Many of the country’s efforts for biodiversity conservation, addressing climate change challenges, preventing or reversing environmental degradation, and sustainably using natural resources are being hampered by the insufficient financial resources available for implementation. Paraguay has thus relied on assistance from the international community for these purposes. Identifying additional, alternate, innovative sources of environmental financing would be crucial.
Key policies and governance approach
Existent, or on-going activities or initiatives (protocols, self-regulation/regulations) related to sustainable finance in Paraguay include:
- 2012: Foundation of the Sustainable Finance Roundtable as a voluntary self-regulated association of four banks: Sudameris Bank, Continental Bank, Regional Bank, and Vision Bank.
- 2016: Sudameris Bank: “Guide for the Sustainable Financing of Livestock Activity in Paraguay”.
- 2017: Regional Bank: “Guide for the Sustainable Financing of Agricultural activity in Paraguay”.
- 2018: Continental Bank: “Guide for the Sustainable Financing of the agro-industrial activity in Paraguay”.
- 2018: Resolution No. 8/2018 “Guide for the Management of Environmental Social Risks for Entities Regulated and Supervised by the Central Bank of Paraguay”. These regulations are mandatory for all the supervised entities.
- 2018: Central Bank approved the Guide for Environmental & Social Risk Management, to be integrated within the credit risk analysis of financial institutions.
- 2019: The Paraguay Sustainable Finance Roundtable officially signed up to the Principles for Responsible Banking of the UNEP Financial Initiative.
- 2019: Framework Agreement between WWF and the National Securities Commission to develop and strengthen aspects related to “green bonds” and credit ratings, with guidelines.
- 2019: Framework Agreement of Cooperation between the National Securities Commission and the Sustainable Finance Roundtable to develop projects and programmes properly agreed upon.
Additionally, Paraguay is the first Latin American country to typify and incorporate guidelines for the emission of Sustainable Development Goals (SDG) bonds in its national regulation. The national securities regulatory body (Comisión Nacional de Valores, CNV) issued Resolution No. 9/20 on March 2020, which modifies legislation seeking to “endow the stock market with new financial instruments that promote social and environmental objectives” aligned with the 2030 Agenda and the SDGs. The resolution states that the governance, management, transparency, impact assessment, and accountability of the SDG bond market in Paraguay will be guided by international standards and guidelines, including those of the Green, Social, and Sustainable Bond Principles (GBP), International Capital Market Association (ICMA), Climate Bonds Initiative (CBI), International Climate Bonds Standards and UNDP's Impact Management Standards.
The SDG bonds will support Paraguay's COVID response in the recovery phase by promoting and facilitating the financing of projects that will stimulate the economy and also contribute social and environmental benefits to “build back better”. Investment in environmentally friendly projects would also contribute to improving public health (e.g., air quality). SDG Bonds could leverage investments that will translate into measurable social and environmental benefits in the country's COVID recovery.
Paraguay is the first Latin American country to typify and incorporate guidelines for the emission of Sustainable Development Goals (SDG) bonds in its national regulation. The national securities regulatory body (Comisión Nacional de Valores, CNV) issued Resolution No. 9/20 on March 2020, which modifies legislation seeking to “endow the stock market with new financial instruments that promote social and environmental objectives” aligned with the 2030 Agenda and the SDGs.
SDG Bonds could leverage investments that will translate into measurable social and environmental benefits in the country's COVID recovery.