Sustainable finance taxonomies are playing a pivotal role in mobilizing private capital towards environmentally sustainable investments, as they establish a transparent and science-based definition of ‘what is green’ and ‘what is not’ within a jurisdiction, bringing credibility, integrity, and transparency to the market and thus, facilitating the identification of such investment opportunities for the private sector. For this reason, sustainable finance taxonomies are being developed rapidly worldwide and across the LAC region. The Common Framework of Sustainable Finance Taxonomies for Latin America and the Caribbean is a guidance document that can serve as a voluntary reference to orient LAC member states that are in the process of or intend to develop sustainable finance taxonomies.
There is a growing momentum and an excellent opportunity for the LAC member states to establish compatible and interoperable frameworks on sustainable finance not only at a regional level but also globally that will facilitate access to cross-border financial markets for such investments and will avoid information asymmetry and market fragmentation, which are among the main barriers to be overcome for increasing market uptake on sustainable finance.
This report is the first deliverable of the Working Group on Sustainable Finance Taxonomy in Latin America and the Caribbean (LAC Taxonomy Working Group), created as part of the Interagency Technical Committee (ITC) of the Forum of Ministers of Environment of LAC and constituted by UNEP and its Finance Initiate (UNEP FI), World Bank, IFC, IMF, UNDP, ECLAC, IDB, CAF, FAO, and the European Commission, as an external technical advisor.
