LAGREEN: Latin America's First Green Bond Fund

Green bonds are dedicated to the transparent financing of climate- and resource-friendly investments. Unlike standard bonds, they carry additional requirements - issuers must track, monitor and report on how proceeds are used. The first green bond was issued in 2007, and since then the market has grown substantially, including across Latin America and the Caribbean. Yet as of 2019 it remained almost non-existent in the region compared to elsewhere - despite Latin America being among the most vulnerable to the effects of climate change. 

Objectives

Mobilising private capital for a greener Latin America 

LAGREEN is the first green bond fund dedicated to Latin America. Its purpose is to finance climate- and resource-friendly investments and mobilise local and international private capital towards greater green bond issuance across the region. By addressing market bottlenecks and bringing new issuances to critical scale, the Fund aims to: 

• Mobilise additional funding for Nationally Determined Contributions (NDC) implementation
• Drive local capital market development towards sustainable finance, fostering transparency and long-term commitment in financial and economic activity
• Achieve substantial greenhouse gas emissions mitigation and climate change adaptation impact 

Project activities

LAGreen is an impact fund structured as a blended finance vehicle with starting capital provided by the European Union and the German Ministry for Economic Cooperation and Development, used to leverage funding from the private sector. 

A dedicated technical assistance facility helps issuers build their capacities and promotes best practice to multiply impact. 

(Expected) Results

LAGREEN is expected to have a positive impact on greenhouse gas emissions reduction, the development of green local capital markets and the wider economy. It will: 

• Prevent the emission of an estimated 5,160,000 tonnes of CO2 equivalent by 2029
• Mobilise 40% of its financing from private sources
• Support the development of local currency green bonds and local capital markets
• Invest in green infrastructure - particularly transport infrastructure - reaching an estimated 8.4 million final beneficiaries and creating up to 1,593 jobs in construction and 6,373 in the operations phase, contributing to poverty reduction 

Implementing partners

KFW 

OEEB, Carl Zeiss Foundation/Stiftung, Finance in Motion, Federal Ministry for Economic Cooperation and Development (BMZ)