CAF, the development bank of Latin America and the Caribbean, has announced a historic investment of $40 billion over the next five years to finance green growth and climate action.
With the new announcement, the institution aims to increase its green financing to 50% of its approvals by 2030. CAF's portfolio of operations will combine project financing, the promotion of sustainable public policies, impact investments, and the use of innovative instruments. CAF will allocate $10 billion in approvals by 2030 to drive this process, ensuring energy security and service affordability.
The strategy also includes green credit lines for financial institutions and direct work with subnational governments to ensure that financing reaches all citizens.
CAF's announcement coincides with the CELAC-EU Summit in Santa Marta, an event that seeks to deepen cooperation and European investment in Latin America and the Caribbean, a region that hosts 60% of the world's biodiversity.
Strategic Lines and Areas of Action
The funds will be allocated to the following strategic areas of the development bank:
- Just Energy Transition
With significant potential in renewable energies (solar, wind, natural gas, hydroelectric, and geothermal), the goal is to decarbonize the electricity, transport, and productive sectors.
- Resilience, Strategic Ecosystems, and the Agricultural Sector
The strategy focuses on climate adaptation and resilience against threats such as deforestation and mining. At the same time, opportunities in the agricultural sector will be enhanced through regenerative and sustainable approaches.
- Resilient Territories and Infrastructure
Actions seek to foster water security through access to drinking water, sanitation, and the management of phenomena like droughts and floods. The resources will also contribute to accelerating the opportunities of the triple transition—green, digital, and social—promoted by the European Union's Global Gateway.
In the urban sphere, the development of sustainable mobility systems, urban regeneration, and infrastructure in harmony with nature will be promoted.
In terms of infrastructure, CAF promotes physical connectivity and digital transformation under an integration approach, with interventions in transport, logistics, energy, and digital transformation projects, seeking to close the region's infrastructure investment gap.
High-Impact Initiatives
The institution will continue to mobilize third-party financing, such as the issuance of green bonds and climate funds, and will promote strategic alliances.
Among CAF's standout green initiatives are: • Debt-for-Nature Swap of the Lempa River in El Salvador: A one-billion-dollar mechanism that releases fiscal resources for the protection of critical ecosystems. • Biodivercities Network: A space for articulation for local governments that finances sustainable urban interventions based on biodiversity. • Blue Bond: A 100 million euro issuance aimed at financing projects for ocean protection and coastal communities. • Green SMEs: An initiative co-financed by the GCF that provides credit and technical assistance to small and medium-sized enterprises in countries like Panama to mitigate climate change with innovative solutions.
CAF's Executive President, Sergio Díaz-Granados, highlighted that this is an unprecedented investment for a development bank in the region. This initiative focuses on the just energy transition, water security, sustainable mobility, agricultural prosperity, and the conservation of strategic ecosystems, including the Amazon and mangroves. Díaz-Granados recalled that the goal of reaching at least 40% green approvals by 2026 was met ahead of schedule in 2024. This financial commitment was announced within the framework of COP30 in Belém and the CELAC-EU Summit in Santa Marta.
