publications.iadb.org/publications/english/document/
Getting_to_Net-Zero_Emissions_Lessons_from_Latin_America_and_
the_Caribbean.pdf
28. https://www.google.com/search?q=PPPs+low+carbon+transport+LAC&rlz=1C1CHBD_enBR877BR877&oq=PPPs+low+carbon+transport+LAC+&aqs=chrome..69i57.5406j0j7&sourceid=chrome&ie=UTF-8#
29. https://publications.iadb.org/publications/english/document/
Climate-Change-Projections-in-Latin-America-and-the-Caribbean-Review-of-Existing-Regional-Climate-Models-Outputs.pdf
30. https://cdkn.org/wp-content/uploads/2014/06/TALA-0028aColombia-Issues-Paper-Final.pdf
31. https://www.climatebonds.net/climate-resilience-principles
32. http://gca.org/wp-content/uploads/2021/01/Green-and-ResilientRecovery-for-LAC-Jan-2021-.pdf
33. http://gca.org/wp-content/uploads/2021/01/Green-and-ResilientRecovery-for-LAC-Jan-2021-.pdf
34. https://www.unep.org/resources/adaptation-gap-report-2020?_
ga=2.190297128.249827967.1628974397-804495001.1624368614
35. https://rotoplas.com/sustentabilidad/tag/bono-sustentable/
36. https://www.climatebonds.net/2021/05/taxonomy-roadmap-chile
37. See Vasa, Vartanyan, and Netto forthcoming) A novel database forgreen bonds to support investment analysis and decision-making,research, and regulatory decisions: The Green Bond Transparency
Platform. Under Review. Available from IDB.
38. GBTP templates and guides can be found here https://www.
greenbondtransparency.com/support/resources/
39. Reporting frameworks considered were the ICMA Harmonized
Reporting Framework, the Nordic Position Paper, the Worldbank
Guide on Use of Proceeds Reporting.
40. BANCO DEL ESTADO DE CHILE SOCIAL BOND FRAMEWORK2018 <https://www.corporativo.bancoestado.cl/sites/default/files/
documentos_archivos/bancoestado-social-bond-spo-%28eng%29_0.
pdf>
41. Global Capital 2017. Accessed on August 2nd <https://www.
globalcapital.com/article/b14xhy7mh1j5dl/japans-sri-issuerscatching-up-after-investors-show-the-way>
42. BANCO DEL ESTADO DE CHILE SOCIAL BOND FRAMEWORK2018 <https://www.corporativo.bancoestado.cl/sites/default/files/
documentos_archivos/bancoestado-social-bond-spo-%28eng%29_0.
pdf>
43. Marco de Referencia Bonos Sociales Caja Los Héroes <https://www.losheroes.cl/wps/wcm/connect/dd37a6f7-17ff-4363-96ee3f13e8e058ce/Marco+Bono+Social+v2.1.pdf?MOD=AJPERES>

Prepared by the Climate Bonds Initiative

Supported by the Inter-American Development Bankand the International Finance Corporation

Authors: Leisa Souza and Krista Tukiainen
Contributors: Julia Ambrosano, Prashant Lonikar, PedroMasi,
Iraís Vazquez, Raquel Bonelli and Valéria Contreras
Suggested citation: Latin America & the Caribbean Sustainable FinanceState of the Market 2021, Climate Bonds Initiative, September 2021.
Design: Godfrey Design© Published by Climate Bonds Initiative, September 2021
www.climatebonds.net
Disclaimer: The information contained in this communication does not constitute investment advice in any form and the Climate Bonds Initiative is not an investment adviser. Any reference to a financial organisation
or debt instrument or investment product is for information purposes only. Links to external websites are for information purposes only. The Climate Bonds Initiative accepts no responsibility for content on external
websites. The Climate Bonds Initiative is not endorsing, recommending or advising on the financial merits or otherwise of any debt instrument or investment product and no information within this communication should
be taken as such, nor should any information in this communication be relied upon in making any investment decision. Certification under the Climate Bond Standard only reflects the climate attributes of the use ofproceeds of a designated debt instrument. It does not reflect the credit worthiness of the designated debt instrument, nor its compliance with national or international laws. A decision to invest in anything is solely yours.
The Climate Bonds Initiative accepts no liability of any kind, for any investment an individual or organisation makes, nor for any investment made by third parties on behalf of an individual or organisation, based in whole
or in part on any information contained within this, or any other Climate Bonds Initiative public communication.

Latin America & Caribbean: Sustainable Finance State of the Market 2021 Climate Bonds Initiative

33