December 12, 2016 (www.investorideas.com newswire) Brazilian companies have signalled their intention on green bonds and green securities in London last week. CPFL Renováveis, Klabin and Ecoagro foreshadowed potential green bond issuance to an audience of institutional investors during our ‘Investor Roadshow for Brazil's New Economy'.
The forum saw leading companies in agriculture, forestry and finance join the Brazil Tree Association, national development bank BNDES and government ministries, profiling green investment opportunities to an audience of 200 institutional investors and stakeholders at the London Stock Exchange and Guildhall, as Brazil begins to implement its NDCs and associated goals in agriculture, land use, clean energy and urban infrastructure.
BNDES has just launched a R$500 million (USD144 million) green bond fund (Fundo de Energia Sustentável) intended to lead private sector investment and spur the growth of the domestic Brazilian green bond market and will begin operations by mid-2017.
BNDES will take a more active role on ESG issues amongst its existing portfolio new investments made by the new green bond fund. The bank has indicated it will consider appointing independent directors to company boards as part of the new direction.
The impact of the Forum in building for Brazil's sustainable economic direction and climate finance goals has been widely acknowledged.
Eduardo Dos Santos, Brazil's Ambassador to the UK
"Beyond green finance opportunities, the forum highlighted Brazil's ambition to reinforce its position at the forefront of a model of development that is prosperous, inclusive and sustainable – not only economically, but also socially and environmentally."
"Brazil's increasingly engaged private sector and solid green policy framework is already unleashing a revolution in terms of demand, scale and governance for new sustainable development projects."
Flávio Girão Guimarães, Brazil's Ministry of Finance
"The new framework behind Brazil's infrastructure projects cannot be missed by investors who live in a world of low yields. It is an opportunity to combine economic grow, sustainability and return."
Flávia Carvalho, IR Superintendent CPFL Renováveis
"As a pure-play renewables company, CPFL Renováveis believes the development of green bond markets presents a promising opportunity to finance our growth. The opportunity to participate at the Brazil's New Economy forum in London with the Climate Bonds Initiative London, is one we could not have missed."
Elizabeth de Carvalhaes, Executive President of IBA (Brazilian Tree Industry)
"We believe the forum has helped bring the financial element that has been missing into climate discussions, especially involving implementation of Brazil's COP21 NDCs."
Milton Menten, CEO Ecoagro
"It was clear that Brazil is expected to assume a prominent position as one of the world's main players in green finance, especially in agribusiness. Ecoagro was proud to participate in the Climate Bonds Initiative Brazil's New Economy forum. The event was a good opportunity to demonstrate Ecoagro's leadership in the green securities segment and present our work with Suzano, the first "green CRA" in the Brazilian market, issued last November."
For more information, please contact:
Climate Bonds Initiative (International)
+44 (0) 7506 270 943
Climate Bonds Initiative (Brazil)
+55 (11) 99627-3226
In-Country Market Development: Climate Bonds undertakes a number of in-country market development programs including activities in Brazil. More information can be found here. Climate Bonds regularly blogs on Brazil based events and green bond developments.
Current Brazil Green Bonds: In late November, Suzano Pulp & Paper SA announced the first green bond issued in Brazilian Real, following up on their successful USD 500m green issuance in July. According to Marcelo Bacci, CFO at Suzano, their green bond had "the lowest yield ever in a CRA (green securitisation) in the local markets, mostly due to its green characteristics."
This is the third green bond from Brazil since food giant BFR led off in May 2015 with a EUR 500m (USD 549m) BBB-rated bond attracting more than 50% European buyers.
Brazil Profile: Brazil is the world's ninth biggest economy and is the world's largest exporter of sugar and soybeans, the 3rd largest exporter of corn and 4th largest producer of fibre furnish. It has the world's largest area of arable land in a single country. According to the FAO, Brazil will have to increase its food production significantly to help cope with 2050's world population.
As presented by Brazil's Vice-Minister of Agriculture during the event, Brazilian low carbon agriculture is a great potential for green bonds investment as sustainable practices are already in use, including technological advancements in livestock and grain production. Increases of more than 33% in grain, milk, pulp and meat production are projected for the next decade.
Brazil State of the Market Report: Published in both Portuguese and English, the Brazil Edition of the Climate Bonds Initiative flagship report was released in August 2016 and tracks all climate-aligned and green bonds issued within the Brazilian market from Jan 1st 2005 to May 31st 2016.
Recent Developments: In October 2016, major local investors and pension funds signed the first Brazil Green Bonds Statement committing to "the development of a robust Brazilian green bonds market that makes a contribution to addressing climate change."
A Council for Sustainable Market Development (Conselho Brasileiro para o Desenvolvimento Sustentável do Mercado) has been jointly convened by the Business Council for Sustainable Development (CEBDS) and the Climate Bonds Initiative, to develop and promote policy and market mechanisms to catalyse a robust future pipeline of opportunities for green investments in the future.
In November 2016 International Finance Corporation's (IFC) Climate Investment Opportunities in Emerging Markets report, Brazil's estimated climate smart investment potential for selected sectors is $1.3 trillion from 2016–2030.
Disclaimer: The information contained in this communication does not constitute investment advice and the Climate Bonds Initiative is not an investment adviser. Links to external websites are for information purposes only. The Climate Bonds Initiative accepts no responsibility for content on external websites.
The Climate Bonds Initiative is not advising on the merits or otherwise of any investment. A decision to invest in anything is solely yours. The Climate Bonds Initiative accepts no liability of any kind for investments any individual or organisation makes, nor for investments made by third parties on behalf of an individual or organisation.
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