AgricultureSustainable FinanceState of the Market 2023Brazil briefing paperGORDON AND BETTYClimate BondsMOOREPrepared by the Climate Bonds InitiativeSupported by the Gordon and Betty Moore FoundationIntroductionreached cumulative volume of USD33.3bn.agricultural activities,was responsible for 9.8%Brazil was the third largest source of green,Contentsocial,sustainability,sustainability-linked,andIntroduction 22022.Given that methane is its largest source oftransition(GSS+)debt in the Latin Americagreenhouse gas(GHG)emissions,Brazil is the fifthand the Caribbean (LAC)region following ChileBrazil's growing sustainable(USD47.7bn)and Mexico (USD42bn).debtmarket 3entericfermentation of cattle.Conseque ntly,The green theme dominates the BrazilUse of Proceeds categories 4dealing with the ervironme ntal impacts of agri-GSS+volume (45%)with the more nascentfood systems plays a pivotal role in the country'sAcross the agriculture themes 6sustainability-linked bond (SLB)market thetransition to net zero,both in terms of dimateOutlook 7change mitigation and adaptation.second largest segme nt (32%).Agriculture,Forestry and Bioenergy were the most fundedThe growth of the agriculture sector in Braziluse of proceeds (UoP)categories for greenhas resulted in deforestation and change of landbonds from Brazilian corporate issuers,anduse,which has also increased domestic GHGrecent advances in regulation have encouragedemissions.The sector,including productionthe practice ofaggregating smaller projects andand agribusiness supply chains,now accountsassets,bringing them to the sustainable debtfor nearly 25%ofthe economy.Des pite climaticmarket through asset-backed securities (ABS).adversities and the global economic impact ofthe pandemic,the sector has shown resilienceBonds Agriculture Sustainable Finance State ofaccounting for a fifth of GDP growth in the Q12023,boosted bydelayed harvests.the Market published in June 2021.It focuses onlabelled instruments used to finance projects,Sustainable finance is playing an increasinglyimportant role in the decarbonisation of theoriginating from Brazil,and includes the maticagricultural sector.By the end of H1 2023debt issued between May 2015 and June 2023.the Brazilian sustainable debt market hadThematic labelsGreen,social,sustainabilitySustainability-linkedandtransitionBonds bearing the transition label arebonds(SLBs)a subset of green and are often issuedGreen,social,sustaina bility,andThe UoP of SLBs are generalbyentities operating in hard-to-abatetransition bonds offer climate andsectors such as steel,chemical,orpurpose,i.e,not earmarked forsocial benefits through their UoPanyspecific social or environmental purposeThe proceeds from the sale of suchcement.Social categories indudeHowever,key performance indicators(KPIs)bonds are earmarked to supportEducation,Microfinance,and Supportare selected as areas for improvement overfor Marginalised Communities.climate or social expenditures in categoriesthe lifetime of the bond and time-boundSustainability bonds include a combination ofspecified in the issuer's sustainable financingsustainability performance targets(SPTs)are setframework.Green bonds focus on UoP withgreen and social categories.to measure their achievement.The achievementclimate or environmental benefits such asofthe SPTs is linked tocoupon step-ups orLow-Carbon Energyergy Energy,Low-Carbonstep-downs,or early repayment obligations.Agriculture Sustainable Finance State of the Market 2023Climate Bonds Initiative