Green credits are a type of financing that is exclusively used for sustainable activities. Four banks offer these lines in the country.
Demand for green credits maintains sustained growth on a national scale. In the country, according to the Association of Private Banks of Ecuador (Asobanca)There are four entities that have green financing in their portfolio: ProCredit, Produbanco, Pichincha and Bolivariano.
The banks that grant this type of financing assure that, so far in 2021, it is registered a strong inclination by clients towards green and sustainable investment, even in a scenario where the COVID-19 pandemic continues.
Sustainable development, on the banking agenda
The registered growth is reflected in the number of credit operations that have grown between one and two digits. For example, Banco Pichincha went from 547 operations in 2019 to 4,551 until October of this year. ProCredit reached more than 300 credits granted so far in 2021, double the amount registered in 2019.
The economic analyst and professor Guillermo Granja affirms that this upward behavior occurs, in part, because more and more companies and individuals are committed to preserving the environment. For Farm, there is a marked stream of people aiming to protect the planet, which drives the revitalization of this credit segment.
ProCredit has provided $ 150 million in ‘green’ financing to sustainable projects
According to David Gray, president of the Asobanca Sustainable Finance CommitteeAlthough since 2012 specialized green credit products began to be registered in the country, it was not until 2020 that the Sustainable Finance Committee registered the amounts placed under this label known as “green credits”.
The union highlights that, in the last five years, with the signing of the Sustainable Finance Protocol private banks have increasingly developed green products.
One point to consider, says Gray, is that sustainable financing it doesn’t just include green credit. Rather, it opens an umbrella of products aimed at mitigating social impact, with lines to finance microenterprises, vulnerable sectors, businesses led by women, among others.
Destination of credits
Green credits are intended for both companies and individuals. According to Asobanca, the resources granted by the banks are channeled to projects of energy efficiency, efficient technologies, machinery and infrastructure changes, green credits for SMEs, for environmentally friendly vehicles, among others.
ProCredit He explained that, in the case of natural persons, the lines are intended for investments in sustainable housing, renewable energy or electric cars. In the case of companies, on the other hand, the main focus is on machinery with high efficiency, efficient use of other resources, circular economy, recycling or waste management and the use of clean energy, he explained. Katarina Zdraljevic, head of the entity’s Environmental Management Unit.
Until November 2021, the entity has disbursed close to $ 42 million in green credits.
In Pichincha Bank It is committed to financing items such as sustainable agriculture through its Biocredits. From 2019 to October 2021, for example, this segment has concentrated at least half of all green resources placed.
Banco Pichincha issued green bonds for $ 150 million
In the first ten months of 2021, the entity granted $ 105 million to finance sustainable agriculture projects, about $ 44 million more than in 2020. This segment is followed by construction and sustainable housing and transportation, highlights Ignacio Maldonado, Executive Vice President of Business of Banco Pichincha.
ProducedOn the other hand, from 2016 to the end of November 2021, 429 credit operations have been generated for $ 293 million within the Green Lines program.
Most of these resources have been allocated to the sustainable development of agriculture (34%), aquaculture (30%) and manufacturing (24%), mainly focused on the development of efficient production processes.
Jose Ricaurte, Produbanco’s Vice President of Retail Banking, also said that the beneficiaries of the loans can work directly with consultants specialized in sustainability in order to improve their Productive processes.
Asobanca records that private banks placed $ 215 million in green loans during 2020.
Main milestones of the sustainable financing agenda
2016: Signing of the Sustainable Finance Protocol to begin building a sustainable finance strategy for the sector.
2017: Creation of the Sustainable Finance Committee, promoted by the Association of Private Banks, with the participation of twelve private banks.
2019: Signing of nine banks, en bloc, of the agreement on the Principles of Responsible Banking promoted by the Financial Initiative of the United Nations Environment Program UNEP FI (Financial Initiative of the United Nations Environment Program).
First issuance of green bonds by Banco Pichincha. Bonds for $ 150 million were issued.
2020: The development of twelve sector guides to mitigate the environmental impact on productive credit begins. Private banks receive $ 560 million from DFC, IDB Invest, IFC, FMO aimed at sustainability efforts.
2021: Asobanca, together with IDB Invest and FMO, begin the development of 22 additional sector guides, the work of which will culminate in 2022.
Until September, private banks received $ 322 million from IDB Invest, DFC and FinDev Canada, aimed at sustainability efforts.
Fifteen private banks sign a new act to renew their commitment to the Sustainable Finance Protocol.
Asobanca presents the first twelve sector guides, prepared in partnership with eco.business Fund, an impact fund for Latin America and the Caribbean, to outline and strengthen the productive credit rating processes carried out by banks, in order to mitigate environmental and social risk when granting them. (I)
Paul is a talented author and journalist with a passion for entertainment and general news. He currently works as a writer at the 247 News Agency, where he has established herself as a respected voice in the industry.
