Brazilian environment to receive up to 60% of green bond resources
In the upcoming issuance of Brazil's first sustainable sovereign bonds on the international market, scheduled to occur early next year, the National Treasury has announced that 50 percent to 60 percent of the funds raised will be allocated to environmental projects, while the remaining 40 percent to 50 percent will go toward social initiatives.
Officially, the Treasury has not provided an estimate of the amount it intends to raise through the issuance of foreign market bonds. However, Finance Minister Fernando Haddad stated during a recent trip to New York that the Brazilian government aims to secure $2 billion, approximately BRL 10 billion, by issuing green bonds.
The Treasury report outlines that the funds acquired from Brazil's sustainable sovereign bonds will be designated for projects in eight segments, six of which are related to the environment, and two to social initiatives. The agency has established distribution estimates for each of these segments, including minimum and maximum sub-limits for resource allocation.
For environmental projects, the distribution is as follows:
- Clean transportation: 20% to 25%;
- Renewable energy: 15% to 20%;
- Terrestrial and aquatic biodiversity: 11% to 18%;
- Sustainable management of living and natural resources and land use: 3% to 6%;
- Adaptation to climate change: 0.5% to 0.8%;
- Control of greenhouse gas emissions: 0.1% to 0.2%;
For environmental projects, the distribution is as follows:
- Combating poverty: 30% to 40%;
- Food security and sustainable food systems: 10% to 17%;
"The proposed portfolio [in the first green bond issue] is predominantly in the environmental category, highlighting efforts that will be decisive in continuing to reverse the course of deforestation and will remain critical for the preservation of Brazil's native biomes," the National Treasury justified in the report.
