Latin America at a Crossroads
The text below is the Letter from the CEO included in IDB Invest’s annual report. You can download the full report here.
Latin America and the Caribbean now faces a crossroads where we must work to optimize the many opportunities to build a different and better world.
We all want a fairer, more sustainable region, more committed to nature, more inclusive, with a better balance between rural and urban areas, with respect for minorities and in which gender equality is defended. The question is how to get there.
During 2021 IDB Invest played a very active role in pursuing such goals. As a development bank, we used our capital and mobilized additional resources to invest in private sector projects to accelerate sustainable economic growth and inclusion.
In the second year of the pandemic, our institution surpassed all its operational goals, delivering our highest-ever lending volume to the region.
That’s a track record we want to build upon; but there’s more to come.
Our achievements in 2021 provide us with a vantage point to focus on pillars that are particularly important for Latin America and the Caribbean: promoting a sustainable financial sector, mobilizing resources for the real economy, and developing smart and resilient investments in the face of climate change.
We worked to create innovative solutions and to structure new financial assets to bring them to market, while connecting investment opportunities in the region with investors’ risk and reward expectations.
Furthermore, our experience in partnering with banks, large corporations and investors allowed us to support small and mid-sized companies, the backbone of the region’s economy.
All these related concepts are very important in facing major challenges such as the climate crisis. We are helping the financial sector develop, launch and scale up new sustainable products for investment that will enable the region to achieve a net zero-emissions target.
IDB Invest is trailblazing in the sustainable investing space in LAC, having supported 30% of green, social and sustainable bonds in the region and backing many first-of-its-kind bonds in nine countries: Mexico, Ecuador, Uruguay, Argentina, Brazil, Colombia, Costa Rica, Peru, and Panama.
Following our mandate to lead by example, at the COP26 in Glasgow we announced the issuance of LAC’s first blue bond to support clean water and ocean conservancy projects. For a region with more than 25% of its population living in coastal areas, this was an important milestone.
In renewable energy, we debuted the world's first pilot project to monetize the cost of decarbonization through a project with ENGIE, a power generation company in Chile. Additionally, we launched the world’s first certificate for green transmission lines in Uruguay, an innovative solution that will attract new investors seeking profitability through more sustainable electricity transportation projects.
In gender, diversity and inclusion (GDI), we surpassed our targets with more than 50% of the projects advancing such efforts. In 2021 we began to use performance-based incentives to pursue diversity goals. For example, Atlas, a renewable energy company in Brazil, committed to employing more Afro-descendants and hired more than 1,000 workers of this historically disadvantaged group. Our GDI advisory services are now a common component in deals, and help companies develop ambitious strategies on that front.
Through our Vision 2025, we adapted our strategy to meet the evolving needs of our clients and focus on priorities such as narrowing the credit gap for micro, small and medium-sized enterprises, unlocking climate financing, increasing gender and diversity investments, accelerating digitalization, catalyzing regional value chain deals, and mobilizing capital for sustainable infrastructure.
Above and beyond the capital we provide, our knowledge of and our experience in LAC sets us apart. We can be more effective and deliver greater impact by playing a more active role as a convener. By strengthening our focus in connecting assets with markets, we can help fulfill the growing appetite among international investors for sustainable investments. The time is now to invest in a green and inclusive future for our region.
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