Impact Report 2023

It’s more than a mindset.
It’s about taking action.

Read more
journey of firsts leaves
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Latin America continues to grow rapidly, but this is putting severe pressure on the region’s natural resources. We need to transition to more sustainable economic models.

Forging new paths

Pioneers enact change.
They prove what is possible and inspire others to join.

Our impact ambitions

Our goal

To help develop the Latin American thematic bond market by promoting best practices and fostering capacities for issuers. At the same time, we aim to drive the impact agenda through mobilizing funding from capital markets.

Key target impact areas

Supporting environmental benefits

Supporting environmental benefits

  • Climate action
  • Natural resource conservation (inc water)
  • Pollution prevention and control
Fostering sustainable economic development

Fostering sustainable economic development

  • Employment generation
  • Promoting sustainable business practices
  • Strengthening circular economies

Green bonds can introduce financial sophistication to impact investment. Mobilizing more private investors and capital markets for this is key. It is the only way for impact investments to make a significant contribution.

– Diego Stapff, LAGreen Fund Director

To read more about LAGreen and its objectives

Click here

How we achieve impact

LAGreen promotes innovation and helps new issuers access the market by focusing investments on new bonds and supporting issuers with advice and capacity building.

We screen investments against best international practices

We screen investments against best international practices

We evaluate the issuer’s sustainability commitments

We evaluate the issuer’s sustainability commitments

We assess the expected impact of underlying projects

We assess the expected impact of underlying projects

We support innovative firsts - especially those that create opportunities to reach new sectors and enhance the effect of our investments

We support innovative firsts - especially those that create opportunities to reach new sectors and enhance the effect of our investments

// argentina > TODO: add "shape" class to make it clickable

Investing across Latin America

Bolivia
0
of advisory and capacity building project distribution
Brazil
0
of investment portfolio
0
of advisory and capacity building project distribution
Looking to expand primary investment into
Colombia
0
of investment portfolio
0
of advisory and capacity building project distribution
Costa Rica
0
of investment portfolio
0
of advisory and capacity building project distribution
Dominican Republic
0
of advisory and capacity building project distribution
Ecuador
0
of investment portfolio
0
of advisory and capacity building project distribution
El Salvador
0
of advisory and capacity building project distribution
Guatemala
0
of advisory and capacity building project distribution
Honduras
0
of advisory and capacity building project distribution
Mexico
0
of investment portfolio
0
of advisory and capacity building project distribution
Nicaragua
0
of advisory and capacity building project distribution
Panama
0
of investment portfolio
0
of advisory and capacity building project distribution
Paraguay
0
of advisory and capacity building project distribution
Peru
0
of investment portfolio
0
of advisory and capacity building project distribution
Looking to expand primary investment into
Data as at 31 Dec 2023
Data as at 31 Dec 2023
impact by numbers top image background

Our impact so far

Portfolio and financial indicators1

Portfolio and financial indicators<sup>1</sup>
0
Co-investments2

Impact indicators3,4

0
Tons of CO2e emissions avoided per year
0
M3 water treated/saved
0
MWh energy generated per year
0
Tons of waste reduced, reused or recycled5
0
M2 sustainable construction financed5

Breakdown

Use of proceeds (“UoP”)3

Funding per share class1

Green Use of Proceeds distribution by categories (82.5%)3

  1. Data from outstanding portfolio as at 31 Dec 2023.
  2. Total funding mobilized in bonds in which LAGreen invested, provided advice and/or built capacity.
  3. Data from reported portfolio as at 31 Dec 2023.
  4. Given the thematic focus of each bond, impact metrics are aggregated from bonds which have allocations to the sectors – commonly one to three bonds — rather than the entire cohort of bonds that have reported.
  5. Cumulative figures since the fund’s inception.

All currency data is in USD

Read more

As a bond investor, the fund relies primarily on reporting made public by the issuers for attaining impact data. Impact KPIs are assessed and aggregated across the fund’s portfolio and displayed cumulatively since inception. Our in-house team of impact experts critically reviews the information made available by the issuers, before the data is applied to calculate the impact KPIs.

To consistently support the quality of impact reporting by issuers, and ensure solid data for the fund’s own assessments and reporting, LAGreen continuously offers programs to enhance issuers capacity to prepare impact reports and to develop methodologies in line with industry standards and scientific evidence to estimate impact.

Bond snapshots

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In depth: Unleashing the green bond potential

We are delivering on our mission, investing in green bonds with a climate focus. All the bonds in which we invested are highly impactful with very solid credentials.

– Diego Stapff, LAGreen Fund Director at Finance in Motion

Impact Report animation cover Play button
The future of Latin America impacts us all

Latin America’s economic expansion is putting its natural capital under pressure. Even the region’s vast rainforests, crucial carbon sinks, are becoming net emitters due to deforestation. And the consequences may be catastrophic.

