The World Bank's Board of Directors Friday approved a US$ 500 million financing project for actions in Brazil linked to sustainability and the carbon credit market. The project was approved today (23), in Washington, by the World Bank Board of Directors. Joining the initiative to create a one-stop shop is Banco do Brasil (BB).
Both financial institutions will lend resources linked to sustainability projects to help Brazil achieve its climate targets, with robust benefits for those who reduce carbon emissions, it was announced.
According to BB, the expectation is to offset up to 90 million tons of carbon dioxide emissions by 2030, equivalent to about 4.5% of what Brazil needs in order to meet its commitments to zero emissions that year.
Budgeted at US$ 500 million, the Brazil Climate Finance Project is distributed as follows: The World Bank will lend $400 million for BB to provide sustainability-related loans to companies that want to reduce carbon emissions. The project also includes a pilot US$ 98 million Climate Debt Fund, which should leverage private capital to expand sustainability-related financing in the broader economy, Agencia Brasil explained.
These financing instruments are complemented by US$ 2 million in resources to increase Banco do Brasil's capacity to provide technical assistance to companies to adopt credible mitigation plans and access high-quality carbon credit markets.
The three actions are intended to mobilize up to US$ 1.4 billion in private capital, both by expanding BB's green financing and by combining public activities with resources from private investors. BB was chosen because it concentrates 60% of rural credit in the country, which allows it to expand sustainable credit lines to agribusiness.
The project will make it possible for BB to offer clients packages that integrate financing with support for access to high-quality carbon credit markets through a one-stop shop. Borrowing companies will be encouraged to adopt and implement credible greenhouse gas emissions reduction plans with results targets.
The initiative also links these companies to high-quality carbon markets. According to BB, the initiative will provide Brazilian companies, especially small and medium-sized businesses, with an affordable end-to-end service, from measuring their carbon footprint to generating high-integrity carbon credit returns.
BB President Fausto Ribeiro said that the project increases synergy with the financial institution's strategy of leading sustainability projects and fostering business with environmental, social, and corporate governance. In his view, the experience is innovative and can be reproduced all over the planet.
The public and private sectors play a vital role in supporting the transition to a greener economy. We welcome the partnership with the World Bank not only because it is the world's largest funder of climate action in developing countries, but also because of its experience in creating and strengthening local capital markets and greening domestic financial sectors, Ribeiro said.
(Source: Agencia Brasil)