Luxembourg and San Salvador, 22 August 2023 – The eco.business Fund strengthens its commitment to sustainability in El Salvador with a second loan of USD 20 million to Banco Cuscatlán. This investment will be focused on promoting sustainable practices among the nation's agribusiness enterprises.
Banco Cuscatlán's collaboration with the eco.business Fund began in 2019 with a USD 5 million loan aimed at nurturing ecosystem conservation. The funding enabled Banco Cuscatlán to offer loans focused on agribusinesses, promoting sustainable production of sugarcane, coffee, and cocoa, among other representative segments of El Salvador’s economy.
The additional loan is intended to expand Banco Cuscatlán's reach to additional sectors. The bank plans to use these funds to promote the incorporation of sustainable technologies through the production chain. These initiatives aim to reduce carbon emissions and ensure that most agribusiness waste is recycled or transformed within the production process.
"The proposed transaction has the potential to deliver significant social and environmental impacts," remarked Michael Evers, Chairperson of eco.business Fund. He expressed enthusiasm about contributing to advancing sustainable farming practices in El Salvador, a country where deforestation and climate change threaten biodiversity. "By directing investment towards sustainable infrastructure, automation, and compliance with sustainability standards, we expect the bank to make a positive contribution to environmental sustainability and economic development."
Banco Cuscatlán has earmarked part of the new loan to support the adoption of new saving technology in its clients’ processes; this includes the use of efficient systems and reuse of by-products. The bank has identified potential investments in producing and processing sugarcane, coffee, dairy, and sugar products.
For this loan, Banco Cuscatlán will incorporate 'Green List measures' as eligibility criteria for providing loans to its clients. These are activity-specific sustainability measures applicable to multiple agribusiness sectors, including practices like dry sugarcane cleaning, biogas equipment, efficient irrigation, biodiversity-friendly machinery, and water-reuse infrastructure.
José Eduardo Luna, Executive Director of Banco Cuscatlán, stated: "By including the Green List measures, we can enhance our role in promoting sustainable practices and diversify our impact. This approach will allow us to fund a broader array of activities, including primary production, and accurately report their impact."
In closing, Evers expressed his confidence that "Banco Cuscatlán, through this investment, will continue to strengthen its support for environmentally responsible and efficient practices, contributing to a more sustainable agribusiness landscape in El Salvador."
About the eco.business Fund
The eco.business Fund aims to promote business and consumption practices that contribute to biodiversity conservation, to the sustainable use of natural resources, and to mitigate climate change and adapt to its impacts in Latin America, the Caribbean, and sub-Saharan Africa. By providing financing for business practices that conserve nature and foster biodiversity, the fund seeks investments with both environmental and financial returns. The eco.business Fund provides financing through three avenues: local financial institutions that are committed to the fund’s mission and which have the capacity to reach its target group; directly to its target group (i.e. companies and producers); and in the case of sub-Saharan Africa, to real sector intermediaries. The fund supports sustainable operations in the sectors of agriculture, fishery (including aquaculture), forestry and tourism. Target beneficiaries are those that hold an eligible sustainability certification or those taking out a loan to make eligible sustainable investments in their operations.
Operating together with each of the two sub-funds, are two development facilities that provide high-impact technical assistance to investment partners and final borrowers.
An impact investment fund advised by Finance in Motion, the eco.business Fund was initiated by Germany’s KfW Development Bank and Conservation International with financial support from the German Federal Ministry for Economic Cooperation and Development (BMZ).
The sub-fund for sub-Saharan Africa was formally launched in 2020 with initial funding from BMZ.
The sub-fund for Latin America and the Caribbean has received funding from the European Commission as well as from numerous other prestigious development finance institutions and institutional investors.
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