Countries in Latin America are rushing to tap the booming market for so-called green bonds in the wake of the United Nations COP26 summit, according to the World Bank.
As per a Bloomberg report, agreements reached at the event in Glasgow last month — where nations agreed to combat climate change by halting deforestation and cutting the use of coal — have accelerated the demand to issue debt whose proceeds are earmarked for environmental projects.
Rodrigo Cabral, senior financial officer for the World Bank treasury said: “The demand that we are getting to talk to sovereigns is growing exponentially.”
The World Bank works with governments to structure the bonds.
However, according to some Indigenous leaders in Peru and Ecuador, pledges and solutions proposed by world leaders to address the climate and biodiversity crisis at COP26 are not going to be enough.
In a report by Mongabay, a new plan called the Amazon Sacred Headwaters initiative proposes the protection of 80% of the Amazon in Peru and Ecuador by 2025, consisting of 35 million hectares (86 million acres) of rainforest.
“One of the key points that we must underline is that governments are considering protecting only 30% of the area that includes 35 million hectares [86 million acres] of land by 2030. What we want to achieve is the protection of at least 80% by 2025,” said a spokesperson for Amazonian Indigenous leaders at COP26.
Green bonds market was already growing
Governments across the world have sold $92.3 billion in green bonds so far this year, already surpassing a total of $37.5 billion in all of 2020, according to data compiled by Bloomberg Intelligence.
To help develop domestic capital markets, since 2008 the World Bank has issued green bonds denominated in emerging market currencies.
In Ecuador, oil extraction is one of the country’s main sources of revenue for foreign debt repayments. According to a report by the World Bank, as of 2020 Ecuador’s foreign debt stands at $58.5 billion, or more than half the size of its economy.
(Banner image courtesy: @WBG_Climate/Twitter)