According to a study carried out this year by the IDB, the social and infrastructure spending necessary to meet the climate change objectives in Latin America and the Caribbean (LAC) is between 7% and 19% of GDP, meaning 470 billion to 1.3 trillion dollars are needed by 2030, depending on initial conditions and proposed economic and social objectives.

The IDB, through its IDB Invest branch, is working extensively in the region, in the mobilization and combined financing, developing innovative financial structures and mitigating non-financial risks through best-practice environmental, social, corporate governance and integrity policies. Some examples were described in a recent post in IDB Invest’s blog:
• The A-Bond / B-Loan structure offers the advantages of the IDB Group umbrella to local and international bond investors, in many cases, to provide the scale and tradeability needed to incentivize investment in non-investment grade projects.
• IDB Invest’s guarantees help mitigate the main risks that investors in the capital markets do not want to assume.
• The unfunded risk participation product takes advantage of IDB Invest’s financing capacity in LAC to mobilize investment from credit institutions and investors that have a risk appetite to support investments in sustainable infrastructure in the region, but do not have access to cost-effective funding solutions in specific countries.
• Blended Finance resources from donor agencies is a particularly effective mobilization tool for investments in sustainable infrastructure, as it can generate favorable results that encourage private sector participation in the future.
• IDB Invest helps mitigate non-financial risks, which are unattractive to investors in the capital markets. High environmental and social, corporate governance and integrity standards reduce the likelihood and impact of non-financial risk events, ultimately making high-impact projects more attractive to investors.