CAF to allocate $25 billion over the next five years to promote green growth

During the COP26 in Glasgow, CAF, the development bank of Latin America, announced its commitment to allocate 25 billion dollars over the next five years for green operations to help countries in the region increase climate resilience, promote energy transition, achieve low greenhouse gas emissions growth and strengthen the conservation of natural ecosystems and biodiversity.

The institution also plans to strengthen the mobilisation of third-party funding sources, such as through the issuance of bonds and green and climate funds, and will promote strategic alliances to enhance coordinated work between governments, civil society, international organisations, NGOs and the private sector. This will help to conserve biodiversity, design public policies for adaptation and mitigation, strengthen the capacities of governments and encourage environmentally friendly and inclusive economic growth.

"The planet needs Latin America's leadership to ensure its own survival, and the region must take advantage of its position to achieve sustained economic growth to help overcome structural gaps in poverty, competitiveness and inclusion. To address climate change, it is essential that we adopt new financial instruments that secure existing financing and attract new private sector investment," said Sergio Díaz-Granados, CAF's Executive President. 

One of the first actions linked to CAF's new green strategy is the contribution of $1 million to strengthen the agreement between Colombia, Costa Rica, Ecuador and Panama to conserve the Eastern Tropical Pacific Marine Corridor, an ecosystem that generates $3 billion annually mainly from fishing, tourism and maritime transport. 

In addition, CAF will build a platform for mobilising climate and environmental funds that in the period 2021-2026 will make it possible to mobilise at least USD 1.5 billion in concessional financing for the region, and, in parallel, will create a HUB for the Caribbean in Trinidad and Tobago, which will place special emphasis on environmental issues and the prevention of natural disasters in the region. 

CAF plays a leading role in the IDFC (International Development Finance Club), an organisation with 26 members that work together to meet the Sustainable Development Goals (SDGs) and the commitments of the Paris Climate Agreement, joining forces to promote and leverage Sustainable Development Investment around the world. It is also accredited with the main green funds for global financing, such as the Adaptation Fund, the Global Environment Facility (GEF) and the Green Climate Fund (GCF), thus supporting its member countries in the implementation of projects that contribute to the fulfilment of their environmental and climate commitments. 

CAF is committed to becoming the green bank of Latin America, through a series of strategic lines, which are summarised in the following points: 

• Portfolio of green operations that contemplate interventions in natural capital and climate change mitigation and adaptation measures. This involves lines of credit granted to intermediary financial institutions with which CAF works in its shareholder countries.
• Strategic alliances with international investors and partners, such as specialised funds, banks and the private sector to attract and mobilise new resources.
• Innovative financial instruments to optimise the use of capital.
• New alliances with universities, foundations, NGOs, sub-national governments to exchange knowledge and best practices.
• Creation of a regional platform to address the climate and biodiversity loss crisis.
• Coordination with local actors as a basis for climate action. 
• Green financing in capital markets under the framework of CAF's Green Bonds Programme.
• Transition of the business fabric towards sustainable and resilient production models that comply with greenhouse gas reduction commitments and boost productivity, innovation and digitalisation. sustainability benefits.
• Support for the formation of a regional carbon market that channels international resources in favour of the productive, sustainable and resilient transformation of Latin America and the Caribbean.