Notícias
Brazilian National Treasury: Press Release on the Sovereign Sustainable Finance Committee
The National Treasury has been making efforts to launch public bonds associated with the sustainable development agenda in Brazil, serving as a reference for an active and constant presence of Brazil in the thematic bond market. The initiative reaffirms the country's commitment to sustainable development policies, in line with the growing interest of non-resident investors and with the global expansion of the thematic bond market. For that, the National Treasury plans to issue a sustainability bond, which aims to support projects and policies with positive environmental and social impacts.
On May 17th, 2023, the Federal Administration published the Decree nº 11.532/2023, which establishes the Sovereign Sustainable Finance Committee, a key milestone in the promotion of Brazil’s sustainable development agenda. The Committee is an inter-ministerial collegiate and will be responsible for preparing the framework for sustainability sovereign bond issuances (“the framework”). Considering the scope of the country's sustainable development agenda, which mobilizes various stakeholders within the scope of the Federal Public Administration, the Committee is a key element of the governance structure in the process of those bond issuances.
The sustainability bonds to be issued by the National Treasury will be public debt instruments backed by budgetary programs of the General Budget of the Union. Eligible actions and projects must have potential social and environmental impact, and must be in line with the guidelines provided by the framework.
The framework is a key document as it presents investors with the issuer's sustainability credentials and establishes the guidelines to be adopted by the Federal Government to issue sustainability bonds. The document will contain the structure and criteria for monitoring the allocation and the environmental and social impact of the expenses incurred based on the use of proceeds of the bonds.
The establishment of the Sovereign Sustainable Finance Committee is in line with best international practices. It is a common practice to define a collegiate to develop a thematic bond issuance framework, evaluate projects and select budgetary actions eligible for their respective frameworks. Sovereign issuers such as Chile, Colombia, France, Germany, Italy, and the Netherlands have defined collegiates as part of their governance structures. Governance is key to maintaining a constant flow of information between the sector bodies involved in sustainable projects and the bond issuer.
The Sovereign Sustainable Finance Committee is composed of the Secretary of the National Treasury (Ministry of Finance), who will chair it, and representatives of the following bodies:
- Ministry of Agriculture, Livestock and Food Supply;
- Ministry of Science, Technology and Innovation;
- Ministry of Agrarian Development and Family Agriculture;
- Ministry of Social Development, Assistance, Family and Fight against Hunger;
- Ministry of Development, Industry and Foreign Trade;
- Office of Economic Policy, Ministry of Finance;
- Ministry of Integration and Regional Development;
- Ministry of Environment and Climate Change;
- Ministry of Mines and Energy;
- Secretary of Federal Budget, Ministry of Planning and Budget.
In addition, representatives of other bodies and entities, public and private, as well as specialists in sustainable finance, may be invited to participate in the Committee's meetings.
No date has yet been set for the release of the framework. However, the expectation is that this process will be concluded in time for the sovereign sustainability bond to be issued in 2023. Meanwhile, the National Treasury will continue with its strategy of conventional bond issuances, taking advantage of windows of opportunity in the international market.