Channeling financial resources for sustainability

Channeling financial resources for sustainability

In recent years, the Sustainable Finance team at FGVces has conducted various studies to analyse the opportunities and challenges to the increase of public, private and international financial flows to a green and low-carbon economy.

Attracting private financial resources

Between 2014 and 2017, FGVces carried out 11 studies in partnership with the Brazilian Federation of Banks (FEBRABAN), analyzing ways to leverage Brazil's transition to a green economy through resources intermediated by the National Financial System.

Between 2017 and 2018, FGVces was a strategic partner of WWF, supporting the implementation of Collaboration for Forests and Agriculture (CFA) in Brazil, an initiative that seeks to eradicate deforestation in the soy and beef supply chains in the Amazon and Cerrado regions in Brazil. Among other activities, FGVces produced the White Paper “Responsible Investment and the Fight against Deforestation in Livestock, Soy, Pulp and Paper Chains in Brazil”, analyzing risks associated with deforestation to which companies operating in Brazil and producing or acquiring soy, beef, pulp and paper are exposed, as well as the potential risks to which institutional investors who invest in companies in these chains are exposed.

In 2019, FGVces participated in the research project "Flow of Capital for Climate Action'' (FlowCCA) in partnership with the Grantham Institute, the Centre for Climate Finance and Investment (Imperial College London) and FGV Agro, in order to identify barriers to the increase of private financial flows for investments in low-carbon sectors in Brazil. The project generated an executive report and an academic article, published in the Journal of Sustainable Finance & Investment.

In 2020, FGVces conducted a study in partnership with FiBraS project (GIZ) to analyse the potential implications of the covid-19 crisis to the environmental, social and governance (ESG) analysis of banks and investors.

FGVces is now working on a research project in partnership with Adam Smith Institute and FGV Energia to identify sources of financing for distributed photovoltaic solar energy projects in low-income communities.

In partnership with WWF, the Sustainable Finance team has also started a research project to examine which types of infrastructure are needed to develop a bioeconomy in the Amazon region as well as analyse the challenges that must be tackled in order to finance this infrastructure. 

Mensuration of public and international financial resources

FGVces also participates in research projects that seek to measure the volume of public resources allocated in low-carbon sectors in Brazil, such as the Low-Carbon Agriculture Plan Observatory. In partnership with FGV Agro, FGVces produces annual publications monitoring the Low-Carbon Agriculture Program, the main credit line for financing low-carbon agriculture in Brazil.

Another project focused on public resources was developed in partnership with Instituto de Energia e Meio Ambiente (IEMA) and supported by the Oak Foundation and Instituto Clima e Sociedade (iCS), measuring the volume of public financial resources earmarked for urban mobility.

Publications and Reports

Potential implications of the covid-19 crisis for ESG analysis

The report analyses the possible implications of the covid-19 crisis for the environmental, social and governance (ESG) analysis of banks and investors.

(report in Portuguese only)

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Public Expenditures on Urban Mobility in Brazil

This study aimed to analyze the volume of public financial resources for urban mobility.

(report in Portuguese only)

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Monitoring of the Low-Carbon Agriculture Program - Crops of 2017/18 and 2018/19

This report presents data for the 2017-2018 and 2018-2019 crop years of the Low-Carbon Agriculture Program, the main credit line for financing low-carbon agriculture in Brazil.

(report in Portuguese only)

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Barriers to the increase of financial flows for investments in low-carbon sectors in Brazil

The study sought to identify the barriers to the increase of private financial flows for investments in low-carbon sectors in Brazil. The research results seek to contribute to public policy discussions, as well as provide inputs for a model being developed at the Imperial College on the level of investments required in low-carbon sectors and technologies in developing countries to attain a 2ºC scenario.

(report in Portuguese only)

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Structural and specific barriers to the development of a green bond market in Brazil

The article investigates the factors that hinder the development of a green bond market in Brazil.

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Responsible Investment and the Fight against Deforestation in Livestock, Soy, Pulp and Paper Chains in Brazil

The study analyzed the risks associated with deforestation to which companies operating in Brazil that produce or purchase soy, beef, pulp and paper are exposed, as well as the potential risks to which institutional investors who invest in companies in these chains are exposed. 

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Financing for Photovoltaic Distributed Generation

This study analyzes the financial feasibility of the adoption of photovoltaic systems in Brazil, in order to examine the scalability of bank financing for these projects.

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Carbon Management and Pricing: Risks and Opportunities for Financial Institutions

This report addresses climate risk management by banks and companies, examining the possible impact on financial institutions of the adoption of carbon pricing systems in Brazil.

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Financing Forest Restoration with Economic Exploration of the Legal Reserve

This study seeks to evaluate the financial feasibility of bank financing models for the restoration of Legal Reserve areas where there is the possibility of economic exploration.

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Financial Institutions and Deforestation Risk Managemen

This study aimed to analyze the implications and risks for financial institutions of deforestation on the livestock, soybean, wood products and palm oil supply chains.

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Natural capital risks and opportunities for the financial sector

This report aims to analyze the risks and opportunities of financial operations in sectors with intensive use of natural capital.

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Financing Forest Recover

This report seeks to analyze the financial feasibility of selected models for the financing of forest restoration activities with no economic use in Brazil. 

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Sustainable buildings and energy efficiency

This report presents proposals for the National Financial System to increase the volume of resources for the financing of energy efficiency projects.

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The Brazilian Financial System and the Green Economy: measuring financial resources allocation to the green economy

This report updates the methodology presented in the 2014 report to measure financial resources for the green economy. The scope of the analysis was expanded, including the amounts allocated to sectors that have a potential to cause an environmental impact, according to the National Environment Council (CONAMA).

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Green Bond

The study aims to contribute to discussions on the opportunities and limits for the development of a Green Bond market in Brazil, following the example of international experience.

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Environmental Reserve Units (CRA)

The study aims to contribute to discussions on the opportunities and limits for the Environmental Reserve Units (CRA) to be construed as publicly offered securities, attracting the interest of investors who are not directly and operationally interested in offsetting Legal Reserve deficits.

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The Brazilian Financial System and the Green Economy: Alignment with Sustainable Development

This is the first publication launched by FGVces and FEBRABAN in the context of the UNEP “Inquiry: Design of a Sustainable Financial System” initiative. It brings together three complementary studies: the volume of resources allocated by the Brazilian financial sector in green economy sectors on 12/31/2013; the country's institutional and regulatory framework for the National Financial Sector in relation to the topic; and the relationship between finance and sustainability in two sectors (agribusiness and renewable energy) and two economic topics (biodiversity and cities).

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Partners

  • Adam Smith Institute
  • Centro de Estudos em Agronegócio (FGV Agro)
  • FEBRABAN - Federação Brasileira de Bancos
  • FGV Energia
  • Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ)
  • Imperial College London - Grantham Institute e Centre for Climate Finance and Investment
  • Instituto de Energia e Meio Ambiente (IEMA)
  • Instituto Clima e Sociedade (iCS)
  • Oak Foundation
  • WWF

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