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Andrew Shaw - FMO Green Lines

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Oficial Senior de Desarrollo de Capacidades, FMO, Holanda

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Andrew Shaw - FMO Green Lines

  1. 1. FMO GREEN LINES FINANCING SUSTAINABLE COMMUNITIES, 25 AUGUST Andrew Shaw Senior Capacity Development Officer
  2. 2. THIS IS FMO 2015 performance: 858,000 Jobs supported Objective Double the expected direct and indirect jobs supported through our annual new investments in the period 2018-2020 compared to the baseline period 2010-2012 Baseline 2010-2012 500,000 expected direct and indirect jobs supported 2015 performance: 936,000 GHG avoided Objective Double the expected GHG emissions avoided through our annual new investments in the period 2018-2020 compared to the baseline period 2010- 2012 Baseline 2010-2012 600,000 tons GHG avoided
  3. 3. Banking could do very well as the world moves toward a low-carbon economy. There will be lots of business opportunities. . . . [B]ankers are particularly strong in this area. They have been very creative over all kinds of issues and they could do it again in the financing of green initiatives. Lord Stern, World Economic Forum, Davos 2009 3
  4. 4. THE OPPORTUNITY 4 Financial Institutions • Future oriented / responsible corporate citizen • Being a partner with a differentiated value proposition to your clients • Attracting new clients & cross-selling opportunities • New business lines and new funding opportunities • E&S risk management and the credit process End Clients • Reduced operation costs • Reliability of energy supply • Reputation advantages • Improved access to global supply chains • Identifying modernization opportunities
  5. 5. FMO GREEN JOURNEY deliver added value product development co-finance learn
  6. 6. Thinking behind Greenline Product Development PRODUCT DEVELOPMENT Aspects to consider Eligibility Criteria • Predefined vs. tailor made Pricing & conditions • Preferential interest rates? • Long tenors • Risk sharing Capacity Development / Technical Assistance • Required by both FIs and end-users (SMEs) • Many DFIs offer TA funded through donor funds Monitoring/Reporting • Tools to monitor energy savings, GHG emissions and other environmental benefits MARKET CONDITIONS Aspects to consider Macro Economy • Investment Activities and Climate • Funding costs for banks • Market Potential ≠ Demand Regulation • 2015 Paris Climate Accord • Housing/construction: building codes & energy labeling Local Factors • Electricity cost and reliability • Climate change and weather patterns – e.g. water usage • Taxes, subsidies and other incentives • Supply chain standards and certification GREEN FMO experience
  7. 7. EXAMPLES endorsing 'green' business in Latin America Grupo Promerica Banco BAC San Jose S.A. • First greenline with Banpro in Nicaragua in 2014 • Focused on green modernization of agriculture • Partnership with CPML for technical expertise • Now rolling-out to other countries (incl. ECU) • Expanding partnership with CPMLs: market studies, training, product development, promotion • Kick-off workshop in Costa Rica • June 2016, USD 20 million green line facility • Costa Rica policy: carbon neutrality by end 2021 • Renewable Energy, energy efficiency, green buildings, water, sustainable transport • Partnership with technical advisors and Green Building Council Costa Rica • Greenline tool for verification and reporting
  8. 8. Where to start building a the green business ASSETS Aspects to consider LIABILITY Aspects to consider GREEN Where to start from an asset / liability perspective EQUITY 1. Build green loan book 2. Build green deposit products 3. Issue Green Bond: a) Use green asset book to create value b) Diversify investor base c) Longer tenors
  9. 9. TAKE AWAYS 9 Market conditions Clients Capital market Innovation

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