Strengthening capabilities for climate action in the Peruvian financial ecosystem

Countries:

Peru

Status:

Completed

Sector:

GFS

Delivered by:

Counterparts:

Introduction

Raising awareness and providing tools to identify climate-related risks and evaluate investment opportunities through a low-carbon, climate-resilient approach that emphasises inclusivity.

The goal of the project was to support Peru’s financial sector with integrating climate change risks into investment decisions, while catalysing sustained action on emission reductions. Filling the knowledge gaps on climate impacts was crucial, especially in areas that could affect Peru’s financial markets. By introducing relevant risk management approaches and analysing regulatory options, this project laid the foundation for counterparts to unlock new sustainable investment opportunities, accelerate the disclosure of climate risks and enhance the flow of capital towards a low-carbon economy.

 

Gender equality and social inclusion (GESI) also played a vital role, connecting women across the financial, environmental and climate sectors in Peru. This was achieved with the help of the MIC (Mujeres, Inversión y Clima) Network, set up to highlight their voices in wider discussions to support concerted climate action.

 

This project was delivered by Programa de Inversión Responsible (PIR), in partnership with ImplementaSur and 2° Investing Initiative.

"I think the financial sector has a lot that we can contribute to bridge the disconnect with small entrepreneurs and businesses in the forestry sector and help them overcome obstacles in accessing finance. The MIC group could be an interesting way of
linking with them.”

Franshesca Valverde

Vice President of ESG at AC Capitales SAFI and member of the MIC Network

“Climate change affects vulnerable populations to a greater extent, within which women are the main affected, especially in low socioeconomic strata. That is why the Network of Women, Investment and Climate is an ideal space to face this social problem – one that is already receiving more and more attention and analysis at a global level”

Kate Harrisson

British Ambassador to Peru,
2018 to 2022

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Context

  • Coastal countries, like Peru, are particularly vulnerable to climate change. This is compounded by the effects of the economic and financial crisis caused by COVID-19 which, according to the World Bank, will produce a -4.7% drop in GDP and a loss of approximately 3.5 million jobs
  • The country has an ambitious goal of a 30% reduction in Greenhouse Gas (GHG) emissions by 2030, which will require significant effort from both the public and the private sector, including financial industry support
  • Banks and other financial institutions lack the appropriate resources to assess climate-related risks and low-carbon opportunities, thus remaining unable to fulfil their fiduciary duty towards investors
  • Goals and priorities between the financial institutions and the public sector are not aligned, hindering the progress towards Peru’s climate goals, defined in their Nationally Determined Contribution (NDC)
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People from the financial ecosystem trained in climate risk management, reporting and regulation

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Pension funds’ investment portfolios assessed for transition risk exposure

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Key policy proposals presented, responding to the financial sector’s identified needs

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Women already actively involved in the MIC network

Project achievements

The project delivered a number of impactful outputs targeting key actors in the financial sector in Peru:

  • A four-module e-learning training course to build sector capacity on climate risks and opportunities, covering topics like assessing and reporting climate risks in finance and regulation. The training was delivered to Investors in the financial ecosystem, Regulators, Issuing companies and State entities
  • A pilot initiative to assess the transition risk exposure of Peruvian pension funds, analysing Peru’s four largest pension fund investment portfolios against the national emission reduction targets. Each fund received a detailed report that provides crucial information to align investment decisions
  • Policy proposals to encourage a green economic recovery for Peru, providing recommendations to financial institutions and the regulator on how concrete actions and regulatory changes will unlock the investments needed
  • Update of the Green Finance Roadmap to support the Ministry of Environment in Peru (MINAM) by identifying information gaps in quantifying climate risks and a proposal of steps to address these gaps
  • The creation of a Network of Women, Investment and Climate (MIC) which aimed to connect women in the financial sector with women vulnerable to the effects of climate change, positively impacting their lives, environment and projects
Network of Women, Investment and Climate

Created to connect women in the financial sector and women with livelihoods vulnerable to climate change

Inclusive institutional policy

In collaboration with PRESENTE, delivered an information session for PIR partners on inclusion of LGBTQIA+ minorities in institutional policy

Representation of marginalised groups

Actively prioritised balanced gender representation among workshop speakers and within the delivery team

Inclusive institutional representation

Actively promoted inclusion, resulting in more diverse participation in PIR’s Board of Directors

GESI highlights

Throughout the project, special attention was paid to women in the financial sector and other minorities to promote wider inclusion across activities. Beyond mainstreaming GESI throughout project activities, the project has also helped PIR Board of Directors reflect on gender inclusivity within the financial sector, leading them to actively promote the participation of women in its own Board of Directors.

The project also created the MIC Network, bringing together women in finance passionate about the climate. The network holds regular meetings to discuss issues around gender, women’s societal role, and climate activism – exploring how climate change disproportionately affects vulnerable women.

During MIC Network events, women learnt from each other’s experiences, shedding light on the reality of women in the Peruvian Amazon who work in forest conservation and the difficulties they face.

Overall, these meetings allowed women to create a safe space to talk openly about their experiences and challenges. It also linked women working in finance with the issue of climate change, integrating the two worlds.

Synergies have also been generated with other organisations, allowing PIR to expand the project’s scope and impact to reach more diverse groups – such as the network Amazonía Que Late for the work of the Women's Network, and an alliance with the right-based civil society organisation PRESENTE to achieve greater inclusion of the LGTBIQ+ population.

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Forward look

  • The Peruvian financial community is expected to use the knowledge on climate risk assessment acquired through this project
  • The pension funds that received climate exposure analysis can now take concrete action to transition portfolios towards more low-carbon investments. For instance, identifying areas with the highest transition risks, developing mitigation strategies, and estimating portfolio value loss in the event of a late and sudden transition
  • Similarly, following the specific analytical support underpinning the green finance roadmap, MINAM requested further support to help them adopt the recommendations for climate-related financial disclosure (TCFD)
  • The MIC Network is expected to remain active and grow, expanding its membership and receiving financial support to ensure independence while offering training opportunities and other career development opportunities for women

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