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REPORT: Road map – Actions for setting a green bond market in Colombia

At present, Colombia is formulating policies and strategies conducive for a transition towards a green and low-carbon economy

Green growth has been included as one of the goals set under the National Development Plan and, today, there is a Mission for Green Growth that seeks to outline steps to consolidate the transformations required in the country regarding sustainable development, by identifying necessary goals, policies and strategies consistent with global agendas on sustainable development and the Paris Agreement.

Large monetary investments required to achieve the transformation into green and inclusive development

There are no comprehensive estimates on the costs involved in the transition towards green economy, as these depend on targets set under policies and strategies outlined by the Mission for Green Growth. However, the country made progress on assessing estimate costs of domestic contributions for the Paris Agreement; as a result, boosting green projects in various areas, with the aim of attaining dynamics and cash flow levels as needed, requires involvement by economic, political and social players. Use of innovative tools such as green bonds is significantly important to achieve an in-depth involvement of the capital market.

Setting and enhancing the green bond market demands implementing a series of tools and promoting dynamics suitable to remove barriers that hinder the achievement of this goal

In an endeavor supported by international development banks, by the end of 2016, Bancolombia made the first issuance of green bonds in the country. Thereafter, in April 2017, Davivienda resorted to the same mechanism and framework used by Bancolombia. For allowing the country to have more than two successful cases and a strong market, it is required to set a number of tools identifying the market bases and underpinning the next stage, that is, the dynamic and sustained growth of green bond issuances. This Road Map sets forth a number of actions to identify such bases and boost strategies beneficial for the growth of green bond markets.

This Road Map is the second of a series of three documents prepared by E3–Economía, Ecología y Ética, and METRIX–Finanzas, in association with PwC UK and Climate Bonds Initiative, on the development of a green bond market in Colombia

Such documents are intended to assist the Colombian government, and other entities interested in issuing green bonds, in understanding the potential of such tools; to that effect, the papers “Assessment of Potentialities for a Successful Green Bond Market in Colombia” and “Theoretical Case Study for the Issuance of Green Bods” were published. Together with this Road Map, the cited papers aim to motivate both public and private entities to explore prospective issuances of bonds beneficial for green programs and and “Theoretical Case Study for the Issuance of Green Bods”. Together with this Road Map, the cited papers aim at motivating both public and private entities to explore prospective issuances of bonds beneficial for green programs and projects in Colombia.

Picture: Lorna Phillips