The pioneering spirit of Sicredi, a credit union system with more than 7 million members and a presence in all Brazilian states and the Federal District, also exists in the area of sustainability. In 2022, Sicredi issued the first public sustainability bond in Brazil, with series of two and three years.

Coordinated by Bradesco BBI, the operation raised US$ 159.4 million in resources that were converted into financing for projects aligned with sustainability. The issuance was based on a framework prepared with the support of the dutch company Sustainalytics, specialized in evaluating ESG projects.

Before that, Sicredi had already been carrying out public issues of traditional bonds in the market, as well as green and social fundraising bilaterally with strategic partners, says João Pedro Segabinazzi Stephanou, Manager of Structured Operations and Sustainable Finance:

“With the maturity of the sustainable finance market in Brazil, we realized the opportunity to use our acquired expertise by issuing a sustainability bond, based on a sustainable finance framework that would support this issuance, in addition to future funding in the market”.
The issuance is aligned not only with the cooperative’s values, but also with the growing demand for sustainable credit, according to Stephanou.

Green finance

The sustainability bond operates as an instrument for raising funds for investment in sustainable projects in both the environmental and social spheres, explains the Manager of Structured Operations and Sustainable Finance:

“The resources raised through this operation were allocated to projects and initiatives that promote sustainable development, covering economic, social and environmental aspects.”

Investors who purchase the bond have a guarantee from the issuer that the resources will be invested in activities aligned with sustainable criteria, in accordance with the criteria set out in Sicredi’s Sustainable Finance Framework. This approach aims to integrate ethical and positive impact considerations into business, providing investors with the opportunity to support sustainable causes while seeking financial returns.

The environmental eligibility criteria are aimed at supporting activities based on the use of natural resources that can generate value in a sustainable way, whether through appropriate management, or even through investment in clean technologies.

“In this way, green projects aimed at energy efficiency are eligible to receive resources from the sustainable bond, including the installation of photovoltaic energy panels, investments in real estate developments aligned with best environmental practices, in addition to sustainable mobility and management projects of natural resources”, explains João Pedro Segabinazzi Stephanou.

In the social aspect, initiatives to promote the financial and economic inclusion of communities with lower purchasing power are eligible, as well as support for micro and small businesses capable of positively impacting communities and promoting the creation of jobs.
Medium-sized companies run by women or located in less developed locations also qualify. Finally, the financing includes family farming.

Sustainable support

The resources from the sustainable bond were invested in operations from June 22, 2022 to December 31, 2022. Of the amount, US$159.4 million was allocated to 5,356 renewable energy projects with a focus on solar energy.

Furthermore, investments included another 5,474 projects to generate jobs through financing Small and Medium-sized Enterprises (SMEs) led or owned by women.

Another 4,008 projects to generate jobs through financing SMEs led or owned by people located in municipalities with a Human Development Index (HDI) below the national average were benefited. Each of these categories received a total of R$234 million. The numbers are detailed in the Annual Sustainable Bond Allocation and Impact Report.

Stephanou reports that it is now possible to measure the impacts provided by the sustainability bond:

“In the renewable energy operation, the emission of 4.9 thousand tons of greenhouse gases (GHG) per year was avoided. Furthermore, in operations aimed at social eligibility, we contributed to supporting more than 80,000 jobs.”

He also points out that the launch of Brazil’s first sustainability bond by Sicredi reinforces its commitment to the United Nations Global Compact in favor of the Sustainable Development Goals (SDGs).

Therefore, the operation meets objectives 7, 9, 13 and 5, which deal, respectively, with affordable and clean energy; Industry, innovation and infrastructure; climate action; and equality of gender.

Recognition

Due to the Sustainable Public Financial Letter, Sicredi was awarded in the “Sustainable Bond of the Year” category by the Global SME Finance Awards 2023. The initiative also received an honorable mention in the Best Financier for Women Entrepreneurs category.

“We are very happy with the recognition, which demonstrates our global relevance in preserving the environment and empowering people, allocating resources to those who need it most”, says Alexandre Barbosa, executive director of Sustainability, Administration and Finance at Sicredi.

The Global SME Finance Awards are organized by the SME Finance Forum and endorsed by the G20 Global Partnership for Financial Inclusion (GPFI). The recognitions in the Sustainable Title of the Year category in this edition also included a partnership with the Green Bond Technical Assistance Program (GB-TAP) of the International Finance Corporation (IFC).