Common Framework of Sustainable Finance Taxonomies for Latin America and the Caribbean
July 3, 2023
10 July 2023
8:30 AM (Panamá)
The realization of the Sustainable Development Goals (SDGs) and the objectives of the Paris Agreement require increasing capital flows towards investments that contribute to sustainable and low-carbon economic development. Sustainable finance taxonomies represent a valuable tool to channel resources to where it matters most by providing definitions that are based on science to identify assets, activities or projects aligned with sustainable development objectives. They help build confidence in the market and the integrity of claims, avoiding greenwashing.
Currently, several taxonomies are under implementation and more in development in the Latin America and Caribbean region. While this is encouraging, there is a risk that a lack of comparability and operability between these creates hurdles for trade and financing flows, especially across country flows. In this context, the Working Group on Sustainable Finance Taxonomies for Latin America and the Caribbean, constituted by UNEP and its Finance Initiative (UNEP FI), UNDP, IFC, World Bank, IMF, IDB, CAF, ECLAC, FAO, and the European Commission, as an external technical advisor, has acted as the Steering Committee of the technical development of the Common Framework of Sustainable Finance Taxonomies for Latin America and the Caribbean (LAC Taxonomy Common Framework).
The LAC Taxonomy Common Framework 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. While considering local specificities, it establishes a set of guiding principles, drawing on the European Union and international best practices, that will improve comparability and ensure interoperability of sustainable finance taxonomies in the LAC region and internationally with the objective to facilitate cross-border capital flows for environmentally sustainable investments in the region. The LAC Taxonomy Common Framework has been funded by the European Union through the EUROCLIMA Programme.
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