At a Glance
|Strategic Outcomes||SO3 Increased access to sustainable services, SO6 Enhanced adaptation to climate change|
|Start Date||Q1 Feb 1 2021|
|End Date||q4 Dec 31 2022|
|Actual Budget (USD)||510,062|
|Actual Expenditure (USD)||452663|
|GGGI Share (USD)||$510,062|
|Poverty and Gender Policy Markers||poverty, gender|
|Name of Client (Lead/Prime implementer if GGGI is part of a consortium)||Ministry of Economy and Finance|
|Participating Organization (Funding/donor)||United Kingdom: Department of Business, Energy and Industrial Strategy (BEIS)|
|Name of consortium members, if any|
GGGI Project Code : PE17
Project Manager and Staff +
Sustainable bonds are innovative financial instruments used by governments to finance environmental and social impact oriented public investment projects, which is key in the context of increased climate ambition and post-COVID-19 recovery. Green or thematic bonds represent an innovative financing instrument prioritized by the Peruvian National Competitiveness and Productivity Plan, and are an important instrument helping Peru raise affordable long-term finance, earmarked to help with Peru’s low-carbon transition.
Between 2020 and 2021, GGGI, delivered technical assistance to the Government of Peru, to build its capacity, systems, development of skills and knowledge for the planning and implementation of the issuance of the first Sustainable Bond of Peru. The process was led by the General Directorate of the Treasury and had the support of the National Council for Competitiveness and Formalization of the Ministry of Economy and Finance (MEF) and GGGI within the framework of the project financed by the United Kingdom Pact Program, called UK PACT.
In October and November of 2021, the Government of Peru issued the country’s first Sustainability and its first Social bonds, for USD 3.2 billion and EUR 1 billion, respectively. The issuance marked the largest-ever Sustainability bond issuance by a sovereign, and the largest-ever Sustainability bond issuance from LAC. The success of the program generated renewed and increased interest from Peru’s financial sector’s regulators and actors, to promote the use of sustainable finance instruments to drive a low carbon, resilient and socially inclusive economic recovery.
The specific proceeds coming from the Government of Peru’s USD 4.2 billion Sustainable Bonds issuance which finances NDC and SDG strategies, supports green economic recovery, and improves the livelihood of its citizens – notably women and vulnerable groups, due to 1 billion euros Social Bond issuance implies an Allocation and Impact Report one year after the emission.
Outcome 1: Design of the Sustainable Bond Framework of Peru to support the implementation of national climate policies, financing of green recovery and improved investment transparency.
Outcome 2: Issuing of the first Sustainable Bonds by the Government of Peru in international markets to provide resources to help finance environmental and social projects that will support Peru’s achievement of its NDC in the Paris Accord and the United Nations Sustainable Development Goals.
Outcome 3: Support the MEF produce its first Sustainability Bond Allocation and Impact Report. The Impact Report will contain the expected environmental and/or social impact of projects and expenditures, and the methodologies and assumptions used to prepare the impact indicators.
- With the Sustainable and Social Bond issuances, Peru joined the group of countries who use these financial instruments to finance its ambitious climate, social and sustainable goals, showing a commitment to investing in projects with high social and environmental impact, following the most demanding global standards.
- Approval of the Sustainable Sovereign Bond Framework document, also called “Peru Sustainable Bond Framework” (Ministerial Resolution No. 221-2021-EF/52) in July 2021, which is governed by the principles and recommendations of the International Market Association de Capitales (ICMA) for the governance and issuance process to promote transparency and integrity in the growing thematic bond market.
- On October and November 2021, the Government of Peru issued 2 sovereign thematic bonds: a sustainable bond for USD 3.5 billion, and a social bond for €1 billion. The sustainable bond considers eligible green expenditures in eight categories, which are: green buildings, renewable energy, energy efficiency, low carbon transport, efficient and resilient water and waste water management, sustainable management of natural resources, land use and marine protected areas, sustainable agriculture, and sustainable waste management.
- The Sustainable Bond Framework provides alignment between Peru’s NDCs and fresh sources of funding coming from sustainable bonds. This helps Peru finance its needs to meet Peru’s NDCs, and fight against climate change.
- The Allocation and Impact Report of the Social and Sustainable Bond 2021, published in November 2022, presented the information on spending on social programs and green projects executed in the year of the issuance of the bonds. 6 national social programs that contribute to SDGs 1, 2, 3, 4 and 159 projects associated with 3 of the 8 eligible green categories of the Framework with contribution to SDGs 6, 13 and 15.
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