COP28 Side Event: “Instruments to Channel Investments Towards Environmentally Sustainable Objectives”

This event is poised to critically examine a spectrum of tools and mechanisms designed to encourage and direct investments into environmentally sustainable activities. It will focus on two specific topics: 1) classification systems or taxonomies, and 2) financial disclosure obligations.

The move towards investing in sustainable finance and mobilizing green capital has led to an increase in developing instruments to channel investments towards environmentally sustainable objectives. Countries worldwide, specifically in the Latin America region, have made substantial progress over the past two years in developing transparent information architecture for sustainable finance to enhance sustainable investment in a coordinated way, aligning public and private financial flows towards sustainable and climate objectives.

The growth of sustainable finance has involved positive interactions between policymakers, public and private financial institutions, and financial regulators. Today, these interactions have led to a growing number of initiatives across the Latin American region not only for developing taxonomies but also for requesting (voluntary or mandatory) the disclosure of financial information of taxonomy-aligned activities.

Colombia was the first country to announce and develop a green taxonomy; following a three-year process, its taxonomy was published in the second quarter of 2022. This year, Mexico became the second promoter by publishing its social taxonomy in the first quarter of 2023, with a particular social focus based on gender equality, and the probability of becoming mandatory after its piloting phase. Countries such as Costa Rica, Panama, the Dominican Republic, Peru, Brazil, and Chile are developing their taxonomies, while Ecuador, Argentina, and Central American countries plan to establish them. Countries like Mexico and Brazil are working towards regulations and instruments to disclose financial information from real economy actors for taxonomy aligned activities, by 2026. 

The wave of taxonomies will continue to grow and inherently undergo revisions and updates to reflect best practices in the region and internationally. Therefore, it remains paramount to understand and analyze the latest trends and the upcoming initiatives that Latin American countries are considering when developing taxonomies and the information architecture under development for soliciting the disclosure of information for taxonomy-aligned activities. 

Objective:

With the aim of discussing the relevance of taxonomies and the interlinkages for mandatory and voluntary financial disclosure information, this side event brings together an array of country experts from Ministries of Finance, taxonomy users, practitioners, private sector actors, and researchers from the Latin American region to discuss:

1. How finance taxonomies are signaling the market at the regional and international levels for accelerating sustainable investments? 

2. What are the technical aspects that taxonomies are taking into consideration to enhance sustainable investments? 

3. Why financial regulators are emphasizing in the role of data and transparency when disclosing information for taxonomy aligned activities?

4. What are the latest trends on standards for disclosing sustainable finance information?

5. How financial disclosures (mandatory or voluntary) are shaping corporate behavior? 

Moderator: Sebastián Lema, Director of Climate Finance, CCAP

Guest Speakers:

• María Paz Gutiérrez -Green Finance Office,  Ministry of Finance, Chile

• Teresa Ruiz-Tagle- Executive Director, CLG-Chile

• Soffia Alarcón, Non Resident Fellow, Institute of the Americas (IOA)

• Anjuli Pandit, Head of Sustainable Debt Capital Markets for Europe and the Americas, HSBC