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By Jamie McGeever and Marcela Ayres
BRASILIA, Sept 8 (Reuters) – Brazil’s central bank on Tuesday launched a “Sustainability” agenda that will further embed green and climate issues into its policies and decisions on currency reserves management, bank stress tests and lending criteria.
In a presentation, and an online press conference after its release, bank officials said green issues were increasingly important for the bank and crucial for the economy, and that this agenda puts Brazil at the forefront of the global push for environmentally friendly finance.
“We want to debunk the myth that sustainability curbs productivity. On the contrary, it stimulates productivity and (economic) growth,” bank President Roberto Campos Neto said.
Global investment firms with trillions of dollars under management have threatened to dump Brazilian assets if they see no progress in resolving the surging destruction of the Amazon rainforest.
Campos Neto said the central bank closely monitors investment flows into the country, and is aware that any perception that Brazil is falling short in its environmental commitments could affect these flows.
“We want to show investors that the central bank is concerned about this, that it is related to our mission,” Campos Neto said.
The agenda will also see “socio-environmental” and “climate” risks play an increasingly important part on the central bank’s regular stress tests of financial institutions. Firms which score badly will need to increase capital to face environmental risks.
Fernanda Nechio, deputy governor for international affairs, said the bank would look at the feasibility of incorporating a “socio-environmental variable” into the management of its international reserves, although there are no “specific metrics” yet.
In its presentation, the bank said it was looking into providing “sustainable liquidity” credit lines to financial institutions backed by backed by private loans or securities. Nechio said this could be launched in the coming months.
The central bank also said credit limits for rural companies and operations that show high environmental and sustainability standards could rise as much as 20%. (Reporting by Jamie McGeever and Marcela Ayres; Editing by Sandra Maler and Richard Chang)
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