The Inter-American Development Bank (IDB) has launched a new facility that will help public banks in the Latin America and the Caribbean (LAC) to align their operations with Paris Agreement goals, thanks to a 20-million euros contribution from German government through the Federal Ministry for Economic Affairs and Climate Action (BMWK) and its International Climate Initiative (IKI).

The “Latin America and the Caribbean Facility for Greening Public Development Banks and the Financial Sector” aims to support public development banks on: i) evaluating their portfolios, ii) integrating climate and socioenvironmental risks into decision-making processes, iii) promoting increased green lending, and iv) facilitating access to climate and capital markets finance.

The facility will also introduce an innovative performance-based payments mechanism, which incentivizes the banks to increase their portfolio share aligned with the Paris Agreement objectives. It is expected that the new facility will mobilize private climate funding for more than 1 billion dollars.