Go-ahead for the green capital market in Latin America: KfW contributing its Green Bond expertise

• Environment- and climate-friendly investments: EUR 74 million for the LAGreen fund
• Removing obstacles to economic growth by developing bond markets
• Strong mobilisation of private funds: USD 500 million of investment expected in five years

The LAGreen green bond fund was launched today at the UN Climate Change Conference in Glasgow. The fund, initiated by KfW and managed by Finance in Motion, will invest in green bonds. The proceeds will be used to finance climate-friendly projects in Latin America. Green bonds are fixed-income bonds issued by participants active in climate finance, including private and state-owned banks, companies and renewable energy project developers. Proceeds from these bonds are allocated to specific climate projects which are then transparently monitored over the term of the bond for compliance with mandatory criteria.

KfW has fiduciary holdings totalling EUR 74 million on behalf of the German Federal Ministry for Economic Cooperation and Development (BMZ) and the EU. This investment is in the riskier tranches of the fund, thereby minimising risk to private investors and giving strong leverage for the invested public capital.

“Development of the Latin American bond markets removes barriers to economic growth while addressing environmental and climate challenges. With the LAGreen fund, KfW is contributing its expertise as one of the largest issuers of green bonds worldwide and therefore also helping to mobilise private capital. This is indispensable for implementing international climate targets,” said Christiane Laibach, Member of the KfW Group Executive Board.

The fund helps Latin American countries to meet national targets set out in the Paris Agreement to reduce emissions and adjust to climate change, while also closing financing gaps though private investment. The fund also sets binding, demonstrable standards based on the Green Bond Principles, thus counteracting greenwashing. In five years, investments of USD 500 million are expected to be made in Latin American green bonds.

Information about KfW Development Bank can be found at:
www.kfw-entwicklungsbank.de/en