A new credit facility will help increase access to climate finance in Brazil, especially for climate-smart agriculture related projects. IFC is providing a US$100 million loan to Banco ABC Brasil S.A. to promote market opportunities in sustainable finance while supporting the nation's climate goals.
IFC's financing package will allow the midsize specialist bank in Brazil to focus on two segments: climate-smart agriculture projects provided the sugarcane, coffee, and orange crops have eligible certification; and electricity generation and transmission projects associated with sugarcane biomass projects. As part of fostering the greening of the banking sector in Brazil, IFC will also help ABC Brasil develop its internal climate taxonomy.
Climate change is a major threat to development in Brazil with the potential to affect millions of people by impacting agricultural livelihoods, increasing the incidence of natural disasters, and reducing energy, food, and water supplies. Moreover, the deteriorating drought conditions in the country is affecting hydroelectric generation it provides 65 percent of the country's energy , resulting in higher electricity prices and inflation.
While the country is also one of the world's largest potential markets for green growth, only a few banks actively offer green climate finance products in the country. The lack of economic incentives for borrowers and limited technical capacity in agriculture green lending among financial institutions are major bottlenecks to further increasing sustainability in the sector.
"Against this backdrop, IFC's longer-term funding will enable the bank to strengthen its operational capacity and expand its climate portfolio in climate-smart agriculture lending, as well as by contributing to certified biofuel production", says Eduardo Pinus, ABC Brasil Superintendent.
"IFC's strategic priorities in Brazil include helping the country reconcile economic growth with challenges of environmental sustainability. This project will help strengthen climate resilience in key sectors of the Brazilian economy, such as agriculture and energy," says Carlos Leiria Pinto, IFC's Country Manager in Brazil.
"The goal to establish a market environment conducive to sustainable finance will contribute to a more stable financial system, reducing poverty and inequality by creating jobs and alleviating the impacts of climate change on livelihoods," says Stephanie Rubach, IFC's Senior Investment Officer.
As part of the project, IFC will also help ABC Brasil build a more strategic approach to identify climate-related projects while continue improving its environmental, social and governance management system, in line with its sustainability strategy.
About Banco ABC Brasil
Banco ABC Brasil (ABCB4), listed on Level 2 of Corporate Governance of the São Paulo Stock Exchange (B3), is a multiple-service bank, specialized in granting credit and services to large and medium-sized companies, and one of the only ones in the country to have the support of an international controller and local autonomy. It is managed by a team of executives who are also shareholders of the bank and have extensive experience in the financial market.
The Bank has been present in Brazil since 1989, when it began to build a solid base of corporate clients, offering financial products with high added value. ABC Brasil is recognized for its deep expertise in credit analysis and granting and for offering clients a broad portfolio. For more information, visit www.abcbrasil.com.br
About IFC
IFC a member of the World Bank Group is the largest global development institution focused on the private sector in emerging markets. We work in more than 100 countries, using our capital, expertise, and influence to create markets and opportunities in developing countries. In fiscal year 2021, IFC committed a record US$31.5 billion to private companies and financial institutions in developing countries, leveraging the power of the private sector to end extreme poverty and boost shared prosperity as economies grapple with the impacts of the COVID-19 pandemic. For more information, visit www.ifc.org.
