World Bank to lend $500 million to help Brazil meet climate targets

The World Bank Board of Directors approved at the end of Thursday (22) a US$ 500 million project in Brazil to expand financing linked to sustainability and strengthen the capacity of the private sector to access carbon credit markets and help the country. to curb deforestation.

The initiative, in collaboration with Banco do Brasil, takes a sustainability-linked lending approach to help Brazil meet its climate targets and deliver “robust” mitigation benefits, the multilateral credit body said in a statement.

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 funds to be used for climate-friendly purposes.

In early 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 cheaply.

The carbon credits – generated through activities such as planting forests or pulling climate-damaging carbon dioxide out of the air – are sold to polluters to offset their emissions as a way to help them achieve net zero emissions to limit warming. global.

“Up to 90 million tonnes of CO2 in emissions reductions are expected by 2030, equivalent to around 4.5% of what Brazil needs to stay on track with its net zero emissions commitments,” the World Bank said. .

The project is also expected to mobilize up to US$1.4 billion in private capital through increased financing from 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 this, urgent action is needed to complement public interventions with private solutions and funding.”

The project adopts an “innovative, results-based approach to funding” that encourages companies to adopt and implement credible greenhouse gas emissions reduction plans to reduce their carbon footprint across the enterprise, as well as link these companies to high-quality carbon markets, the World Bank said.

Banco do Brasil will be able to offer its customers packages that integrate financing with support to access the carbon markets, explained the World Bank

“This will provide Brazilian companies –small and medium-sized companies in particular– with an affordable end-to-end service, starting from measuring their carbon footprint to generating returns from high-completeness carbon credits,” said Banco do Brasil. Brazil.

Stopping deforestation in the Amazon, the forest responsible for absorbing large amounts of greenhouse gases that warm the planet, is part of President-elect Luiz Inácio Lula da Silva’s plan for the country to regain leadership in the debate on climate change.