Betting on green finance in Peru
hace 2 year
By: Pia Zevallos - Libélula's General Manager
A recent study by the Superintendencia de Banca, Seguros y AFP, indicates that 43% of the Peruvian financial system's portfolio is exposed to climatic events. We are increasingly aware of the environmental and social impact of human activities. In view of this, adopting sustainable financial practices has become a priority for competitiveness, profitability and protection of a company's value. Peru, a megadiverse, highly vulnerable country with high potential for renewable energies and low productivity, has much to gain from green finance.
According to the report "State of the Sustainable Debt Market in Latin America and the Caribbean 2022", 'green debt' has experienced significant growth, reaching a value of more than US$42.4 billion. This growth reflects the increasing interest of investors in channeling their resources towards projects and companies that promote sustainability; but it is held back by the lack of standardization and/or definition of what is understood as "green".
In this context, how can we identify and rapidly migrate towards more sustainable investments or those with less exposure to climate change? The Green Finance Taxonomies are tools to achieve this. These can be national, regional or sectoral, and classify investments that promote environmental sustainability. They are mostly based on a system developed by the European Union to transparently identify sustainable activities and investments.
The government of Peru is developing its own Green Finance Taxonomy, which together with the Green Finance Roadmap, one of the first in the region, seeks to facilitate the mobilization of investments of up to US$2 billion by 2025 towards coherent actions in the fight against climate change.
Despite the obvious benefits, the implementation of a taxonomy faces significant challenges, such as the need for coordination to ensure consistency and interoperability of classification systems. In addition, compliance and impact assessment of investments classified as sustainable are essential to avoid the greenwashing and promote market integrity, while providing predictability to investments and eliminating bureaucratic hurdles.
Standardization and transparency of language related to sustainable finance are essential steps to build trust and accelerate progress. We have the opportunity to identify a viable investment pathway aligned to decarbonization and climate change adaptation goals. It is imperative for companies to align themselves with global trends by assessing the level of exposure of their portfolio to climate and environmental risks.
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