Finding a solution

Solving these complex issues requires a holistic approach, which includes adopting sustainable growth models. To do this, we must channel massive volumes of funding into impactful solutions. With the right level of financial sophistication, Latin American economies can:

  • invest in sustainable economic practices
  • scale the sustainable finance market, particularly green bonds

Investing in resilient capital markets in Latin America has global significance. Because success here means we are progressing in our battle against the climate crisis

Impact is about taking action

We are driven by the real impact we make on our environment and people’s lives.

It takes time and dedication to develop the necessary capacities, market knowledge, networks and track record to make this impact.

$137mio
Cumulative volume invested in partner institutions
You can only be effective if you deploy

Deploying capital is the biggest challenge for those wanting to drive change. The obstacles are significant and often idiosyncratic to the region.

Our local knowledge, local presence and desire to stay the course, have allowed us to deploy capital – in many cases, developing first issuances of their kind.

100%
of bonds aligned with ICMA thematic bond principles
We understand the needs of all market players

Public investors – Finance in Motion has invested over €7billion of primarily public capital in high-growth geographies since 2009.

Private investors – we give international private investors unique access to local investments in familiar, robust vehicles, with first-loss protection.

The region – investing where it counts the most requires local knowledge to understand the real needs of the region; its economy, its people, its environmental challenges, and the opportunities to contribute to the global fight against climate change.

The issuers – years of frank, open discussions with issuers help us get to the root of the barriers to issuance.

Capital markets – connecting local and international capital markets through impact investments is a great opportunity to mobilize larger volumes of private sector money towards green projects.

Success stories demonstrating our impact

Our local team knows the market through Finance in Motion’s presence in the region. They have the networks, they know the financial sector, the issuers, and the companies looking for this kind of financing.

– Myriel Frische, Fund Management at Finance in Motion

Bancolombia

In October 2022, we partnered with IDB Group in a landmark COP 640bn Sustainability-Linked Bond (“SLB”) issued by Bancolombia with dedicated green use of proceeds. Bancolombia has been named ‘world’s most sustainable bank’ twice by Dow Jones and is a founding member of the Net Zero Banking Alliance. As a global sustainability leader, it set ambitious sustainability targets for the bond:

  • to reduce the carbon intensity of its portfolio by 25%
  • to provide financing to over 1.5 million low-income people with limited access to finance within five years

Our advisory and capacity building function is proud to have worked closely with the bank on its circular economy strategy.

LAGreen's support through the issuance of the Sustainable Subordinated Bond has been of great value for Banco de Bogotá to continue promoting sustainable financing in the country...

– Diana Barón, Sustainable Finance Director at Banco de Bogotá

Banco de Bogotá

In March 2023, LAGreen invested in the $230mio issuance of a sustainable bond by Banco de Bogotá. The first Basel III subordinated thematic bond in Colombia, we are proud to have invested alongside eco.business Fund, IDB, IDB Invest, IFC and FinDev Canada, to promote access to capital for issuers with strong sustainability agendas.

Our advisory and capacity building function supported the bank with the preparation of the bond’s impact reporting.

Use of proceeds examples for this bond that align with our impact objectives:

img
Public lighting modernization with the Municipality of Gigante

Installation and supply of 789 x 40W LED light bulbs in the public lighting network.

This measure saved 153.42 MWh/year, a 16.8% reduction in energy consumption.

img
Improving and optimizing a recycling plant in Tocancipá-Cundinamarca

Replacing components, improving and adapting water systems for the recovery and use of certain post-consumer plastics.

This project will contribute to the region’s waste management by improving circular practices and avoiding 2,682 tons CO2eq/year with the project’s completion.

At LAGreen we go beyond just investing in green bonds in Latin America. What makes us unique is our capability to combine our financing with tailored capacity building to promote high-quality issuance standards and transparent reporting among our investees...

 – Kurt Vogt, LAGreen Board Member

We have set the groundwork for future success

It is no small feat to be up and running with processes, methodologies and a track record of investing in such an innovative segment. Let alone participating in groundbreaking issuances.

The market is growing

The Latin American thematic bond market, while young, is robust, innovative, and based on strong impact standards. It is growing steadily despite challenging global market conditions and has substantial headroom as global commitments to decarbonization and sustainability increase.

With a diverse range of projects and sectors to support, we expect the region to continue to lead in thematic bond innovation.

And maintaining high impact standards will be key to attracting more international investors looking to complement portfolios and align with international regulatory requirements.

The market is steadily growing and welcomes innovation. Main stakeholders are aligned. There's more willingness and there's more awareness, and a commitment to do things right. And we will continue to promote international high impact standards.

