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Investing in reversing. Sustainable finance strategies against climate change
Published: November 2019
Editor/s: IDB Invest
Author/s: Hilen Meirovich, Head of Climate Change, Advisory Services and Blended Finance, IDB Invest
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Report that highlights IDB Invest’s strategy and solutions in sustainability and climate change framed in three strategies: 1) promoting a sustainable financial sector, 2) mobilizing resources for sustainable projects, and 3) incorporating resilience for a smart investment.
Firstly, IDB Invest has redoubled its efforts to direct financial sector resources through two mechanisms: a) the creation of a supply of green products from financial intermediaries in the region; b) The generation of an adequate demand for this type of product. The main solutions include green lines and thematic bonds. IDB Invest has created 35 green lines in 15 countries in the region, which are reducing an estimated 41 million tons of CO2 equivalent per year.
Regarding the second strategy, the presence of IDB Invest in projects has a catalytic effect and is an unquestionable incentive for investors, who can invest in innovative financial solutions created in recent years, to facilitate their participation in the development of infrastructures aligned with the fight against climate change in Latin America and the Caribbean. Among those solutions are B-Bonds, Total Credit Guarantee (TCG) and blended financing.
Finally, financial assistance is especially important when access to finance faces difficulties due to meteorological events. In these cases, IDB Invest tries to remove these barriers by designing specific solutions to increase financial resilience, such as contract clauses that help companies to recover, and working side-by-side with credit institutions, agricultural cooperatives and key agribusinesses in each respective country. IDB Invest helps obtain those advantages by contributing models that facilitate the calculation of climate change consequences like the effects on commodity supplies. Some of the prominent cases include Danper Trujillo, Desdelsur, Hidrowarm, Posorja, and Tropicalia.