The acronym ESG (Portuguese: Environment, Social and Governance) has become an easy symbol in the discourse of government officials and private sector managers, as well as in the news. However, in practice, ESG must be seen as much more than just a set of good actions and conscious practices, as a matter of the survival of humanity as a species, and our planet as yet our only home and business, as it is for consumers and investors. Increasingly interested in the topic.
But for this to be possible, the ESG must be sponsored and funded. No time to waste, and Minas Gerais Development Bank BDMG has developed internal and external policies to enhance environmental, social and corporate governance. On the other hand, there are specific funding lines for creating responsible projects and transforming existing projects into more mindful ones. On the other hand, the bank’s internal procedures are in place so that it can mitigate its impact on nature and join the world’s efforts for a carbon-neutral economy.
According to BDMG President, Sergio Gusmão, in its ability to mobilize resources to build a new future on a more sustainable and inclusive basis, the financial system must be linked to contemporary challenges. It is necessary to reorient economic models towards a more integrated perspective from an environmental and social point of view, in line with major sustainable development agendas, such as the Paris Agreement and the 2030 Agenda.
“Our ambition is to be a global reference for a government development bank focused on impact, accurately expressing this movement of connection with international financial flows towards judicious allocation of projects at the local level. In this sense, we place the Sustainable Development Goals as an indicative agenda at the core of our strategy. Since the focus of the Development Bank’s work should be to create value for society, we have reviewed the strategy and created impact measurement tools. Through a partnership with Bid (Inter-American Development Bank), in 2019, a calculator was developed to measure the impact of projects on carbon emissions. We have also begun to monitor the impact of our financing on job creation, particularly in the small and micro business sector, especially those affected by the pandemic crisis,” explains Gusmao.
In 2020, BDMG broke the record for funds raised in 60 years for the bank: R$2.3 billion. A large portion of these resources are already forming lines to finance projects with social and environmental impact, such as clean energy generation and self-consumption projects.
This year, during COP 26, a €20 million operation was signed with the European Investment Bank (in a).
In addition to the establishment of “green finance” lines, the intensification and diversification of our strategy Finance, we started operating innovative financial instruments linked to this new demand for sustainable projects. This is the case for sustainable bonds. In parallel, we have gained greater institutional strength and deepened the formation of alliances and technical cooperation with institutions related to the topic of sustainable finance. As of November 19, 63% of BDMG payments, or 1.09 billion Brazilian reais, were linked to one of the Sustainable Development Goals, exceeding the target of 45%,” noted the BDMG head.
In the last days of 2020, BDMG issued the first issuance in the history of sustainable bonds (or sustainable bonds) implemented by a Brazilian public bank. The transaction took place on the New York Stock Exchange, in the amount of 50 million US dollars. The aim was to make funding available, by the Bank of Minas Gerais, for projects with an environmental and/or social focus for companies of all sizes and municipalities in the state. BID Invest – a multilateral bank belonging to the BID Group – acquired all the securities.
One Warranty It is equivalent to a “debt bond” with the goal of raising funds for stocks or investments. with a sustainable address or sustainable bonds The issuer undertakes to use the amount in projects related to the environmental and/or social fields. In the case of this specific operation, BID Invest acquired the sustainable bond issued by BDMG. The bank will direct the funds obtained to lines of credit aimed at financing sustainable projects for companies and municipalities in the state of Minas Gerais.
Leading agreements closed at COP 26
During the United Nations Conference on Climate Change in 2021 (COP 26), in Glasgow, Scotland, in November, the Development Bank of Minas Gerais (BDMG) was part of the delegation of Minas Gerais that attended the event, participated in the meetings and pioneered the closing agreements between Brazilian development banks .
In the eyes of the world, he formalized his attachment to Green Bank Network, an international network of banks willing to finance sustainable projects, was created at COP 21, held in Paris, in 2015.
We were the first Brazilian bank and the first development bank in the world to integrate this network. This means that BDMG is now on the radar of a select group, which has already invested or committed to investing $50 billion in climate-impact projects. It is a window of opportunity that opens up for us to raise more funds for sustainable development in the state,” explains BDMG President, Sergio Gusmão.
Also at an event on the official COP 26 agenda, the foundation celebrated its commitment to the “Declaration of Reorganization of Public Support for the Energy Transition”. This is a global commitment, promoted by the UK government, which provides that projects involving the extraction, marketing and transportation of fossil fuels will not be funded from 2023 onwards.
BDMG has also formally submitted, with the European Investment Bank (EIB), a €20 million extension of the original €100 million contract cap, signed between the two institutions in 2019. The annex was signed as part of the parallel schedule to COP 26. It will be used Additional resources for the formation of lines of credit from the Bank of Minas Gerais aimed at financing renewable energy and energy efficiency projects in the state, as well as providing capital for investment projects of micro, small and medium-sized enterprises. The repayment term can be up to 13 years, depending on the nature of the operation and type of business, with a grace period of up to two years.
In October 2019, BDMG had already raised 100 million euros from the European Investment Bank, the largest international operation in the history of the bank from Minas Gerais and the first multilateral operation in Brazil. Initially limited to renewable energy and energy efficiency initiatives, the contract became more flexible in November 2020, due to the emergency scenario caused by the pandemic. At that time, 30% of the total (30 million euros) began to meet the various demands for credit from MSMEs affected by the health crisis.
“This extension of the border indicates the EIB’s confidence in the efficient allocation of resources through BDMG. In just over two years of the partnership, we have already taken the entirety of the initial contract in action, adding amounts already disbursed and projects already launched that are under analysis in Bank. Now, we have strengthened this partnership and taken an additional step to increase liquidity vectors for both investments in renewable energy and maintenance of SMEs, a sector that accounts for most of the job generation in Minas Gerais,” says Gusmao.
The Vice-President of the European Investment Bank, responsible at the time for Latin America, said, “This new agreement, which will reach entrepreneurs, highlights the EIB’s priorities in Latin America, helping to promote sustainable and inclusive economic development, by promoting productive investment. Ricardo Mourinho Felix.
