The successive increases in production and productivity, obtained from the use of modern technologies and sustainable practices in the field, contribute to boost the green bond market in Brazil. The evaluation is included in the Investment Plan for Sustainable Agriculture launched on Tuesday (23) by the Ministry of Agriculture, Livestock and Supply (Map) and the Climate Bonds Initiative (CBI), during the webinar "Unlocking the Green Investment Potential for Agriculture in Brazil".
The plan was designed to provide greater understanding and visibility on the scenario of green investment opportunities in Brazilian agribusiness. The CBI is the world's leading authority on the subject and the only global certifier of green titles.
Minister Tereza Cristina (Agriculture, Livestock and Supply) recalls that the plan was born from the signing of a protocol between mapa and cbi in November last year in New York. "We want to be the protagonist of this new trend. Hence the importance of strengthening this green finance market in Brazil, which is an agro-environmental power, committed to sustainability," he said.
The minister cited measures that have made Brazilian agriculture one of the most sustainable in the world, such as production in degraded areas without the need to open new areas, which allows the preservation of 66% of the national native vegetation, and sustainability technologies developed by the Brazilian Agricultural Research Company (Embrapa) for the breeding of healthy animals from Integration-Crop-Livestock-Forest (ILPF) systems. "We need the development of green agro finances as a strong inducer of the realisation of this scenario," he said.
According to the minister, green investments can reach billions in Brazil, taking into account that working capital to move agricultural activities approaches US$ 100 billion per year. The amount increases when considering all agribusiness, such as the production of inputs, logistics, industrialization and commercialization.
In the webinar, The Minister of Infrastructure, Tarcísio Gomes de Freitas, highlighted that the federal government has a very robust portfolio of infrastructure investments, and that all projects already include in the planning phase the perspective of sustainability, as a smaller use of fossil fuel in the transport of cargo. "I'm sure that our inclusion on the issue of sustainability and obtaining green bonds will be a success," he said.
The President of the Central Bank, Roberto Campos Neto, pointed out that sustainable governance has become a theme on the agenda of all central banks in the world. According to Campos Neto, Brazil has great potential in green finance, which needs to be developed. He cited, for example, that only 20% of the country's carbon emissions are priced. "Governance policies influence investments. We can and should participate more in this market."
For the president of Banco UBS in Brazil, Sylvia Coutinho, Brazil has all the conditions to become the world leader in green investments, highlighting Law 13,986, which makes agribusiness credit securities simpler, less bureaucratic and flexible for the green financial market. The executive mentioned that a survey of 3,000 investors from 85 countries revealed that Brazilian investors lead the ranking as the most attentive to the topic when allocating resources to ventures. "Brazil has the largest environmental assets on the planet and the most competitive agribusiness on the planet."
According to the chief investment officer of PGGM (Europe's pension fund), Jeroen Verleum, the country needs to empower investors to expand the application of resources in green finance.
CBI Executive Director Justine Leigh-Bell stressed that green investments in Brazil can grow on a large scale, through better visibility of investment-friendly segments. "We are in the right direction, but there is a lot of work to be done. I expect that there will be a lot of success on the part of Brazil."
Photo: Antônio Araújo/Mapa
The significant results of the Brazilian agricultural market – the largest exporter of beef, poultry, soy, coffee, orange juice, sugar – have already made it the second largest green bond market in Latin America and the Caribbean. The country accounts for 34% of the emissions in the region, totaling almost US$ 6 billion.
The country's first green bond was issued in June 2015 and since then there are 25 securities issued. "But it is a market in Brazil still incipient, considering the potential of the sector. There are numerous opportunities, but these need to be identified and promoted, including the types of assets and projects that can be classified as eligible for green financing," said José Ângelo Mazzillo Jr, deputy secretary of the Mapa's Agricultural Policy Secretariat.
In the global scenario, this volume, in 2019 alone, reaches a record issue of approximately US$ 260 billion. In the accumulated, since 2013, there are US$ 800 billion, according to the Investment Plan for Sustainable Agriculture.
The plan is the result of efforts by Mapa and the CBI through consultations with representatives of the federal government, class entities and the agricultural sector.
In the last four decades, the Plan points out, Brazil has implemented several sustainable agricultural practices, such as no-tillage, crop-livestock-forest integration (ILPF) and biological nitrogen fixation, conducted by the Ministry of Agriculture. No-tillage, for example, was adopted in soybean and corn production, improving soil fertility and decreasing the use of chemical fertilizers.
The adoption of the Forest Code and the Low Carbon Agriculture Plan (ABC) have been vital for the expansion of sustainable agriculture. Through increased agricultural productivity and the adoption of good practices and technologies, only 7.8% of the Brazilian territory – 66 million hectares – are destined for agricultural production.
An evaluation of the ABC Plan, which turns 10 years old in 2020, shows that low-carbon technologies have been implemented on 59 million hectares, about 25% of the area used for agricultural activities. The expansion of these technologies and other agricultural practices will increase productivity and efficiency and, consequently, increase the number of new investment opportunities. The use of low productivity pastures for cultivation purposes is another alternative to increase productivity and efficiency.
Among other practices and techniques already present in national agriculture to increase efficiency and productivity is the use of biofertilizers and biodefensives. The country already has a national bioinsumos policy. Embrapa has developed different low-carbon initiatives for beef production, such as Carbon Neutral Meat (CCN) and the ILPF Network.
To strengthen the growth of the green capital market in Brazil, the plan lists a series of measures to be adopted such as the expansion of the (political) plan and the (credit)ABC program. One of the guidelines is the adoption of new technologies to increase productivity, machinery, storage, inputs, in addition to allowing a greater implementation of existing practices.
Another point will need to be improved the under-legal regulation of the matter in order to create the appropriate incentives to improve the business environment and facilitate producer access to the capital market. The promotion of credit improvement mechanisms, instruments such as insurance and loss-sharing mechanisms will be important measures to leverage public capital and attract private investors.