Chile announces the emission of its first sovereign green bond to fight climate change


Chile’s Treasury is in conditions to issue the country’s first green bond, Treasury Minister Felipe Larraín announced after different specialized international institutions favourably reviewed the country’s Green Framework document.

The bonds are similar to normal bonds, but the funds raised will be used to finance or refinance projects that protect the environment. The Treasury aims to make the issue in 2019, the Secretary of State said, highlighting that the framework allows for the issue of such bonds. There is a commitment to use the resources for different types of green projects, which could be in areas such as Clean Transport, Energy Efficiency, the Conservation of Biodiversity and Marine Resources, Water Management and Green Buildings.

Minister Larraín highlighted that the initiative joins the financial world to environmental protection, an area in which Chile will be a regional pioneer. “The government of President Piñera has chosen the fight against climate change as one of its action areas. In this line, we have committed to ensuring that there will be no new coal-fired power plants in Chile and there will moreover be a closure plan for existing coal-fired thermoelectric plants,” he said.

The head of the Treasury department said that the green bond could be for up to US$1.5 billion on foreign markets, adding that pursuing this type of instruments is because of an environmental conscience, although there are ever more investors looking with interest at having green bonds in their portfolios. “Recent evidence indicates that the rates that have been obtained for green bonds are lower than those of comparable sovereign bonds, in the same term and in the same currency,” Minister Larraín said.

Minister Carolina Schmidt highlighted that Chile is creating a clear position of environmental leadership, creating measures that support transformation of the energy matrix and are now connecting with the world of finance through this sovereign emission of a green bond. “President Piñera is inserting a state policy in Chile of climate action, which will lead to the transformation that we want for our country,” she said.