BM&FBOVESPA S.A. – Brazilian Securities, Commodities and Futures Exchange, the Inter-American Development Bank (IDB) and the International Bank for Reconstruction and Development (IBRD) held on July 13 a regional workshop on “Carbon Financial Instruments – Challenges and Opportunities”. The meeting was held in São Paulo and was attended by delegates from financial institutions such as Morgan Stanley, Barclays Capital, the European Climate Exchange and the Carbon Trade Exchange.
The workshop allowed financial institutions to exchange experiences and ideas on the carbon markets in Latin America and the Caribbean (LAC), and to share their national and international perspectives on the challenges and opportunities that come from developing carbon financial instruments and expanding carbon markets in LAC.
By analyzing the current scenario of the principal carbon financial instruments and the role of financial institutions, delegates will be able not only to promote the development of financial mechanisms for expanding carbon markets in LAC, but also to define the complimentary strategic lines of action that can be taken by the region’s financial institutions.
During the event, BM&FBOVESPA showcased its auction system for trading carbon credits on the spot market and its Carbon Efficient Index (ICO2), which is being developed in association with the Brazilian Development Bank (BNDES). The ICO2 index is an equity index with a portfolio weighting scheme that takes into account the free float (the number of company shares available for market trading) of the shares of the companies which comprise the index, as well as their degree of efficiency in greenhouse gas (GGE) emissions.
The IDB and its Sustainable Energy and Climate Change Unit showcased the different products and services that it can offer such as the Carbon Finance Platform and the PlanetBanking initiative, which seeks to promote, through technical cooperation and financing, the implementation of the necessary environmental sustainability principles to allow financial intermediaries in Latin America and the Caribbean to adapt and respond to the effects of climate change.
The World Bank helps countries in the region and in the world to adapt to climate change and reduce their carbon-intensive development through partnerships guided by the Climate Change Convention process. These partnerships include the financing of projects, such as the BM&FBOVESPA initiative for the Strengthening of the Brazilian Carbon Market Infrastructure, innovative financial instruments, such as Climate Investment Funds (CTF) and green debentures linked to carbon emissions, as well as relevant analytical works, such as the Annual Report State and Trends of the Carbon Market and the Brazil Low-Carbon Study, launched in July 2010 in Brasília.
The exchange of concepts, ideas and experiences by the different actors in this workshop will help create a network of financial institutions in the region related to carbon markets, thereby promoting greater environmental awareness.