Eleven organizations join forces to develop the Common Framework for Sustainable Finance Taxonomies for Latin America and the Caribbean (LAC Taxonomy Common Framework)

The LAC Common Framework provides clarity and credibility to local and international investors to mobilise private capital for the sustainable investments in the region.

Panama City, 10 July 2023 – A Common Framework of Sustainable Finance Taxonomies for Latin America and the Caribbean (LAC) was launched today by a group of United Nations agencies and international organizations to accelerate progress towards unified and strengthened national sustainable finance taxonomies in the region.

The LAC region has been classified as “highly exposed, vulnerable and strongly impacted by climate change” in the IPCC reports of 2022. To address this existential threat and align economies with the UN Sustainable Development Goals, governments in the region and globally are developing sustainability taxonomies at a rapid pace. However, a lack of comparability between national taxonomies creates hurdles for trade and international capital flows towards low-carbon projects.

The LAC Taxonomy Common Framework aims to serve as a catalyst for progress towards sustainable finance implementation, offering LAC member states a regional alignment approach to unlock opportunities and financing for long-term value creation, shared prosperity, and sustainable development in the region. The guiding principles established in the report ensure taxonomies are science-based, allowing for a credible transition for high emitting sectors towards net-zero emissions by 2050 and improving the adaptability and resilience of assets and activities across all sectors.

“This Common Framework will add a significant value to the taxonomy develop process in the region, especially for Central America. The technical guidance will streamline this process and ensure interoperability with other taxonomies””, said Karina Velásquez, Executive Secretary of the Central American Council of Superintendents of Banks, Insurance and Other Financial Institutions (CCSBSO).

By establishing essential guiding principles, designing objective classification systems for sectors and activities, and drawing upon the European Union and other international best practices, the LAC Taxonomy Common Framework ensures high level of transparency and interoperability, thus facilitating cross-border capital flows for social and environmentally sustainable investments. The report also enables private sector actors to make more informed investment decisions by offering clear guidance on green and social investments.

“Chile is process of developing the taxonomy and this regional work is published at a right time. The region is setting an example for other countries and the world to follow by ensuring that the definitions of sustainable investments are aligned globally and in LAC, supporting long-term economic growth and encouraging better social and environmental stewardship in the region”, said Carola Moreno, Finance and International Affairs Coordinator of Chile’s Ministry of Finance. 

To further advance regional and international interoperability of taxonomies, international cooperation plays a key role. The LAC Taxonomy Common Framework will help governments and other relevant entities in Latin America and the Caribbean formulate interoperable sustainable finance taxonomies with the technical assistant provided by the members of the Working Group on Sustainable Finance Taxonomies for Latin America and the Caribbean.

This framework was financed by the European Union through the EUROCLIMA+ Programme and was technically developed by the Working Group on Sustainable Finance Taxonomies for Latin America and the Caribbean. This Working Group was built as part of the Interagency Technical Committee (ITC) of the Forum of Ministers of Environment of Latin America and the Caribbean and is constituted by the United Nations Environment Programme (UNEP) and its Finance Initiative (UNEP FI), the United Nations Development Programme (UNDP), the International Finance Corporation (IFC), the Inter-American Development Bank (IDB), the Economic Commission for Latina America and the Caribbean (ECLAC), the Development Bank of Latin America (CAF), the Food and Agriculture Organization, the staff of the International Monetary Fund (IMF) and the World Bank and the European Commission as an external advisor. 

Resources

Download a copy of the report Common Framework of Sustainable Finance Taxonomies for Latin America and the Caribbean” https://www.undp.org/latin-america/publications/common-framework-sustainable-finance-taxonomies-latin-america-and-caribbean 

Notes to Editors

About the UN Environment Programme (UNEP)

The UN Environment Programme is the leading global voice on the environment. It provides leadership and encourages partnership in caring for the environment by inspiring, informing and enabling nations and peoples to improve their quality of life without compromising that of future generations.

About the UN Environment Programme Finance Initiative (UNEP FI)

UNEP Finance Initiative brings together a large network of banks, insurers and investors that collectively catalyses action across the financial system to deliver more sustainable global economies. For more than 30 years the initiative has been connecting the UN with financial institutions from around the world to shape the sustainable finance agenda. It has established the world’s foremost sustainability frameworks that help the finance industry address global environmental, social and governance (ESG) challenges. www.unepfi.org 

About the United Nations Development Programme (UNDP)

As the United Nations lead agency on international development, UNDP works in 170 countries and territories to eradicate poverty and reduce inequality. We help countries to develop policies, leadership skills, partnering abilities, institutional capabilities, and to build resilience to achieve the Sustainable Development Goals. Our work is concentrated in three focus areas; sustainable development, democratic governance and peace building, and climate and disaster resilience. www.undp.org 

About the Sustainable Finance Hub of UNDP

The Sustainable Finance Hub brings together UNDP’s expertise to harness public and private capital for the Sustainable Development Goals - supporting governments, investors, and businesses in reaching climate, social impact and sustainability targets. Our work drives systemic change towards a sustainable financial architecture that benefits people and the planet. Find out more about our integrated sustainable finance services at sdgfinance.undp.org 

About EUROCLIMA Programme

EUROCLIMA is a program funded by the European Union and co-financed by the German federal government through the Federal Ministry for Economic Cooperation and Development (BMZ), as well as by the governments of France and Spain through the Ministry of Foreign Affairs, European Union, and Cooperation.  The Program's mission is to reduce the impact of climate change and its effects in 33 countries in Latin America and the Caribbean by promoting mitigation, adaptation, resilience, climate investment and biodiversity. To this end, it is implemented according to the "Spirit of Team Europe" under the synergistic work of seven agencies: Spanish Agency for International Development Cooperation (AECID), AFD Group: Agence Française de Développement (AFD)/ Expertise France (EF), Economic Commission for Latin America and the Caribbean (ECLAC), International and Ibero-America Foundation for Administration and Public Policy (FIIAPP), Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH, the UN Environment Programme (UNEP) and the United Nations Development Programme (UNDP). www.euroclima.org 

For more information and to arrange interviews, please contact: 

UNEP Regional Communication Unit (Latin America and the Caribbean) 

Carlos Gomez, Regional Information Officer unep-latinamerica-news@un.org   

UNDP Communication Unit

Hope Traficanti - hope.traficanti@undp.org