INNOVATIVE FINANCING

The global reorientation of capital towards social investments is a growing and multifaceted reality. Initiatives like Europe's Global Gateway are at the forefront of this trend, with an ambitious goal to finance sustainable infrastructure, digital transformation, and renewable energy. With a fund of €300 billion allocated to global projects and a target set for 2027, this program is managed by key European institutions such as Germany's KfW, AFD, and the EIB.

In Latin America and the Caribbean, CAF plays a crucial role through non-reimbursable funds dedicated to climate change mitigation and adaptation. These resources are designed to support projects that reduce environmental impact and strengthen resilience to the effects of climate change.

The private sector complements these efforts with a significant increase in the issuance of green and social bonds, especially in the U.S. and Europe. This trend is also gaining strength in Latin America and the Caribbean, contributing to the reduction of greenhouse gas emissions.

PIVOCS

CAF offers innovative financial products such as Integrated Loans Linked to Climate and/or Social Objectives (PIVOCS), which provide preferential conditions and reduced rates for projects with specific environmental goals. Additionally, CAF, through its network of international partners, facilitates access to lower financing rates for initiatives with a significant positive impact.

PIVOCS was an initiative launched in 2023 to strengthen CAF’s mission of becoming the Green Bank of Latin America and the Caribbean. These loans are designed to promote sustainable development and combat climate change, aligning financing with the climate and social commitments of member countries.

PIVOCS offer financial incentives, such as reducing the interest margin by up to 30 basis points for up to 8 years, if countries meet or exceed established sustainability goals, without increasing rates for non-compliance.

Mexico was the first country to benefit, receiving a USD 300 million loan to support its sustainable finance strategy, focused on climate commitments and reducing female poverty.

Additionally, PIVOCS are part of CAF's Compensatory Financing Framework (FFC), which adjusts the interest margins on sovereign loans to encourage the adoption of sustainable practices. The benefits linked to PIVOCS will be active from 2030 to 2038, marking a strong commitment to sustainable development and mitigating the impacts of climate change.

CAF’s non-reimbursable funds are also directed toward project preparation, pre-feasibility studies, and master plans, with a record-breaking USD 7 billion in the last year to support sustainable projects. Furthermore, CAF receives support from international partners, such as Japan, to manage natural disasters, reinforcing its commitment to climate change and sustainability.

In conclusion, financing opportunities to tackle climate change challenges and promote sustainable projects are expanding, with CAF and its international partners leading the way in providing critical resources.