LAGreen invests in subordinated bond to boost Banco de Bogota’s sustainability strategy and strengthen capital base
The bond shows the versatility of thematic bonds, by helping issuers with strong sustainability agendas get better access to capital.
LAGreen, the Latin American Green Bond Fund has invested USD 10 million in a sustainable bond issued by Banco de Bogotá, dedicated to promoting projects with positive environmental and social impacts, while strengthening the bank’s capital base.
Banco de Bogota, a leading Colombian financial institution, has incorporated a sustainability strategy focused on climate and social action as an important pillar of its business model and is aligned with national and international best practices. The bank adheres to the Principles for Responsible Banking and joined the Net-Zero Banking Alliance. Through this bond, the bank will further fulfil its sustainability commitments, for example, in terms of decarbonizing its portfolio. Furthermore, as the largest member of a banking group with broad presence in Central America, Banco de Bogotá, can spread its best practices across the region.
The subordinated bond was issued for a total size of USD 230 million with other investors including the eco.business Fund, IDB Invest, IFC and FinDev Canada. It shows how issuers supporting sustainable projects can leverage thematic bonds to generate additional benefits, in this case, strengthening the issuer’s capital base.
LAGreen’s investment will be channeled by Banco de Bogotá towards investments in renewable energy production, climate resilience, sustainable transport, water and energy efficiency, as well as circular economy solutions. The bond will help position the bank among the biggest forerunners of sustainability in the regional context – a positive development in building the market for green finance in the country and the region.
LAGreen Chairperson Johannes Scholl said: “We are delighted to support a leading banking group to advance its sustainability strategy. This investment demonstrates how long-term sustainability commitments can generate important benefits for sustainable bond issuers. We look forward to a partnership that will not only bring positive environmental impact, but also promote systemic change in favor of green finance in Colombia and the region.”
“We are very pleased with the work carried out in collaboration with LAGreen for the issuance of our first Sustainable Subordinated Bond. This achievement reflects our commitment to allocate resources to high-impact projects in mitigation and adaptation to climate change. In addition, we are proud to continue driving business development and job creation, access to affordable housing, women’s empowerment, and gender equality, as we have set out in our sustainability strategy,” stated Isabel Cristina Martinez, Vice President of Sustainability and Corporate Services at Banco de Bogotá.
In addition to the funding, the LAGreen Technical Assistance Facility plans to support Banco de Bogotá in developing its yearly sustainable bond impact report.
LAGreen is the first green bond fund dedicated to Latin America.
By investing in green bonds and supporting new issuers with technical assistance, LAGreen’s goal is to boost environmental and social benefits across the region and promote the transition to a green economy. In addition, the fund aims to promote high impact standards for green bonds, both in terms of the impact of supported projects, as well as green credentials, reporting, and impact assessment.
As an impact investment fund advised by Finance in Motion and Santander Asset Management, LAGreen was established as an initiative of Germany’s KfW Development Bank, with seed capital provided by the European Union (EU) and the German Federal Ministry for Economic Cooperation and Development (BMZ).
About Banco de Bogota
Banco de Bogotá is a leading financial institution in Colombia that offers a wide range of products and services. It is the oldest financial institution in Colombia (founded in 1870) and is the main subsidiary of Grupo Aval. It is listed on the Colombian Stock Exchange (BVC) with a market capitalization of 16.3 trillion pesos as of June 2022. As of the end of 2022, Banco de Bogotá had at least one banking service channel in 957 municipalities in Colombia, which represents coverage of 87% of the national territory, facilitating access to its products and services, in line with its strategy of inclusion in the banking system.
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