World Bank and BB create one-stop-shop for carbon credit

The World Bank and Banco do Brasil (BB) will create a one-stop-shop for financing linked to sustainability actions and the carbon credit market. The project was approved today (23), in Washington, by the Board of Directors of the World Bank.

For the first time, the two financial institutions will lend resources linked to sustainability projects that help Brazil achieve climate goals, with robust benefits for those who reduce carbon emissions. According to BB, the expectation is to offset carbon dioxide emissions by up to 90 million tons by 2030, equivalent to about 4.5% of what Brazil needs to fulfill the commitments to zero emissions that year.

Budgeted at US$500 million, the Brazil Climate Finance Project is distributed as follows. The World Bank will lend US$400 million to Banco do Brasil to grant sustainability-linked loans to companies that want to reduce carbon emissions. The project also includes a $98 million pilot Climate Debt Fund, which is expected to leverage private capital to expand finance linked to sustainability in the broader economy.

These financing instruments are complemented by US$ 2 million in resources to increase the capacity of Banco do Brasil to provide technical assistance for companies to adopt credible mitigation plans and to have access to high quality carbon credit markets.

The three actions intend to mobilize up to US$ 1.4 billion in private capital, both through the expansion of Banco do Brasil’s green financing and through the conciliation of public activities and resources from private investors. BB was chosen because it concentrates 60% of rural credit in the country, which allows expanding the granting of sustainable lines of credit to agribusiness.

Results goals

The project will make it possible for BB to offer its customers packages that integrate financing with support for access to high-quality carbon credit markets through a one-stop-shop. Borrowing companies will be encouraged to adopt and implement credible greenhouse gas emission reduction plans with outcome targets.

The initiative also links these companies to high-quality carbon markets. According to BB, the initiative will provide Brazilian companies, mainly small and medium-sized businesses, with an affordable end-to-end service, from carbon footprint measurement to the generation of high integrity carbon credit returns.

Synergy

The president of Banco do Brasil, Fausto Ribeiro, stated that the project increases synergy with the financial institution’s strategy of leading sustainability projects and fostering business with environmental, social and corporate governance. According to him, the experience is innovative and can be reproduced all over the planet.

“The public and private sectors have a vital role to play in supporting the transition to a greener economy. We welcome the partnership with the World Bank not only because it is the world’s largest funder of climate action in developing countries, but also because of its experience in creating and strengthening local capital markets and greening domestic financial sectors,” said Ribeiro.

Reproduction Agency Brazil