FEBRABAN and CEBDS launch Guide for Issuing Green Bonds in Brazil

The Brazilian Federation of Banks (FEBRABAN) and the Brazilian Business Council for Sustainable Development (CEBDS) launched this Friday (21st), in São Paulo, the Guide for Issuing Green Bonds in Brazil 2016 , with the objective of guiding participants and those interested in the Brazilian fixed income market regarding the process of issuing these securities and also contributing to their development in the country.

For Murilo Portugal, president of FEBRABAN, the historic agreement signed in 2015, in Paris, during COP21, indicated the urgency of increasing the supply of financial resources for actions to mitigate and adapt to climate change, in volumes that will require the creation of new financing instruments, and the participation of governments and the private sector.

Marina Grossi, president of CEBDS, highlighted that the challenge around the world is to make investments destined for the transition to a low-carbon economy go from billions to trillions. In this context, issuing green bonds is strategic and provides a series of benefits. “For the issuer there is access to new investors and reputation gains; for the investor there is greater transparency in the use of resources, which can result in lower risks associated with the investment”, he pointed out.

In order for Brazil to achieve the goals it has committed to under the Paris Agreement, the Secretary for Climate Change and Environmental Quality at the Ministry of the Environment, Everton Lucero, stated that financing must be at the heart of the strategy. In this sense, he described green bonds as an important instrument, capable of bringing environmental issues to the heart of decision-making.

Green Bonds

The green bonds (green bonds, in the international market) are fixed-income securities used to raise funds for the purpose of implementing or refinancing projects and the purchase of assets capable of bringing benefits to the environment or even contributing to mitigating the effects of climate change.

Examples of regulated financial instruments in Brazil that could be classified as green bonds are: shares of credit rights investment funds (FIDC), debentures, infrastructure incentivized debentures, financial bills, promissory notes, agribusiness receivables certificate (CRA) and certificate of real estate receivables (CRI).

The first issues of green bonds were carried out by the European Investment Bank and the World Bank in 2007 and 2008, respectively, and since then this new market has grown rapidly, with issues in more than 25 currencies and dozens of countries.

Total global issuance of green bonds increased from US$ 3 billion in 2012 to US$ 42 billion in 2015. For 2016, the forecast is that this amount will reach US$ 100 billion, according to an estimate by the Climate Bonds Initiative, an international non-profit organization dedicated to advancing the green and climate bond market. “One of the financial instruments available to countries with a sophisticated and mature market like Brazil are the green bonds, the green bonds, object of the guide that we launched today”, highlights the entity.

Guide for Issuing Green Bonds in Brazil 2016

The guide is aimed at potential issuers of these securities – such as companies and financial institutions -, coordinators – also called underwriters, are hired by the issuer to act in the operation -, investors, external evaluation agents and other participants. The document aims to provide guidelines to help market agents in the process of qualifying for the issuance of a green bond.

The Guide for Issuing Green Bonds in Brazil 2016 is divided into five parts: What are Green Bonds; How to Issue Green Bonds in Brazil; Issuance Models, Potential of the Green Bond Market in Brazil, and International Trends.

Declaration

During the launch event, important investors operating in Brazil pledged to sign the Investor Statement on Green Bonds, document that aims to encourage discussion and future issuance of these securities in the local market. The action is an initiative of the Climate Bonds Initiative (CBI), Principles for Responsible Investment (PRI) and SITAWI Finance for Good. The document is based on the global declaration signed by investors in Paris during COP 21.

According to these institutions, Itaú Asset, Santander Asset, Sulamérica and BTG Pactual will sign the declaration and ten other institutions have already shown interest in being signatories. The global statement is supported by 27 institutional investors, representing US$ 11.2 trillion of assets under management.

According to the CBI senior manager, Justine Bell, Itaú Asset, Santander Asset, Sulamérica and BTG Pactual will sign the declaration and ten other institutions have already shown interest in being signatories. “The global statement has the support of 27 institutional investors, representing US$ 11.2 trillion assets under management”, he detailed.

Also participating in the event were the Executive Superintendent of Sustainability Banco Santander, Linda Murasawa; the superintendent of Funds at Itaú Asset Management, Tatiana Grecco; the executive manager of Corporate Finance at Suzano Papel & Celulose, Guilherme Hirata; the Superintendent of Corporate Finance at CPFL Renováveis, Carla Cardilo; The senior investment officer from the International Finance Corporation (IFC), Verónica Rita Garcia Seffino; and the Director of Sustainable Finance at Sitawi, Gustavo Pimentel.

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