There are many barriers faced by the financial institutions to lend credit to businesses for green projects in Colombia. Some of the barriers include a lack of visibility on the business opportunity. Financial institutions are not used to mobilise demand (convince clients to invest in specific solutions); they are used to finance clients that approach them. Another barrier is the fact that financial institutions evaluate the company (the borrower) that is requesting the funding and not the project.
The Inter-American Development Bank (IDB) offered technical assistance to the Banco de Bogotá (BdB) to develop evidence, knowledge and capacity to identify business opportunities in the bank’s portfolio and offer guidelines for managing the green portfolio (including climate resilience).
Also, part of the objective was to identify and take advantage of potential opportunities to increase the “green” portfolio, and lay the foundations for preparing and executing financial and/or non-financial products that support the consolidation of the bank’s green portfolio. In addition, it sought that BdB applies the principles of mainstreaming climate change in its credit and financing operations (such as guarantees, performance bonds, etc.) to companies and projects.
The project aimed to support a Banco de Bogota, a Colombian commercial bank, to develop their green financing strategy, build their E&S risk management procedures and build internal capacity.
The project was divided into three phases. Phase one focused on the analysis of the BdB loan portfolio to identify a possible existing “green” portfolio, as well as identifying the market segments that it already finances where there could be potential opportunities to build a “green” portfolio. Phase two aimed to evaluate the current system of analysis and management of environmental and social risks of BdB. And phase three aimed to develop a strategic action plan for BdB on how to take advantage of potential green business opportunities and climate risks.
