Costa Rica Takes Steps to Boost Sustainable Finance Practices
San José, Costa Rica - In a move to promote sustainable finance practices, Costa Rica has taken several initiatives to encourage environmentally friendly investments and reduce the financial sector’s environmental footprint.
Collaborative Efforts
The country’s financial regulators, SUGEF and SUGESE, have collaborated with the Ministry of Environment and Energy (MINAE) to host a series of roundtables on climate risk in the financial sector. These discussions have set the stage for the development of sustainability-linked regulation by securities and banking supervisors.
Regulatory Initiatives
One such initiative is the “Regulation for the management of environmental and social risks, and climate-related risks in the loan portfolio,” which SUGEF is drafting. The aim is to integrate climate risks into the formal risk management framework and governance of supervised financial intermediaries (i.e., banks).
- Encourages the integration of climate risks into the risk management framework
- Governance of supervised financial intermediaries
Voluntary Initiatives
Costa Rica has also adopted a voluntary initiative to improve the integration of environmental and social issues in the banking sector. In 2019, the Chamber of Banks and other Financial Institutions launched a green protocol for the banking sector, which promotes five principles:
- Offering financial products that foster environmental sustainability
- Considering social and environmental impacts and costs in asset management and risk analysis
- Promoting responsible resource use in internal operations
- Informing stakeholders about policies and practices
- Promoting cooperation among signatories
The Costa Rican stock exchange has also created voluntary guidance for sustainability reporting and a green bond standard. The protocol, which was adopted by eight financial institutions, including banks and other financial institutions, is designed to promote the adoption of sustainable finance practices in the country’s banking sector.
Goals and Targets
These initiatives are part of Costa Rica’s efforts to reduce its carbon footprint and transition towards a low-carbon economy. The country has set ambitious targets to become carbon-neutral by 2050, and the financial sector plays a crucial role in supporting this goal.
- Reduce carbon footprint
- Transition towards a low-carbon economy
- Become carbon-neutral by 2050
Quotes
“Costa Rica is committed to promoting sustainable finance practices and reducing our environmental impact,” said [Name], Minister of Environment and Energy. “We believe that the financial sector has a critical role to play in supporting our transition towards a low-carbon economy.”
Impact
These efforts are expected to have a positive impact on the country’s financial sector, promoting sustainable investments and reducing its environmental footprint.
- Promotes sustainable investments
- Reduces environmental footprint