The Reunión Latinoamericana sobre Bancos de Desarrollo e Inversiones Ambientalmente Sustentables (Latin American meeting on development banks and environmentally sustainable investments) held on the Amazon city of Belém do Pará (Brazil), left more than one commitment to sustainability by development banks –in every operation- and investors interested in the Amazon region.

“Preserving the Amazon forests and rivers is preserving life”. Simão Jatene, governor of the Pará state, used these words during the meeting to clearly state the need to take care and monitor investments made in the Latin American Amazon area and to drive financing of projects committed to the environment.
 
For this to work, the development financial institutions need to be completely identified with the environmental process.

Sustainable banks
Therefore, there was a discussion about a “sustainable development banking” during the two days of meetings. This refers to the introduction of an environmental culture with three main characteristics: a) considering the proper management of environmental and social risk in their operations; b) the development of green financial engineering to fund investments that promote environmental sustainability (i.e. in Power efficiency (EE), Renewable power (ER)) and the fight against climatic changes (carbon financing and other innovative schemes); and c) internal coefficient of institutions to reduce their own carbon footprint.

Promotion institutions with activities in regions – as for example the Amazon- where sustainable management of natural resources require special attention and fine balance of economic and environmental criteria from the banking system deserve special attention so their promotion actions are not stopped in the false dichotomy between producing and preserving.
 
Different realities
It was also acknowledged that there is diversity in banking regarding support to the environmental sustainability in terms of the road travelled and the size of operations.

While banks as the Brazilian BNDES are ready to travel a long road to increase their scale of operations, institutions such as Bice, from Argentina, or Bancóldex, from Colombia, start their road in environmental and climatic financing searching for market recesses to develop in starting from these success cases, such as in renewable power and power efficiency projects. The starting criteria to look for growth here is to focus.

New paradigms
On the other hand, as public policy instruments, development banks need to be very aware of the sustainable development paradigm evolution, which entails political commitments as result of the global agreements.

The RIO+20 will take place in 2012, where the concept of green economy “within the framework of sustainable development and eradication of poverty” is expected to imply transformations towards a more environment-friendly economy (sustainable) and that fights poverty (inclusive).

A first challenge posed is that of integrating environmental sustainability criteria in current national government policies, which include financing development.

For the development banks, this implies improving coordination with policy developers for a more effective application of instruments and resources, advising their governments in the design of adequate schemes and mechanisms.

In this same global plane, the resources to be placed at disposal for the environmental and climatic financing through green funds and other schemes mean that the aforementioned coordination considers their good use. This requires for the development Banks to be ready for absorbing them and strengthen their abilities to create green financial structures.

For this reason, it is important for them to participate more actively in the coming discussions about international financial architecture for environmental and climatic financing, in order to help establish the role of development banks in channeling these resources.

In that sense, as the BID states in its initiative to support development banking in the fight for climatic change and environmental sustainability, and adequate funding and risks transference instruments are necessary conditions, but they are not enough to make environmental projects financing feasible.

More training and education of different stakeholders is also required, as well as a closer contribution between relevant public and private stakeholders.

Generate knowledge
Finally, another conclusion reached in the environmental encounter is that of improving environmental risks management in the operation of development banking implies for this to help in the generation of environmental policies and regulations by financial institutions acting production areas, such as perfecting all processes. Accumulate and process knowledge is very important.

In that sense, the challenge is familiarize with the social and environmental profile of their current client portfolio (for example, water consumption, emissions, power expenses, environmental management systems, etc.), in such a way said knowledge can be used to establish an improvement route to consider the environmental and social aspects of financial activity.

Role of development banks
Development banks have attributes that allow them to play an central role in sustainable investment projects financing: 1) since they are financial entities and because of their spreading capacity in local credit markets, they may identify risks to be mitigated; 2) since they are public and have close bonds with the private sector, they have access to public and multilateral funds and favors coordination in the public-private area.

Finally, the dual responsibility of development banking as being investment agent and officer at the same time for the financed enterprises was highlighted.

About the meeting in Brazil
The Belém do Pará meeting, which gathered representatives from financial institutions in several countries has promoting bigger investments in the Amazon through the Exchange of experiences and good practices between development banks as one of its main goals, in topics such as policies, instruments or programs for financing and promoting environmental sustainable businesses.

According to the organizers, the meeting also served to strengthen development programs of micro, small and medium enterprises of the Amazon region in a sustainable way.