The World Bank´s board of directors approved late on Thursday a $500 million project in Brazil to expand sustainability-linked finance and strengthen the private sector’s capacity to access carbon credit markets and help the country curb deforestation.
The initiative, in collaboration with Brazilian state-controlled lender Banco do Brasil, adopts an approach to lending linked to sustainability to help Brazil meet its climate goals and deliver “robust” mitigation benefits, a bank statement said.
Sustainability-linked financing (SLF) allows for lower financing costs when certain environmental, social and governance (ESG) requirements are met by a company but does not require the funds to be used for climate-friendly purposes.
At the start of December, the World Bank and its partners launched a global tracking system to clean up the opaque market for carbon credits and help developing countries raise much-needed climate finance quickly and more cheaply.
Carbon credits – generated through activities such as planting forests or pulling climate-damaging carbon dioxide from the air – are sold to polluters to offset their emissions as a way of helping them reach net-zero emissions to limit global warming.