CAF – Development Bank of Latin America and the Caribbean announced a USD 40 billion investment over the next five years to finance sustainable growth and strengthen climate action, with emphasis on a just energy transition, water security, sustainable mobility, agricultural prosperity, and the conservation of key strategic ecosystems for the planet such as the Amazon, Patagonia, high-mountain wetlands, and mangroves.
With these financial resources, CAF will consolidate a portfolio that combines project financing, promotion of sustainable public policies, impact investments, green credit lines to financial institutions, use of innovative instruments (such as debt-for-nature swaps and sustainability-linked loans), and collaboration with subnational governments to ensure that financing reaches all citizens.
“This is an unprecedented investment by a development bank in Latin America and the Caribbean, demonstrating our commitment to a more sustainable, equitable, and prosperous region,” said Sergio Díaz-Granados, Executive President of CAF. “In 2021, we set the goal of becoming the Green Bank of Latin America and the Caribbean and projected that at least 40% of approvals would be green by 2026. We achieved that goal in 2024. With today’s announcement, we are increasing our green financing target to 50% by 2030.”
CAF’s announcement coincides with the EU-CELAC Summit in Santa Marta, which aims to deepen European cooperation and investment in the region. The EU-CELAC relationship has the potential to boost sustainable development in both regions, with major investment opportunities under the Global Gateway initiative. Latin America and the Caribbean, home to 60% of the planet’s biodiversity and generating 30% of its energy from renewable sources, represents a key partner for the EU in advancing the green transition.
Strategic Pillars of Latin America and the Caribbean’s Green Bank
The funds will be directed to the following priority areas:
Just energy transition – Latin America and the Caribbean has enormous potential in renewable energies such as solar, wind, natural gas, hydropower, and geothermal. To promote a just transition, CAF will focus on decarbonizing the electricity, transport, and productive sectors while ensuring energy security and affordability to improve community well-being. CAF will allocate USD 10 billion in approvals by 2030 to advance a just energy transition.
Resilience, strategic ecosystems, and the agricultural sector – In the face of threats from deforestation, mining, intensive agriculture, and climate change, CAF will promote adaptation, climate resilience, and an ecosystem-based approach. The strategy values the richness of terrestrial and marine-coastal ecosystems through conservation and sustainable-use interventions, the blue economy, and disaster-risk management, while strengthening regenerative and sustainable agricultural opportunities.
Resilient territories – CAF’s actions aim to enhance water security through access to safe drinking water, sanitation, and the management of droughts and floods. At the same time, it seeks to develop sustainable urban and mobility systems and strengthen the creative and tourism economies, promoting models of urban regeneration and infrastructure development that are in harmony with nature.
Physical and digital infrastructure – To close the infrastructure gap, estimated at about 5% of the region’s GDP annually, CAF promotes physical connectivity and digital transformation within a regional-integration framework. This includes sustainable transport, logistics, and energy infrastructure projects alongside digital-transformation initiatives.
CAF also intends to mobilize third-party financing sources, such as the issuance of sustainable bonds and access to green and climate funds, and to foster partnerships among governments, civil society, international organizations, NGOs, and the private sector. A key component will be close collaboration with subnational and municipal governments.
High-Impact Green Initiatives
Among CAF’s flagship green initiatives are:
- Río Lempa Debt-for-Nature Swap (El Salvador) – A USD 1 billion operation demonstrating that debt restructuring can free fiscal resources which are then reinvested in protecting critical ecosystems and supporting local community development.
- Network of BiodiverCities – A platform connecting local governments to identify, design, and finance sustainable, high-impact urban projects centered on people and biodiversity.
- Conservation, Restoration, and Sustainable Use of Strategic Ecosystems – Expands direct financing for biodiversity in both public and private sectors across 15 strategic ecosystems in the region, recognizing the vital services these ecosystems provide, especially for vulnerable populations.
- Blue Bond – With technical support from UNDP, CAF issued its first Blue Bond for EUR 100 million to finance projects protecting oceans and coastal communities.
- Green SMEs – A joint initiative between the Green Climate Fund (GCF) and CAF providing loans and technical assistance to small and medium-sized enterprises in Chile, Peru, Ecuador, and Panama to mitigate climate change through innovative solutions in renewable energy, energy efficiency, and sustainable land use.
