The Brazilian Development Bank (BNDES) has taken another relevant step towards the development of the sustainable credit market and is launching its Sustainability Bond Framework (SBF). This document facilitates the issuance of green, social and sustainable bonds by BNDES in Brazil and abroad. With a favorable opinion (second party opinion – SPO) from Sustainalytics, a company specialized in sustainable projects, the structure reinforces the importance attributed to the Environmental, Social and Governance topic (SDG) by BNDES and the Inter-American Development Bank (IDB), which participated in the process through technical cooperation.
The initiative expands on the funding possibilities foreseen in the Green Bond Framework launched in 2017, which allowed BNDES to be the first Brazilian bank to issue this type of security in the international capital market, and the first financial institution to issue green financial letters in the local market in 2020. After the innovative BNDES’s emissions, other market entities have already started issuing similar securities.
SBF was developed from a technical cooperation signed with the Inter-American Development Bank. The document was built from a technical consultancy provided by the specialized company Sitawi, considering the best market practices.
The funds to be raised in future operations based on SBF will be used to finance and refinance new or existing projects in the BNDES’s portfolio. The project models eligible for the allocation of resources cover six green and three social categories.
Green categories include: renewable energy; energy efficiency; sustainable management of water, waste water and sanitation; pollution prevention and control; clean transport; and environmentally sustainable management of living natural resources and land use. Social categories include: health; education; and support for micro-, small- and medium-sized enterprises (MSMEs) and microcredit.
Investments in health and education in municipalities with human development index (HDI) below the national average will be prioritized and, for MSMEs, in addition to the HDI criterion, companies led by women or gender minorities will be prioritized.
About BNDES – Founded in 1952 and currently linked to the Ministry of Economy, BNDES is the main instrument of the Federal Government to promote long-term investments in the Brazilian economy. BNDES’s actions focus on the socioenvironmental and economic impact in Brazil. BNDES offers special conditions for micro-, small- and medium-sized enterprises, as well as social investment lines, directed at education and health, family agriculture, sanitation and urban transport. In situations of crisis, BNDES acts in an anticyclical manner and assists in the formulation of solutions for the resumption of economic growth.
About IDB — The Inter-American Development Bank is dedicated to improving lives. Established in 1959, IDB is an important source of long-term financing for the economic, social and institutional development of Latin America and the Caribbean. IDB also conducts cutting-edge research projects and provides advice on policies, technical assistance and training to public and private clients throughout the region.