Funds will help more than 1.5 million low-income unbanked people and help reduce CO2 emissions

IDB Invest and Bancolombia have announced the first sustainability-linked bond (SLB) issued by a bank in Latin America and the Caribbean.

The bond was issued by Bancolombia and was denominated in Colombian pesos (COP) for a total of COP 640 billion, earmarked to support social and environmental projects.

IDB Invest led the design, conceptualisation and identification of the key performance indicators (KPIs) and assisted in the definition of the Sustainability Performance Objectives for each KPI (SPTs).

IDB Invest and the Inter-American Development Bank (IDB), as anchor investors, subscribed COP 550 billion of the SLB, of which the IDB subscribed COP 344 billion and IDB Invest COP 206 billion. Latin American Green Bond Fund (LAGreen) subscribed COP 90 billion.

Through this issue, Bancolombia commits to granting financing by 2025 to more than 1.5 million low-income unbanked people, and to reduce CO2 emissions in the financed portfolio by almost 36 per cent compared to 2021 (measured in tonCO2eq/COPmm), as part of its sustainability strategy.

The five-year issue includes ambitious sustainability goals for 2025, the breach of which will have an impact on the bond’s yield. The issue follows ICMA’s Sustainability-linked Bonds Principles (SLBP) and applicable local regulations for these instruments.

“At Bancolombia we are committed to mobilising resources towards activities that incorporate ESG criteria. Working with organisations such as IDB Invest is essential to design innovative solutions that contribute to our purpose, which is to generate well-being for people based on sustainable development. We have important objectives in financial inclusion and decarbonisation of the portfolio, and we want to continue generating a positive impact on social and environmental issues,” said Juan Carlos Mora, president of Bancolombia.

“This deal reinforces our commitment to support the private sector and, on this occasion, the financial sector, in developing innovative solutions that we hope will motivate others to follow the same path. These initiatives have a direct impact on issues as sensitive as financial inclusion and the transition to an economy with less environmental impact and more conscious of the real challenges faced by our region in terms of decarbonisation,” said IDB Invest’s CEO James P. Scriven.

Johannes Scholl, LA Green’s chairman of the board of directors, noted: “This bond demonstrates that Latin American financial institutions can be pioneers at a global level in the development of new solutions to promote impact investments. Our goal is to act as an agent of change in the region. For this reason, LAGreen is proud to have been part of this alliance with Bancolombia and IDB Invest.”

Additionally, IDB Invest partially financed the second opinion issued by Sustainalytics, which guaranteed adherence of the framework, KPIs and SPTs to the SLB Principles.

This new issue demonstrates IDB Invest’s commitment to developing the thematic bond market and promoting the use of innovative instruments such as bonds linked to sustainability to encourage an inclusive economy with sustainable development.

The issue is expected to contribute to the following United Nations Sustainable Development Goals (SDGs): No Poverty (SDG 1), Decent Work and Economic Growth (SDG 8), and Industry, Innovation and Infrastructure (SDG 9).

IDB Invest, a member of the IDB Group, is a multilateral development bank committed to promoting the economic development of its member countries in Latin America and the Caribbean through the private sector. IDB Invest finances sustainable companies and projects to achieve financial results and maximize economic, social, and environmental development in the region. With a portfolio of US$15.3 billion in asset management and 375 clients in 25 countries, IDB Invest provides innovative financial solutions and advisory services that meet the needs of its clients in a variety of industries.

Bancolombia is a financial group with 147 years of history, and with a presence in Colombia and Central America. It offers a portfolio of financial and non-financial products and services to more than 25 million customers. It provides, among others, commercial and consumer banking services, stock brokerage, leasing financial, factoring, fiduciary services, asset management, private banking and investment banking. It has declared to promote sustainable development to achieve the well-being of all, seeking to impact the communities of the countries in which it operates.

LAGreen is the first investment fund dedicated to promoting the green bond market in Latin America and the Caribbean. It was established as an initiative of the German Development Bank (KfW), based on a public-private financing structure with seed capital from the European Union and the German Government. The objective of the fund is to support the issuance of green bonds as a mechanism to mobilize connecting environmental projects in the region with international capital markets. The fund has Finance in Motion as its investment manager and plans to invest $500 million through 2024.