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Initiative of the Year - Brazil's Green Bond Guidelines

Channels: Green Bonds

Companies: FEBRABAN, Brazilian Business Council for Sustainable Development, CEBDS, CPFL Renováveis, Fibria Celulose, Suzano Papel e Celulose, SITAWI

People: Gustavo Pimentel, Mario Sergio Fernandes de Vasconcelos, Laura Albuquerque

Brazil’s Green Bond Guidelines have ‘galvanised the concept’ of the green bond market in the country and helped eliminate confusion among potential issuers, underwriters and investors.

The guidelines were developed by Brazil’s banking federation FEBRABAN, in conjunction with the Brazilian Business Council for Sustainable Development (CEBDS), to grow the market. The Latin American country had only issued two green bonds before the guidelines were developed in October last year.

Since the guidelines were brought out, the number of Brazilian issues has more than doubled, with transactions from wind developer CPFL Renováveis and paper companies Fibria Celulose and Suzano Papel e Celulose, which tapped the market for a second time. That number is expected to grow considerably through 2017, according to FEBRABAN.

A further three issuers, all wind developers, have had second opinions on their green bonds completed by SITAWI, which provided technical support on the guidelines development, and are looking to issue green bonds in the second quarter of the year, said Gustavo Pimentel, managing director of SITAWI.

FEBRABAN expects the country to leave recession this year and predicts a new emphasis on collaboration between the government and private sector, which will benefit the green bond market.

“This year, our hope is to start a new cycle of development,” says Mario Sergio Fernandes de Vasconcelos, director of institutional relations at FEBRABAN. “So there is a tremendous effort between government and private initiatives to open the market and financial sector to infrastructure, green finance projects and green bonds.”

The guidelines will play an educational role in the Brazilian market and make it easier for businesses to issue green bonds, says Laura Albuquerque, technical advisor at CEBDS.

The guidelines encourage issuers to use other guidelines such as the Green Bond Principles when developing their green bond framework.

As well as educating the Brazilian market on how a green bond is structured, how to label it, what criteria it needs to fulfil and how to monitor it, the Brazilian Green Bond Guidelines also identified sectors in the country with the greatest potential to develop green bonds.

The guidelines point to agribusiness and forestry as two areas where Brazil has strong potential due to its Low-Carbon Agriculture Plan, which aims to recover 15 million hectares of degraded pasture by 2020. 

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