– Matias Gallardo, Sustainability Division at Finance in Motion

And we plan to grow alongside it by:
  • Developing more methodologies to improve our impact monitoring of investments.
  • Welcoming more private investors into the fund after successfully deploying initial capital from public sectors and Development Financial Institutions.
  • Expanding our investments in the region and continuing to play an important role in developing the local and international capital markets.
  • Diversifying our issuers with an increased number of corporates and first-time issuers while maintaining our flexibility and credibility.
  • Continuing to promote high impact standards and transparency through advisory and capacity building function.

Stay tuned for more information on our upcoming participation in the first issuance of a thematic bond in Guatemala.

We are delivering on our mission, investing in green bonds with a climate focus. All the bonds in which we invested are highly impactful with very solid credentials.

– Diego Stapff, LAGreen Fund Director at Finance in Motion

$137mio
Cumulative volume invested in partner institutions
100%
of bonds aligned with ICMA thematic bond principles

Our local team knows the market through Finance in Motion’s presence in the region. They have the networks, they know the financial sector, the issuers, and the companies looking for this kind of financing.

– Myriel Frische, Fund Management at Finance in Motion

LAGreen's support through the issuance of the Sustainable Subordinated Bond has been of great value for Banco de Bogotá to continue promoting sustainable financing in the country...

– Diana Barón, Sustainable Finance Director at Banco de Bogotá

At LAGreen we go beyond just investing in green bonds in Latin America. What makes us unique is our capability to combine our financing with tailored capacity building to promote high-quality issuance standards and transparent reporting among our investees...

 – Kurt Vogt, LAGreen Board Member

The market is steadily growing and welcomes innovation. Main stakeholders are aligned. There's more willingness and there's more awareness, and a commitment to do things right. And we will continue to promote international high impact standards.

– Matias Gallardo, Sustainability Division at Finance in Motion

In depth: Unleashing the green bond potential

The future of Latin America impacts us all

Latin America’s economic expansion is putting its natural capital under pressure. Even the region’s vast rainforests, crucial carbon sinks, are becoming net emitters due to deforestation. And the consequences may be catastrophic.

Finding a solution

Solving these complex issues requires a holistic approach, which includes adopting sustainable growth models. To do this, we must channel massive volumes of funding into impactful solutions. With the right level of financial sophistication, Latin American economies can:

  • invest in sustainable economic practices
  • scale the sustainable finance market, particularly green bonds

Investing in resilient capital markets in Latin America has global significance. Because success here means we are progressing in our battle against the climate crisis

Impact is about taking action

We are driven by the real impact we make on our environment and people’s lives.

It takes time and dedication to develop the necessary capacities, market knowledge, networks and track record to make this impact.

You can only be effective if you deploy

Deploying capital is the biggest challenge for those wanting to drive change. The obstacles are significant and often idiosyncratic to the region.

Our local knowledge, local presence and desire to stay the course, have allowed us to deploy capital – in many cases, developing first issuances of their kind.

We understand the needs of all market players

Public investors – Finance in Motion has invested over €7billion of primarily public capital in high-growth geographies since 2009.

Private investors – we give international private investors unique access to local investments in familiar, robust vehicles, with first-loss protection.

The region – investing where it counts the most requires local knowledge to understand the real needs of the region; its economy, its people, its environmental challenges, and the opportunities to contribute to the global fight against climate change.

The issuers – years of frank, open discussions with issuers help us get to the root of the barriers to issuance.

Capital markets – connecting local and international capital markets through impact investments is a great opportunity to mobilize larger volumes of private sector money towards green projects.

Success stories demonstrating our impact
Bancolombia

In October 2022, we partnered with IDB Group in a landmark COP 640bn Sustainability-Linked Bond (“SLB”) issued by Bancolombia with dedicated green use of proceeds. Bancolombia has been named ‘world’s most sustainable bank’ twice by Dow Jones and is a founding member of the Net Zero Banking Alliance. As a global sustainability leader, it set ambitious sustainability targets for the bond:

  • to reduce the carbon intensity of its portfolio by 25%
  • to provide financing to over 1.5 million low-income people with limited access to finance within five years

Our advisory and capacity building function is proud to have worked closely with the bank on its circular economy strategy.

Banco de Bogotá

In March 2023, LAGreen invested in the $230mio issuance of a sustainable bond by Banco de Bogotá. The first Basel III subordinated thematic bond in Colombia, we are proud to have invested alongside eco.business Fund, IDB, IDB Invest, IFC and FinDev Canada, to promote access to capital for issuers with strong sustainability agendas.

Our advisory and capacity building function supported the bank with the preparation of the bond’s impact reporting.

Use of proceeds examples for this bond that align with our impact objectives:

img
Public lighting modernization with the Municipality of Gigante

Installation and supply of 789 x 40W LED light bulbs in the public lighting network.

This measure saved 153.42 MWh/year, a 16.8% reduction in energy consumption.

img
Improving and optimizing a recycling plant in Tocancipá-Cundinamarca

Replacing components, improving and adapting water systems for the recovery and use of certain post-consumer plastics.

