Signing of investment agreement for Brazil’s “Climate Change Investment Promotion Project” (Overseas Investment and Loan): Supporting emerging companies that contribute to Brazil’s climate change measures through investment in a climate change fund

On May 31, the Japan International Cooperation Agency (JICA) signed an agreement to invest in the GEF LatAm Climate Solutions Fund III (GEF Latam III Fund), which is managed by GEF Capital, and held a signing ceremony on June 12. JICA’s investment will be used to finance startup companies working to address climate change in the Federative Republic of Brazil. This project will be implemented as a co-investment with the French development finance institution, PROPARCO, the U.S. Development Finance Corporation (DFC), and the European Investment Bank (EIB).

Brazil, the largest country in Latin America and the 12th largest GDP in the world, is the world’s fifth largest greenhouse gas (GHG) emitter, accounting for 3.9% (2.4 Gt) of global annual GHG emissions (2019). The Brazilian government has revised its “Nationally Determined Contribution” GHG emission reduction targets for 2022, aiming to achieve net zero emissions by 2050. On the other hand, the country’s climate change-related business is a high-growth potential sector with huge financing needs, but the recent rise in dollar interest rates and the uncertain economic outlook caused by the international situation have made it increasingly difficult for private equity (PE) firms in the country to raise capital.

GEF Latam III Fund is a PE fund investing in (1) renewable energy, (2) food industry and agriculture, and (3) urban solutions in Brazil. The fund is a pioneer in Brazilian investment funds focused on sustainable development goals and has a high degree of expertise in the climate change sector in Brazil.

This project is expected to promote climate change countermeasures in Brazil through JICA’s participation in this fund in collaboration with other development finance institutions, and to mobilize private sector funds, including Japanese companies, for future projects in this field, thereby contributing to SDG Goal 13 (take concrete measures to address climate change) and Goal 17 (achieve the goals through partnerships). Partnerships to Achieve the Goals).

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