Luxembourg and Bogota, 24 March 2023 - eco.business Fund has invested USD 15 million in a sustainable subordinated bond issued by Banco de Bogotá. The investment will support agribusinesses in implementing measures that contribute to the sustainable use of natural resources and generate a positive environmental and social impact while strengthening the bank’s capital base.
This transaction marks the fund’s first sustainability bond investment and aims to ultimately contribute to biodiversity conservation, the sustainable use of natural resources, and climate mitigation and adaptation in Colombia. Through this new partnership, the fund will support Banco de Bogotá’s sustainable agribusiness portfolio expansion by supplying reserved funding and tailored technical assistance, for example by assessing clients’ eligibility for receiving sustainable agriculture financing or supporting clients’ in obtaining a sustainability certification. The funding will be directed to certified companies and supporting companies in gaining certification. These certifications, only obtained through an independent and accredited certifier and audited thereafter, verifies that the company is implementing sustainable, climate and biodiversity-friendly practices - contributing towards building sustainable businesses in the agriculture, aquaculture, and fisheries sectors.
Colombia has the third-biggest population in Latin America, of which more than 30% are rural smallholder farmers. While the growing conditions are ideal for agriculture, the country is often exposed to adverse weather events that can alternate between long periods of drought and then flooding. Given the significant proportion of the population who rely on small agribusinesses to survive, access to the bank’s financing and the fund’s technical assistance - especially when it comes to implementing sustainable agricultural practices that ensure biodiversity conservation and climate change mitigation - becomes a critical lifeline.
Banco de Bogotá has built a robust sustainable business model and services 82% of Colombia’s national territory, putting it in a strong position to contribute meaningfully to building a financially inclusive banking system. These attributes and the bank’s reach across 913 municipalities make it the ideal partner for the eco.business Fund in enabling and supporting sustainable agribusinesses in Colombia.
The bond is a subordinated instrument aligned with Basel III requirements and was issued for a total size of USD 230 million. Other investors include Inter-American Development Bank (IDB), IDB Invest, International Finance Corporation (IFC), Development Finance Institute (FinDev) Canada, and the LAGreen Fund. The investment demonstrates that thematic bonds can generate additional benefits for issuers committed to supporting sustainable projects, by allowing them to differentiate themselves among international investors and, in this case, strengthen their capital base.
eco.business Fund Board of Directors chairperson Michael Evers said: “We are thrilled to have invested in our first sustainability bond with a new partner that prioritizes its sustainability strategy. We believe that through this innovative funding instrument, the bank will further support the agribusiness finance development agenda in Colombia, enhancing the sustainable use of natural resources and biodiversity conservation while mitigating climate change.”
"We are very pleased with the work carried out in collaboration with the eco.business Fund for the issuance of our first Sustainable Subordinated Bond. This achievement reflects our commitment to allocate resources to high-impact projects in mitigation and adaptation to climate change. In addition, we are proud to continue driving business development and job creation, access to affordable housing, women's empowerment, and gender equality, as we have set out in our sustainability strategy," stated Isabel Cristina Martinez, Vice President of Sustainability and Corporate Services at Banco de Bogotá.
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.
About Banco de Bogotá
Banco de Bogotá is a leading financial institution in Colombia that offers a wide range of products and services. It is the oldest financial institution in Colombia (founded in 1870) and is the main subsidiary of Grupo Aval. It is listed on the Colombian Stock Exchange (BVC) with a market capitalization of 16.3 trillion pesos as of June 2022. As of the end of 2022, Banco de Bogotá had at least one banking service channel in 957 municipalities in Colombia, which represents coverage of 87% of the national territory, facilitating access to its products and services, in line with its strategy of inclusion in the banking system.
Media contact eco.business Fund
Phone: +49 69 271 035 742