This project will contribute to the region’s waste management by improving circular practices and avoiding 2,682 tons CO2eq/year with the project’s completion.

We have set the groundwork for future success

It is no small feat to be up and running with processes, methodologies and a track record of investing in such an innovative segment. Let alone participating in groundbreaking issuances.

The market is growing

The Latin American thematic bond market, while young, is robust, innovative, and based on strong impact standards. It is growing steadily despite challenging global market conditions and has substantial headroom as global commitments to decarbonization and sustainability increase.

With a diverse range of projects and sectors to support, we expect the region to continue to lead in thematic bond innovation.

And maintaining high impact standards will be key to attracting more international investors looking to complement portfolios and align with international regulatory requirements.

And we plan to grow alongside it by:
  • Developing more methodologies to improve our impact monitoring of investments.
  • Welcoming more private investors into the fund after successfully deploying initial capital from public sectors and Development Financial Institutions.
  • Expanding our investments in the region and continuing to play an important role in developing the local and international capital markets.
  • Diversifying our issuers with an increased number of corporates and first-time issuers while maintaining our flexibility and credibility.
  • Continuing to promote high impact standards and transparency through advisory and capacity building function.

Stay tuned for more information on our upcoming participation in the first issuance of a thematic bond in Guatemala.

Partnering for impact

How we manage impact

Contributing to a range of SDGs

Through investing in green bonds in Latin America, we channel financing towards sustainable local projects in support of environmental and societal benefits.

These bonds can support a variety of sustainable projects, contributing to a wide range of Sustainable Development Goals (“SDGs”).

For the LAGreen SDGs we have mapped our impact KPIs against specific SDG sub-targets under the ICMA High-Level Mapping to the Sustainable Development Goals.2

2 https://www.icmagroup.org/assets/documents/Sustainable-finance/2023-updates/Green-Social-and-Sustainability-Bonds-A-High-Level-Mapping-to-the-Sustainable-Development-Goals-June-2023-220623.pdf

Aligning with international standards

We build on the following international standards, among others:

  • ICMA Principles
  • Climate Bond Initiative Guidelines
  • Operating Principles for Impact Management
  • IFC Performance Standards
  • Fundamental conventions of the International Labour Organization
  • International Bill of Human Rights
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In 2023, Finance in Motion, LAGreen’s Advisor, underwent an independent verification by BlueMark. Its impact management system ranked ‘advanced’ (the highest rating possible) against the Impact Principles and current industry best practices.

Finance in Motion received the highest score in all eight dimensions of the Principles and was designated as a “Practice Leader” by BlueMark for the third year in a row.

Read Finance in Motion’s Disclosure Statement on alignment with the Operating Principles for Impact management here.

Aligning with Sustainable Finance Regulation

Considering our sustainable investment objective, we are classified as an Article 9 fund according to the Sustainable Finance Disclosure Regulation3.

3 Regulation (EU) 2019/2088 on sustainability-related disclosures in the financial services sector.

Positive impact management

Measuring positive impact helps us progress towards our impact objective and informs our strategy. We monitor our impact based on key indicators, in line with our Theory of Change, which reflects:

  • environmental impact through the financing of sustainable projects
  • support for scaling the thematic bond market in Latin America

Read more about our Theory of Change here.

We integrate systematic impact measurements and management throughout our investment lifecycle. The fund relies primarily on bond impact reports published by issuers for attaining data. Impact KPIs are assessed and aggregated across the portfolio. We have developed tailored tools that allow us to:

  1. Assess the potential impact of each investment at the due diligence stage
  2. Oversee the potential impact during the holding period
  3. Evaluate the final impact at maturity
  4. Monitor and manage portfolio-level impact

The Green Bond Tool

Finance in Motion developed its Green Bond Tool to improve impact assessment and management. It builds on LAGreen’s impact pathways and is aligned with industry best practices, including:

The tool analyzes key aspects of each investment alongside the fund’s contribution, building a holistic impact view that incorporates:

  • The issuer’s sustainability strategy
  • The issuance’s ability to deliver environmental impact
  • The issuer’s committed reporting practices
  • The fund’s engagement with the issuer and the market
Managing environmental and social risks

We prioritize managing – i.e., avoiding, minimizing, and mitigating –  potential environmental and social (E&S) risks and negative impacts associated with our investments. This means we maintain and continuously improve our environmental and social management system.

Throughout our investment process, we consider E&S risks. Screening and thorough due diligence help identify E&S risks and assess the capacity and commitment of issuers to address and mitigate these. Once we have deployed capital, we monitor the E&S performance of our investments annually and engage with issuers wherever possible.

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Shareholders

European Union KFW Federal Ministry for Economic Cooperation and Development