Sao Paulo, Brazil, April 13th, 2022—IFC, a member of the World Bank Group, is providing a financing package of $200 million to Itaú Unibanco S.A. to support lending for the acquisition of climate-smart vehicles. The project aims to widen access to finance for the purchase of these vehicles in Brazil and help strengthen the climate finance market, mitigating climate impact and supporting economic recovery in the country.
The investment entails both IFC's and Itaú's first green bond in the country. It consists of the subscription of green debt securities to be issued by Itaú in the form of Letras Financeiras (LFs), an exclusive debt security for local financial institutions.
By supporting access to finance for climate-smart vehicles, the LFs will contribute to Brazil's commitment to the Paris Agreement to reduce greenhouse gas (GHG) emissions. IFC's support will promote clean transportation financing to influence the Brazilian banking sector to grow their credit portfolio in the climate-smart vehicle segment, contributing to Brazil's long-term vision of a low-carbon future and the diversification of its transportation fleet.
"The financing structure for this funding is innovative, and it also reinforces the ESG agenda of supporting clients' climate transition," says Daniel Goretti, Director of Treasury at Itaú Unibanco.
"One of IFC's strategic priority in Brazil is to support investments in climate-smart and modern technologies to mitigate climate impact. This project with Itaú will contribute to this effort by supporting local capital markets as a key source for catalyzing finance to climate-smart vehicles, while also better supporting Brazil's economic recovery and building a more resilient and sustainable economy," says Carlos Leiria Pinto, IFC's Country Manager in Brazil.
The project is well aligned with the World Bank Group Climate Commitment, which requires that 85 percent of all IFC's new operations to be aligned with the Paris agreement by 1 July 2023, and 100 percent by same date in 2025.
Itaú and IFC have a long-standing relationship and the institutions have worked together in several projects over the years, including investments and advisory services focused on different products and segments, such as capital markets, gender finance, microfinance, and climate finance. In 2015, IFC provided $400 million to Itaú to finance renewable energy, water treatment, and energy efficiency projects in Brazil.
IFC has invested in Brazil's private sector since 1957 to address the country's most critical development challenges, including urbanization, social inclusion, competitiveness and productivity, and management of natural resources.
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 $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.