Green Finance and the Transformation of Property in Brazil: Building New Theoretical and Empirical Knowledge

Research team Properties in Transformation: Tomaso Ferrando University of Bristol Iagê Z. Miola Federal University of Sao Paulo Diogo R. Coutinho University of Sao Paulo Flávio Prol CEBRAP Débora Ungaretti University of Sao Paulo Properties in Transformation: Towards an interdisciplinary research agenda on contemporary Brazil http://propertiesintransformation.org

Brazil and the UK at the centre of the “green bonds rush” - UK Government and the City of London Corporation: intention to transform London into the centre of the market - Brazil as an opportunity: largest environmental assets in the world and a perfect destination for green capitals

What are Green Bonds? What Green Projects? “any type of bond instrument where the proceeds will be exclusively applied to finance or re-finance, in part or in full, new and/or existing eligible Green Projects” (Green Bonds Principles, 2017) (Green Bonds Principles, 2017) What Green Projects? renewable energy reduction of air emissions, greenhouse gas control environmentally sustainable agriculture and animal husbandry; forestry clean transportation sustainable water and wastewater management green buildings eco-efficient products

Why Green Bonds? Increasingly relevant for environmental and climate related projects Market worth around USD 200 billion and projections of 50% increase by 2018 New business opportunities for issuers, investors and third parties (reviewers and underwriters) New avenues for socio-legal research and the transformations of property

Green Bonds in Brazil Why Brazil? Relevance for green bonds and potential for expansion Room for academic contributions Who is studying it in Brazil and how? - Actors involved in the green bonds market - Instrumental perspectives (obstacles and reforms for promoting green bonds markets) What has happened in the Brazilian green bonds market? 9 issuances since 2015 4.3b euro tiny fraction of total bonds issuances, lower than global average (4%)

(CBI, 2017)

Green Bonds in Brazil What are the sectors? Brazil: Global: (CBI, 2017)

Green Bonds in Brazil Who is issuing green bonds? 8 out 9 issuances are private (non-financial) 1 issuance by the Brazilian Development Bank (BNDES) Brazil: Global: Source: GIZ (2017, p. 30)

Green Bonds in Brazil Who is buying green bonds? “Institutional investors, specifically pension funds and insurance companies as well as banks and investment funds, have been the main drivers in the growth of green bond markets” (GIZ 2017, p. 43) Need for research Global: Brazil:

Preliminary Research Questions Who is issuing and who is investing? Where are they being issued and bought? What projects are financed and where? Why are green bonds issued? - Market differentiation - Reputation - Accountability for investors Why are green bonds demanded? - “Environmental, Social and Governance” (ESG) agenda: competitive advantages? - Green = lower risk? - Portfolio diversification and higher profitability?

Preliminary Research Questions How are green bonds being regulated? The regulatory politics of what is “green” soft law/self-regulation (e.g. Brazil) and public (e.g. China and India) What factors, actors and interests affect the modelling of green bonds issuances? How are projects being monitored? How “green” are the projects funded through green bonds? Is there a space for “social” in green bonds? - Green projects and social tensions What are the transformations implied by green bonds when it comes to: Financialization Transnationalization (ex. control through debt, instead of ownership?)

What we have in mind Phase I: Refining questions and methodology Phase II: Identifying 2 case studies and conducting fieldwork Phase III: Trainings with stakeholders Phase IV: Conferences and dissemination to enlarge networks in Brazil and beyond

Thank you!

Green Finance and the Transformation of Property in Brazil: Building New Theoretical and Empirical Knowledge