Colombia, known for its extraordinary biodiversity, is now broadening its climate finance efforts to focus on biodiversity. The country, which straddles the Amazon, Andes, and both the Caribbean and Pacific coasts, is home to a vast array of species and ecosystems. Colombia’s environmental richness ranges from river dolphins and coral reefs to alpine glaciers, making it one of the most biodiverse nations in the world, second only to Brazil in species diversity.
Historically, Colombia has been a leader in climate finance, directing much of its efforts toward reducing greenhouse gas emissions through investments in renewable energy and sustainable transportation. However, the country is now shifting its focus to biodiversity, a more complex and technically demanding area of green finance.
In recent developments, Colombia has set new regulations and frameworks for biodiversity finance. One notable step is the issuance of the world’s first biodiversity bond by BBVA Colombia, followed by another anticipated bond from Banco Davivienda. These bond issuances are intended to raise funds for projects that support environmental sustainability, including sustainable agriculture and forest regeneration, which help preserve biodiversity even if they do not directly reduce carbon emissions.
Both the Colombian government and private financial institutions have received advisory support from the World Bank Group (WBG). Key programs, including the Joint Capital Markets Program (J-CAP) and the International Finance Corporation’s (IFC) Biodiversity Finance Reference Guide, have been integral in shaping this transition. These programs have assisted in creating the regulatory frameworks that support biodiversity finance and guide banks in issuing biodiversity bonds.
The Colombian Financial Superintendency (SFC) has played a crucial role in developing policies for biodiversity finance. By consulting international best practices, the SFC has worked to create a regulatory environment that facilitates the issuance of biodiversity bonds. According to Carlos Senon Benito, a Financial Sector Specialist at the World Bank, these efforts include the development of a “taxonomy” for biodiversity finance—a standardized set of criteria for financial instruments that positively impact nature. This taxonomy ensures that private banks are aligned with Colombia’s environmental goals when issuing biodiversity bonds.
Angela Maria Angulo Daza, Senior Adviser to the SFC’s Sustainable Finance Group, noted that the creation of this taxonomy is grounded in scientific research. Collaborating with the World Bank and IFC, the SFC integrated biodiversity goals into Colombia’s existing green taxonomy, which previously focused on climate change mitigation.
Biodiversity refers to the variety and abundance of plant and animal species, their habitats, and their interactions. However, it has been under threat globally from climate change, urbanization, and the spread of invasive species. In Latin America and the Caribbean, wildlife populations have plummeted by 94% since 1970, raising alarms about the long-term impacts of biodiversity loss on economic growth and human well-being.
Irina Likhachova, global lead for Biodiversity and Nature Finance at the IFC, emphasized the importance of financing activities that restore nature. “It’s not about ceasing to use nature—it’s about allowing nature to regenerate,” she explained, likening the issue to a business model that continues to deplete resources without replenishment.
J-CAP has been advising both regulators and private sector stakeholders in countries around the world, including Colombia, since its inception in 2017. In Colombia, J-CAP’s guidance has focused on developing metrics to measure environmental impacts and financial risks associated with biodiversity projects. This work contributed to the issuance of the world’s first biodiversity bond in July 2024. Issued by BBVA Colombia in partnership with the IFC, the bond raised $70 million for reforestation and wildlife habitat restoration efforts.
Following this success, Banco Davivienda, another major financial institution, is preparing to issue a $50 million biodiversity bond. The funds raised will support initiatives like mangrove restoration on Colombia’s Pacific coast and loans to small and medium-sized farm exporters seeking environmental certifications from groups such as the Rainforest Alliance. Alejandra Diaz Agudelo, Director of Sustainability at Banco Davivienda, explained that these efforts are as much about ensuring the bank’s long-term sustainability as they are about supporting biodiversity.
This second bond issuance is set to be finalized by the end of March, with the IFC serving as the sole buyer. However, its primary purpose is to serve as a “demonstration transaction” that will encourage local-currency bond markets to follow suit and support future biodiversity financing.
Felipe Sanint, Senior Investment Officer at the IFC, highlighted that biodiversity finance is still in its early stages, but the traction it has gained thus far signals growing interest from the financial sector. In fiscal 2024 alone, the IFC allocated $19.4 billion toward climate finance, further demonstrating the potential of green investments.
J-CAP’s work in Colombia is supported by the Swiss government through the World Bank’s Sustainable Finance Facility, with additional backing from Germany, Luxembourg, Japan, and Australia. The growing focus on biodiversity finance in Colombia represents a critical shift toward integrating nature conservation into financial strategies, with the potential to inspire similar efforts across the globe.
Related topics:
- India Surpasses China in Gold Purchases, Buying 51% More in Three Months
- Qilu Bank Enhances Support for Small Businesses with Innovative Financial Tools
- Bitcoin Poised for a Surge Amid Gold’s Delivery Delays, Expert Claims
