NDF - Financing for climate change and development projects

NDF contributes to green bond development in Chile

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Santiago de Chile

IDB supports Chile in a sovereign green bond development using funding from the NDF- financed NDC Pipeline Accelerator

The Nordic Development Fund (NDF) is the anchor donor of the NDC Pipeline Accelerator Multi-Donor Trust Fund (ACL), an IDB-led climate finance facility. The initial NDF funding of ACL was EUR 10 million, and both The Netherlands and Sweden have recently joined the ACL.

The IDB supported the Chilean Ministry of Finance, in collaboration with the Climate Bonds Initiative, in the preparation of the green bond framework and in the identification of a portfolio of eligible expenditures that will support the issuance of the first sovereign green bond in the Americas. This initiative could contribute to further develop the market and encourage other Chilean issuers to follow with green bonds of their own.

A sovereign green bond will provide a strong signal of Chile’s commitment to promoting sustainable finance and the development of a low-carbon, climate-resilient economy, as well as mobilising capital markets to support the delivery of the countries’ Nationally Determined Contribution (NDC) commitments under the Paris Agreement. As a part of the country’s commitment, Chile seeks to encourage the development of a green asset class that can help attract foreign investment to support the country’s sustainable infrastructure needs. Chile will also host the next UNFCCC COP Conference of the Parties (COP 25) in Santiago in December 2019.

Green and sustainable bonds are a powerful way to mobilise private capital for climate- and sustainability-friendly projects and activities. The global market has been soaring in the last five years with annual issuances going from US$13 billion in 2013 to more than US$150 billion in 2018. In Latin America and the Caribbean (LAC), issuances have been mainly from Financial Institutions but represent less than 5% of last year’s global issuances – suggesting a significant untapped potential.

In the Nordic region, the Nordic Investment Bank (NIB) is the largest issuer of green bonds to date.

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