The Brazilian Business Council for Sustainable Development (CEBDS), the German Agency for International Cooperation (GIZ) and the Bank Skandinaviska Enskilda (SEB), with the support of Febraban, organized the symposium Sustainable Capital Market in Brazil – Paving the way for Green Bonds, which took place on June 28th, in São Paulo.
At the opening of the event, Marina Grossi, president of CEBDS, and Mario Sérgio Vasconcelos, director of Institutional Relations at FEBRABAN, announced the creation of a guide on Green Bonds to support and direct issuers, investors and financial institutions. “Febraban and CEBDS have worked harmoniously and complementaryly on many projects, and now we are together in supporting Green Bonds. The Brazilian scenario is not favorable at the moment, but this must change and we already need to be prepared, especially since Brazil has committed to ambitious goals in the Paris Agreement, and the financial market has a very important role to play”, said Marina.
According to Mario Sérgio Vasconcelos, Febraban's vision in relation to Green Bonds is not to create new regulations, but to pave an unhindered path for this bond market that favors environmentally correct attitudes to develop in the country.
Where is the money from Green Bonds invested?
Mats Olausson, senior consultant at SEB for issues related to climate and sustainability, who participated in the first panel of the symposium, explained the importance of investing in Green Bonds, showing where the money raised in these bonds is invested: renewable energy (45.8% ); energy efficiency (19.6%); low carbon transport means (13.4%); sustainable water (9.3%); garbage and pollution (5.6%); climate adaptation (4.1%) Agriculture and forestry (2.2%).
Harald Francke Lund, senior consultant at CICERO, and Sören Elbech, former IDB treasurer, spoke about international good practices in sustainable financing. Lund highlighted that these bonds are essential for combating climate change, as they attract large institutional investors and provide capital for large green infrastructure projects. He also said that only 0.07% of the global debt securities market is green, which shows significant growth potential. Sören Elbech argued that local governments should use their power to create 'green banks', which will be major supporters of projects to mitigate climate change.
BRF's experience in issuing Green Bonds
One of the most anticipated moments of the symposium was the testimony of Élcio Ito, financial director of BRF, the first Brazilian company to issue Green Bonds, but which did so outside Brazil, with the support of Banco Santander. “Our food business is intrinsically linked to the issue of sustainability, which in our industry is one of the strategic pillars of long-term success; It is a question of competitiveness and continuity. It cannot be different in a company that operates throughout Brazil and, mainly, in rural areas. So, having environmental and social efficiency is intrinsic to our business”, introduced Ito.
According to the BRF executive, the company is a traditional issuer of bonds in the international market and has always seen the 'provocation' of Green Bonds; already having, practically, all green principles embedded in their culture, the path to issuance was a little easier. For him, one of the main objectives in issuing Green Bonds was to give some visibility, within the capital market, to this strategic issue of sustainability at BRF and to stamp a green seal on the issuance of debt securities.
A second objective was to diversify the company's investor base on the European continent. “It is an incipient market and, for now, we have managed to attract a small number of investors, but we are happy to meet them, to know what their concerns are, how they think, how they see the projects; in short, who are these investors who can only invest in instruments green”, he described.
Élcio Ito also said that the experience of issuing Green Bonds as a whole had a positive impact on the financial community and, internally, on the 100,000 employees. “In this initial step, we issued € 500 million in green projects for the next seven years and we have already published our first Green Bond Report. Every year we have to satisfy investors and demonstrate that we are complying with the green principles”, he explained.
The financial system has an enabling role
The last panel, mediated by Carlos Nomoto, general secretary, WWF -Brazil, brought together Élcio Ito himself, from BRF; Aline Pacheco, institutional advisor at the São Paulo State Secretariat for the Environment; Guilherme Cardoso, head of the Environment department at BNDES; Linda Murasawa, sector director of FEBRABAN's Social Responsibility and Sustainability Commission; Rafael Bello Noya, director of Financial Solutions & Advisory at Santander; and Warwick Manfrinato, professor at the Institute of Advanced Studies (IEA), University of São Paulo
They discussed the importance of boosting sustainable investments in Brazil. Professor Manfrinato instigated: “The financial system has a liberating role. If you have mechanisms that are stuck and there is no movement, the financial system has to see itself as a liberator for things to happen.”
At the end, Yannick Motz, project manager at GIZ, outlined an overview of the next actions of the project called Emerging Markets Dialogue on Green Finance, a coalition that brings together dozens of banks, companies, consultancies and organizations around the world to discuss the topic of green finance and propose solutions considering local specificities. Headed by GIZ, the project involves all G20 countries and, in the case of Brazil, has CEBDS as the local partner. Among the main activities is the holding of symposiums and workshops with potential companies issuing green bonds, audits, investors and financial institutions, in addition to consultancy and technical support. For more information access here.