TheJakartaPost
Please Update your browser
Your browser is out of date, and may not be compatible with our website. A list of the most popular web browsers can be found below.
Just click on the icons to get to the download page.
World Bank to lend $500 million to help Brazil meet climate goals
Change Size
In this file photo taken on Aug.23, 2019, aerial view showing a deforested piece of land in the Amazon rainforest near an area affected by fires, about 65 km from Porto Velho, in the state of Rondonia, in northern Brazil. (AFP/Carl de Souza)
T
he World Bank´s board of directors approved late on Thursday a $500 million project in Brazil to expand sustainability-linked finance and strengthen the private sector’s capacity to access carbon credit markets and help the country curb deforestation.
The initiative, in collaboration with Brazilian state-controlled lender Banco do Brasil, adopts an approach to lending linked to sustainability to help Brazil meet its climate goals and deliver "robust" mitigation benefits, a bank statement said.
Sustainability-linked financing (SLF) allows for lower financing costs when certain environmental, social and governance (ESG) requirements are met by a company but does not require the funds to be used for climate-friendly purposes.
At the start of December, the World Bank and its partners launched a global tracking system to clean up the opaque market for carbon credits and help developing countries raise much-needed climate finance quickly and more cheaply.
Carbon credits – generated through activities such as planting forests or pulling climate-damaging carbon dioxide from the air – are sold to polluters to offset their emissions as a way of helping them reach net-zero emissions to limit global warming.
"Up to 90 million tCO2e in emission reductions are expected by 2030, the equivalent to about 4.5 percent of what Brazil needs to stay on track with its net-zero commitments," the World Bank said.
The project is also expected to mobilize up to $1.4 billion in private capital through the scale-up of financing by Banco do Brasil and private investors.
"Brazil has significant potential to become a global leader in the transition to a low-carbon economy", said Johannes Zutt, World Bank country director for Brazil. "To do so, urgent action is required to complement public interventions with private solutions and financing."
The project adopts an "innovative, outcome-based financing approach" that encourages firms to adopt and implement credible GHG emission reduction plans to reduce their company-wide carbon footprint, as well as linking these firms to high quality carbon markets, the World Bank said.
Banco do Brasil will be able to offer its clients packages that integrate financing with support to access carbon markets through a “one-stop shop”, as the World Bank explained it.
"This will provide Brazilian firms — small- and medium-sized companies in particular — with an accessible end-to-end service starting from measuring their carbon footprint to generating returns from high-integrity carbon credits," it said.
Stopping deforestation in the Amazon, which absorbs vast amounts of planet-warming greenhouse gas, is part Brazilian President-elect Luiz Inacio Lula da Silva's sweeping plan for the country to reclaim leadership on climate change measures, which were previously abandoned by the Bolsonaro administration.
