First sustainability-linked bond issued by a bank in the region

IDB Invest and Bancolombia announced the first sustainability-linked bond (SLB), issued by a bank in Latin America and the Caribbean. The funds will help more than 1.5 million low-income unbanked people and reduce CO2 emissions.

The bond, issued by Bancolombia, was denominated in Colombian pesos (COP) for an amount of COP 640,000 million to support social and environmental projects.

IDB Invest led the design, conceptualization and identification of key performance indicators (KPIs), and assisted in the definition of the Sustainability Performance Objectives for each KPI (SPTs).

IDB Invest, and the Inter-American Development Bank (IDB), as anchor investors, subscribe COP 550,000 million of the SLB of which the IDB subscribed an amount of COP 344,000 million and IDB Invest an amount of COP 206,000 million. Latin American Green Bond Fund (LAGreen) subscribed an amount of COP 90,000 million.

Through this issuance, Bancolombia commits by 2025 to provide financing to more than 1.5 million unbanked or underserved low-income people, and reduce CO2 emissions in the financed portfolio by almost 36% compared to 2021 (measured in tonCO2eq/COPmm), as part of its sustainability strategy.

The issue will have a term of 5 years and includes ambitious sustainability goals for 2025, the breach of which will have an impact on the interest rate of the bond. The issue follows the principles of Sustainability-linked Bonds Principles (SLBP) and the applicable local regulations for these instruments.

“At Bancolombia we are committed to mobilizing resources towards activities that incorporate ESG criteria, where working with organizations such as IDB Invest is essential to design innovative solutions that contribute to our great purpose, which is to generate well-being for people based on sustainable development. We have important objectives in financial inclusion and portfolio decarbonization, among other fronts, with which we want to continue materializing our positive impact on social and environmental issues,” says Juan Carlos Mora, president of Bancolombia.

“This transaction reinforces our commitment to supporting the private sector, and this time, the financial sector, in developing innovative solutions that we hope will motivate others to follow suit. These initiatives have a direct impact on sensitive issues such as financial inclusion and the transition to an economy with less environmental impact and more aware of the region’s real decarbonization challenges,” said James P. Scriven, General Manager of IDB Invest.

LAGreen Chairman Johannes Scholl said: “This bond demonstrates that Latin American financial institutions have the ability to be global pioneers in developing new solutions to promote impact investing. Our goal is to act as an agent of change in the region. For this reason, LAGreen is proud to have been part of this alliance with Bancolombia and IDB Invest.”

Additionally, IDB Invest partially financed the second opinion issued by Sustainalytics, which guaranteed the adherence of the framework, KPIs and SPTs to the SLB Principles.

The issuance is expected to contribute to the following United Nations Sustainable Development Goals (SDGs): No Poverty (SDG 1), Decent Work and Economic Growth (SDG 8), and Industry, Innovation and Infrastructure (SDG 9).

Source: ComunicarSe