Green loans for climate-friendly technologies
In Paraguay, extreme weather events and climate change are already having direct consequences on productivity and economic output. The demand for climate-friendly technologies and solutions for adapting to climate change is correspondingly high.
The Paraguayan bank Sudameris offers financial services for small and medium-sized enterprises (SMEs) as well as for corporate and private customers. In cooperation with DEG, it has launched a new product: green loans. With this product, Sudameris offers new investment opportunities for the productive, industrial, corporate sector, as well as for small and medium-sized enterprises. It seeks to empower and support companies and individuals in improving their financial, environmental and social performance by financing projects with an emphasis on energy efficiency, sustainable construction, renewable and clean energies or other new technologies that contribute to saving energy or resources.
DEG, together with French development bank Proparco and Dutch development bank FMO, provided Sudameris Bank with a long-term loan totalling USD 120 million for this purpose in 2020. DEG arranged the financing and itself provided USD 40 million of the total amount.
Sudameris’ customers are active in the agricultural industry, the manufacturing industry, trade and the services sector. In these sectors, enormous energy savings can be achieved with investment in new climate-friendly technology, for example through more efficient machinery, innovative irrigation systems, acquisition of cutting-edge and clean technologies, purchase and import of electric vehicles or when boatmen replace their boats with more modern barges.
DEG advisory service: “Green Loan Quick Assessment”
Awarding green loans is a completely new line of business in Paraguay. DEG worked very closely with Sudameris during the product development. In addition, the “Green Loan Quick Assessment” advisory service developed by DEG was implemented as a pilot scheme at Sudameris. In the first phase, the potential for green credit on the local market was assessed and selection criteria defined, which in some areas go beyond the internationally recognised ”Green Loan Principles”. Building on this, Sudameris made adjustments, for example in reporting.
DEG, FMO and Proparco supported Sudameris in the execution of the “Green Products” with further Business Support Services. This new project enabled Sudameris to include the logic and criteria of the green financial products within its commercial strategy, including training aimed at the areas directly involved. And Sudameris was able to successfully award the first greens loans.
With this financing plus advisory service, DEG supports a local universal bank in launching a new financing product. By granting green loans, small and medium-sized enterprises can make targeted investments in climate-friendly technologies.