“Less promises, more action” is the motto of the next climate change summit to be held in Belém, Brazil, COP30. It is a call to set stricter targets for decarbonization, to scale up, pursue deep transformations, and mobilize financial resources for implementation. The meeting is also transcendental, because this year the countries must present the update of their greenhouse gas emissions reduction goals or Nationally Determined Contributions (NDCs).
Indeed, it is increasingly evident that climate action requires a leading role from the financial system. This sector must not only channel investments towards low-carbon and climate-resilient activities, but also manage the risks that climate change represents for the operations of different actors, institutional investors and issuers. The mandate of Article 2 of the Paris Agreement is clear: align financial flows towards a low-carbon and resilient economy. The challenge is to convert that commitment into tangible actions.
In 2022, the Latin American Climate Assets Disclosure Initiative (LACADI I) emerged, promoted in Colombia, Mexico and Peru. Its objective: promote the integration of climate risks and opportunities in financial decisions through the generation of information and strengthening the capacities of institutional investors in the three countries.
In 2024 he was born LACADI II that expands its scope, incorporating not only institutional investors, but also public companies in the real sector, in order to delve deeper into the elements necessary for the transition to low-carbon economies. This second phase is coordinated in Colombia by Transform and implemented in Mexico by the Mexico Climate Initiative, in alliance with the Mexican Council of Sustainable Finance and in Peru for Dragon-fly.*
LACADI II includes technical advice to a bank and an insurer to analyze their management of climate risks and opportunities and how to report in accordance with IFRS or IFRS S2. Likewise, it contemplates an evaluation of annual reports of fifteen companies in the financial and issuing sector under the IFRS S2 standard regarding aspects of governance, strategy, risk management and metrics and includes training on climate governance for members of boards of directors, in order to strengthen their climate leadership for strategic decision making. An online course on climate risk scenarios for the financial sector is also being developed.
On the other hand, the project promotes the exchange of successful experiences. During the Sustainable Finance Forum organized by the Mexican Council of Sustainable Finance On October 1 and 2 in Mexico City, the first Green Resilience Bond in Latin Americafrom FIRA, a financial instrument for which its own taxonomy and an approach based on performance analysis were used. Through this bonus focused on adaptation, the development bank channeled financing to the agricultural sector and to projects that increase the absorption and adaptation capacity in the face of extreme events, severe temperature variations or intense rains.
LACADI II will allow us to know more precisely the degree of maturity of the participating countries in the region in the management of climate risks and opportunities, identify barriers and highlight strengths. It also seeks to open the discussion and promote the interaction of relevant actors, including regulators.
Ultimately, initiatives such as LACADI II underline that the financial sector cannot remain on the sidelines of the climate crisis: it must be part of the solution, creating conditions so that the transition towards a resilient and carbon-neutral economy is possible in Latin America.
*Supported by the International Climate Initiative (IKI) of the German Federal Ministry for Economic Affairs and Climate Action.
About the author:
**Marcela Álvarez Mardones She is Coordinator of the LACADI project, at the Mexico Climate Initiative (ICM), think tank specialized in promoting public policies to accelerate climate action in the country.
The opinions expressed are solely the responsibility of their authors and are completely independent of the position and editorial line of Forbes Mexico.
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