First Blue Bond in Latin America Promotes Sustainable Biz

The Inter-American Development Bank (IDB) has announced the issuance of the first blue bond for Latin America and the Caribbean — a $37 million fixed rate bond that will help fund projects to extend access to clean water in the region.

The announcement was made during the ongoing United Nations’ COP26 climate summit, where IDB President Mauricio Claver-Carone said such schemes promise to help Latin America and the Caribbean towards greater sustainability.

“Accelerating the blue economy will be a key driver in transitioning to an inclusive, low-carbon and resilient future,” Claver-Carone was reported as saying. “With this first blue bond, IDB Group is promoting a groundbreaking approach to financing climate action and attracting new investors to Latin America and the Caribbean.”

Blue bonds are similar to green bonds — a type of fixed-income instrument used to raise money for environmental projects — however with a focus on preserving, protecting, and restoring oceans and waterways.

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This groundbreaking first blue bond for Latin America and the Caribbean is a 10-year fixed rate bond that will raise a total of 50 million Australian dollars (approximately US $36.9 million) to help the region meet UN Sustainable Development Goal 6 — “ensure access to water and sanitation for all.”

The UN Sustainable Development Goals are a group of 17 interlinked climate-related targets established in 2015 aimed at promoting sustainability and reducing environmental degradation globally, with the goals intended to be reached by 2030.

First blue bond will create more sustainable business opportunities

Blue bonds are a relatively new concept that are of particular interest to island nations and countries with extensive coastlines and waterways, with the Seychelles issuing the world’s first sovereign blue bond in October 2018.

Given that 25% of the population in Latin America and the Caribbean live on the coast, blue bonds are particularly relevant to the region, with the cash raised used directly in environmental protection activities, as well as in creating sustainable business opportunities related to ocean and freshwater conservation.

The issuance of this first blue bond represents the sixth bond issued under the IDB Invest’s Sustainable Debt Framework, which was established this year. To date, those bonds total US $1.6 billion, and include a sustainability benchmark bond, two social bonds, and two green bonds, as well as the new blue bond.

Innovation and sustainabilily in business are a growing area of concern in the region — as in the wider world — with the UN earlier this year staging a regional forum on public and proviate sector strategies for sustainability and inclusivity during the economic recovery following the economic turmoil of the COVID-19 pandemic.

Meanwhile, in February the UN launched a circular economy coalition for Latin America, intended to promote more sustainable business in the region.

Sustainability is a growing area of interest for businesses and startups, with the world becoming increasingly aware of the pressing need to promote a more environmentally-friendly future.

The new blue bond for Latin America and the Caribbean is just the latest example of the growing support and funding being made available to businesses working to clean up the air and waterways, reduce carbon emissions, develop more environmentally-friendly technologies, and improve the lifestyles of populations.

Biz Latin Hub can assist you doing business in Latin America

At Biz Latin Hub, we have teams of corporate support specialists in place in 16 markets around Latin America and the Caribbean, and trusted partners that take our coverage to almost every corner of the region.

We offer a comprehensive portfolio of back-office services, including company formation, accounting & taxation, legal services, visa processing, and hiring & PEO, and we provide tailored packages of integrated services to suit the individual needs of our clients.

Our unrivaled regional coverage allows us to specialize in multi-jurisdiction market entry, while our broad portfolio of clients include many dedicated to the sort of sustainable activities that will be funded by the new blue bond.

Contact us today to find out how we can support you doing business in Latin America and the Caribbean.

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