Water and waste sectors scarcely benefit from green bond financing

Green bond financing still largely ignores Latin America’s water and waste sectors, even though they are crucial to building resilience against climate change, according to an upcoming Climate Bonds Initiative (CBI) report. 

The bi-annual document will be published next month and includes investment amounts per country, CBI technical lead specialist Iraís Vázquez (pictured) told BNamericas on the sidelines of the PPP Américas 2023 event hosted by the Inter-American Development Bank (IDB) in Panama City. 

“What we have seen in the last three annual sustainable finance reports is that 52% of these bonds, labeled green, go to renewable energies, 23% to transport, 10% to land use and 6% to green buildings,” she said during a panel.

Vázquez also talked about the difference between resilient infrastructure and adaptation infrastructure. While the first has been seen as a priority to counter the negative effects of climate change, the second is often forgotten because it carries the stigma of “we have already given up.”

Wastewater treatment and waste management often fall into the adaptation category, she told BNamericas. 

The regional water sector alone has a US$400bn investment deficit and low private participation, Gastón Astesiano, head of the IDB’s public-private partnership department, told BNamericas earlier this month. 

Confusion about financing highways through green bonds also runs high. 

CBI “cannot certify a green bond that contains road projects because, in our view, the use of roads encourages the use of more cars. However, in cities that are not connected and that are vulnerable to a hurricane, if they do not have access and evacuation routes, their vulnerability increases,” Vázquez said. 

According to CBI’s 2021 report, the issuance of green bonds in Latin America increased from US$13.6bn in September 2019 to US$30.2bn in June 2021.