Brazil’s Green Finance Triathlon: A week of events running from São Paulo to Florianópolis

Brazil’s Green Finance Triathlon: A week of events running from São Paulo to Florianópolis

Launch-Brazil: State of the Market report; 3rd meeting of Sustainable Agri Committee; Sustainable Infra for Munis Roundtable brings together market leaders and governments to set 2019 green finance action plan

Setting the pace

It was a Green Finance Triathlon in Brazil last week with three successful events in São Paulo and Florianópolis (the capital of southern Brazil’s Santa Catarina state) where, post the long awaited 2018 presidential elections, over 200 leaders gathered to discuss the future of green finance.

The good news? Green finance is set to be a big theme for Brazil in 2019.

To kick us off, the Brazil Agriculture Subcommittee had their final meeting of the year at Pinheiro Neto Advogados HQ on Wednesday in São Paulo to set the strategy for the year ahead.

Convened by CBI and Sociedade Rural Brasileira, the meeting set an action plan for the target sectors including:

  • soybeans
  • coffee
  • sugar cane
  • livestock

Building off of this year’s activities, the plan will involve building capacity in green investment pipelines that are in line with best practice globally, defining different financial products that will help deliver the necessary capital flows to eligible producers and a policy roadmap that will help foster market growth in sustainable agribusiness.

The Committee feeds directly into the high level forum with investors under Brazil’s Green Finance Initiative (BGFI).

Continuing the sprint, on Thursday we launched the Portuguese version of the Climate Bonds annual flagship market report ‘Bonds and Climate Change State of the Market 2018′ report, at Mattos Filho Advogados HQ, in São Paulo before a 100+ strong audience.

The Brazil edition included special section dedicated to the Brazilian agriculture. The report reflected that increasing investment flows into sustainable agriculture at scale provides an opportunity to help limit the country’s future emissions while cementing its role as a major global exporter of sustainable agricultural products.

Spinning towards the south of Brazil we visited Florianópolis, where delegates from municipalities across the state of Santa Catarina gathered with business leaders on Friday to debate the challenges and solutions for channelling private capital flows to finance sustainable infrastructure projects in the urban landscape.

Fiscal recovery for the States will be the greatest challenge in attracting much needed capital, but with the support of Federal Government and development banks, along with successful PPP models and local funds for leverage, there are opportunities to bring to market in the near future.

 

We’re out of breath, let’s see what others are saying?

Milton Mentem, CEO, Ecoagro: 

“We are living interesting times where there is an increasing interest in financial tools such as CRAs and a whole new government perspective, with market unlocking especially regarding the bioenergy and forest sectors. I believe we’ll see a lot more green issuances in 2019.”

 

Thiago Silva, Treasury Finance Manager, CTEEP:

“Brazil has an enormous renewable energy potential, but to become a major global power in the sector the country should look into green investments. Companies in the industry must take advantage of the demand that increasingly conscious and climate-minded investors are giving to green projects and attract this capital profile to their investment portfolio.”

 

Bruno Tuca, Partner, Mattos Filho Advogados:

“Brazil has great potential to flood the international Market with green financial products and what is interesting to note by discussing with Brazilian green issuers that came to market recently is that the effort and cost to label a security are minimal, so this potential should be soon be unlocked.”

 

Justine Leigh-Bell, Director of Market Development, Climate Bonds Initiative:

“All the discussions we’ve had this week were incredibly enriching and most importantly encouraging in light of the recent changes in Brasilia. The market is ready to move and green finance remains a priority for the private sector.”

“It is clear that Brazil will need to find new ways to tap international capital to help meet national climate and development goals. Increasing domestic green bond issuance is an obvious way to diversify the investor base and attract increased off-shore capital into sustainable agriculture and infrastructure.”

 

The finish line

We’ve gotten to the end of our green finance triathlon with the knowledge that Brazil is ready for change and new beginnings. The nation has huge potential for providing institutional investors with the long term quality green investments they desire. The year ahead will be vital to building investor confidence in the national green finance agenda.

At the end of 2018, Brazil’s climate aligned bonds outstanding totalled USD11.3bn, with labelled green bonds accounting for USD4.1bn, or 37%. There’s room for so much more!

A wave of green issuance is predicted for 2019 in Brazil, with investments coming from all types of sectors: from water and sanitation to energy to transport and especially, in light of the discussions we’ve been part of all last week, in agribusiness.

 

To see more on our work with local stakeholders go to our Brazil page. (English/Português)