IFC Rallies Private Sector in Latin America to Spur Investments to Combat Climate Change
IFC, a member of the World Bank Group, kicked off recently in Bogota the Climate Business Forum for Latin America and the Caribbean to help spur private sector investments that reduce carbon emissions. The forum has convened over 300 public and private sector leaders, financiers and academics to discuss and explore new areas where the private sector can make a critical contribution for scaling up climate-smart investments in the region.The Forum, which is taking place June 14- 15, will feature keynote remarks by Colombian President Juan Manuel Santos, and Colombia’s Finance Minister Mauricio Cardenas, who are both expected to highlight the efforts of the Colombian government to mitigate the impacts of climate change. The mayor of Bogota, Enrique Peñalosa, will be the keynote speaker during the second day of the Forum that focuses on sustainable cities.
Colombia, like many other countries in Latin America, is seeking to reduce greenhouse gas emissions by 20 percent by 2030. The government has long emphasized the importance of embarking on a low-carbon growth path that entails sustainable management of the country’s natural resources and putting in place sustainable practices for land, water, waste and forests management.“Deploying the innovative power of the private sector will be crucial for reducing emissions in coming years,” said Liz Bronder, IFC director for Latin America and the Caribbean. “In a country like Colombia, there could be enormous opportunities in clean energy, such as wind and solar, and moving towards new business models that encourage energy efficiency practices. At IFC we have a long and successful track record of supporting the private sector to leverage these opportunities,” she said.
The Forum serves as an important convening platform for business leaders from around the region and other emerging markets who are steering their companies towards new business models that capitalize on climate-smart practices and initiatives. The involvement of the region’s leading companies is crucial for Latin America’s sustained economic growth, as some estimates indicate that losses associated with climate change could amount to as much as 5 percent of the region’s gross domestic product if global temperatures increase to 2.5 degrees Celsius in the second half of the century.
“The historic climate agreement in Paris in December 2015 had 195 countries agreeing to reduce their emissions to keep the global warming below 2 degrees Celsius. This has paved the path for the active engagement of the private sector: a growing number of companies realize that creating a low-carbon business strategy can also be beneficial for their bottom-line,” said Christian Grossmann, IFC Director for Climate Change. “IFC’s experience and global reach can help the private sector in Latin America identify some of the key opportunities in the fight against climate change,” he concluded.
According to We Mean Business – a coalition of organizations working with the world’s most influential businesses and investors, companies in Latin America and the Caribbean are achieving on average a rate of return on their climate-smart investments of 17 percent a year, a healthy margin compared to other emerging markets economies. This shows the ample opportunities present for the private sector in the region. In Colombia, for example, IFC estimates that there is an investment potential of $27.5 billion in renewable energy to 2030. In Brazil, that figure is around $152 billion and in Mexico, around $75 billion.
Building on its renewed commitment to combat climate change, and as part of the World Bank Group, IFC has committed to scaling up its climate-related investments to reach 28 percent of the overall annual new commitments by 2020. In Latin America, IFC also plans to grow its portfolio in the region in urban infrastructure, such as green buildings, transport, waste management, energy, water and sanitation, and telecommunications. IFC will also continue supporting development of financial instruments such as green bonds to ensure that capital markets continue playing a role in raising climate finance.