CAF to allocate USD 25 billion over the next five years to promote green growth
The multilateral organization proposes a green strategy that promotes climate action, biodiversity conservation, energy transition and nature-based solutions. Over the next five years, it will mobilize its own financial resources and align the interests of public and private players around environmental and social responsibility and the reduction of greenhouse gas emissions. The institution's green financing will climb from 24% in 2020 to 40% in 2026.
During COP26 in Glasgow, CAF – development bank of Latin America – announced its commitment to allocate USD 25 billion over the next five years for green operations that will help countries in the region increase climate resilience, promote energy transition, lower growth in greenhouse gas emissions and strengthen the conservation of natural ecosystems and biodiversity.
The institution also proposes to strengthen the mobilization of finance sources from third parties, such as the issuance of bonds as well as green and climate funds, while promoting strategic alliances that allow enhancement of coordinated work between governments, civil society, international organizations, NGOs and the private sector. This will help conserve biodiversity, design public adaptation and mitigation policies, strengthen government capacities and encourage environmentally-friendly and inclusive economic growth.
“The planet needs Latin America's leadership to ensure its own survival, and the region must leverage its position to achieve sustained economic growth that will help it overcome structural gaps in poverty, competitiveness and inclusion. To address climate change, it is essential that we adopt new financial instruments that guarantee current financing and attract new investments from the private sector,” said Sergio Díaz-Granados, CAF's executive president.
One of the first actions linked to CAF's new green strategy is the contribution of USD 1 million to reinforce the agreement between Colombia, Costa Rica, Ecuador and Panama to conserve the Eastern Tropical Pacific Marine Corridor, an ecosystem that generates USD 3 billion annually, derived mainly from fishing, tourism and maritime transport.
CAF will additionally build a platform for mobilizing climate and environmental funds that will make it possible to mobilize at least USD 1.5 billion in concessional financing to the region in the 2021-2026 period, while also creating a Caribbean HUB in Trinidad and Tobago. This will provide special emphasis on environmental issues and prevention of natural disasters in the region.
CAF plays a leading role in the International Development Finance Club (IDFC), an organization that has 26 members working together to meet the Sustainable Development Goals (SDGs) and Paris Climate Agreement commitments, joining forces to promote and leverage Investment in Sustainable Development around the world. It is also accredited by the main green funds for global financing, such as the Adaptation Fund, the Global Environment Facility (GEF) and the Green Climate Fund (GCF), thereby supporting its member countries in the implementation of projects that contribute to the fulfillment of their environmental and climate commitments.
Latin America Green Bank Strategic Lines
CAF is committed to becoming Latin America’s green bank, through a series of strategic lines, which are summarized in the following points:
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