Project Details
Project
Federative Republic of Brazil Sustainable Bond Second-Party Opinion (2023)
Client
Federative Republic of Brazil
Project Type
Sustainability Bond/Loan
Industry Group
Sovereign
Use of Proceeds
Pollution prevention and control; Renewable energy; Energy efficiency; Clean transport; Natural resources/land use management; Water/waste water management; Climate change adaptation; Eco-efficient products; Socio-economic advancement; Food security; Employment generation and Socio-economic empowerment; Affordable housing; Affordable basic infrastructure;
Location
Brazil
Evaluation Date
Aug 2023
Evaluation Summary
Sustainalytics is of the opinion that the Federative Republic of Brazil’s Sovereign Sustainable Bond Framework is credible and impactful and aligns with the four core components of the Sustainability Bond Guidelines 2021, Green Bond Principles 2021 and the Social Bond Principles 2023. This assessment is based on the following:
USE OF PROCEEDS
The 17 eligible categories1 for the use of proceeds are aligned with those recognized by the Green Bond Principles and the Social Bond Principles. Sustainalytics considers that investments in the eligible categories will lead to positive environmental and social impacts and advance the UN Sustainable Development Goals, specifically SDGs 1, 2, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14 and 15.
PROJECT EVALUATION AND SELECTION
The Republic of Brazil has established a Sovereign Sustainable Finance Committee (CFSS) which is responsible for evaluating and selecting eligible projects in line with the Framework’s eligibility criteria. The CFSS is also responsible for identifying and mitigating environmental and social risks associated with the financed projects. Sustainalytics considers this to be in line with market practice.
MANAGEMENT OF PROCEEDS
The CFSS led by the Ministry of Finance will oversee the allocation and the tracking of the proceeds. The Republic of Brazil intends to fully allocate net proceeds within twenty-four months of issuance, on a best-efforts basis. Pending allocation, an amount equivalent to the unallocated proceeds will be managed as per the legislation applicable to government debt management and the National Treasury’s cash availability. Sustainalytics considers this to be in line with market practice.
REPORTING
The Republic of Brazil intends to report on the allocation and impact reports annually until full allocation which will be published on its website. Allocation reporting may include the breakdown of proceeds per type of expenditure, share of financing and refinancing, share of co-financing and the amount of unallocated proceeds. Sustainalytics views the Republic of Brazil’s allocation and impact commitments as aligned with market practice.