Lima, Peru, December 1st, 2022. Businesses in Peru will have better access to funding for climate finance, enabling them to improve their environmental footprint, with IFC's loan of up to $25 million to Banco Interamericano de Finanzas (BanBif), aiming to promote a greener financial sector and greater market sustainability in the country. In addition, the financing package includes $15 million from the Eco-business Fund managed by Finance in Motion.
IFC's investment will allow BanBif—the fifth largest commercial bank in Peru—to jump-start and strengthen its green finance portfolio including green building, energy efficiency, and climate-smart agribusiness while also supporting the bank's growth prospects. At least 50 percent of the proceeds will be used to finance the bank's green building portfolio while the remaining amount will be allocated either to energy efficiency or climate-smart agribusiness.
Peru ranks 56th among over 200 countries in terms of total CO2 emissions and aims to reduce greenhouse-gas (GHG) emissions by 20 percent by the end of 2030, compared with 2010 levels. Moving forward, green buildings can play a key role, especially with the buildings sector accounting for 25 percent of the total final energy consumption. A shift to climate-smart agriculture is equally vital with energy efficiency in the industrial sector a priority for Peru's transition to a lower carbon-intensive economy.
To help accelerate the uptake of green housing units, IFC will provide performance-based incentives to incentivize the provision of green mortgages and green construction loans. The incentives will be funded by the Market Accelerator for Green Construction (MAGC) program, which is sponsored by the United Kingdom's Department for Business, Energy and Industrial Strategy. MAGC helps scale green construction across emerging markets by incentivizing financial intermediaries to scale up green building construction finance products.
Juan Carlos García Vizcaíno, General Manager of BanBIF, expressed: "IFC's funding will help the bank to continue providing longer-term loans while developing a green building pipeline. Given our sustainability strategy, IFC's support will enable us to boost our capacity to engage with clients on green building certification and sustainable practices in agriculture and other sectors. Additionally, the loan will help us diversify our funding sources allowing stronger capital buffers, crucial for post-COVID recovery."
IFC will also equip the bank with its Excellence in Design for Greater Efficiencies (EDGE) certification tool for green buildings.
Elizabeth Martínez de Marcano, IFC´s Country Manager for the Andean Region, said: "One of IFC's priorities in Peru is to promote new green growth opportunities and markets for inclusive growth. In alignment with Peru's Green Finance Roadmap (2021), IFC's financing package will foster competitiveness in the financial and real estate markets in the country. Additionally, by supporting the growth of green buildings, an emerging green asset class in the local market, IFC will help strengthen the climate finance market, key for the nation's future resilience."
As of May 2021, IFC committed $9 billion from its own account to climate related projects and leveraged an additional $4.3 billion through 200+ emerging market financial institution partners. These investments support partners in avoiding GHG emissions of 15.9 million tons per year. In addition, IFC's advisory services have facilitated its client financial institutions build climate finance portfolios of $28.7 billion, avoiding annual GHG emissions of 92.9 million tons.
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 2022, IFC committed a record $32.8 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 global compounding crises. For more information, visit www.ifc.org.
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