Costa Rica has launched a project tagged, “Aligning the Financial Flows of Costa Rican Financial Sector with the Climate Change Objectives of the Paris Agreement,” to support its goal of achieving zero emissions of carbon by 2050.
The institutions involved in this initiative are the United Nations Environment Programme (UNEP), its Finance Initiative (UNEP FI), and the European Commission, along with the Ministry of Environment and Energy (MINAE), the General Superintendency of Financial Entities (Sugef), the General Superintendency of Securities (Sugeval), the Superintendency of Pensions (Supen), the General Superintendency of Insurance (Sugese), and the Central Bank of Costa Rica (BCCR).
The initiative aims to develop a national taxonomy of sustainable finance and support its implementation in the financial sector.
A release on UNEP’s website stated that the initiative will also create a framework to map, quantify, and disclose climate-related financial risks, adding that a significant private investment component will be necessary for Costa Rica to achieve net-zero emissions by 2050.
Deputy Regional Director of UNEP for Latin America and the Caribbean, Piedad Martin said: “The UNEP Regional Office for Latin America and the Caribbean, along with UNEP FI, within the framework of this initiative, will support national authorities and the private financial sector in a joint effort to redirect financial flows towards a low-emission and climate-resilient economy aligned with the Paris Agreement.”
Director of International Affairs at the Ministry of Environment and Energy (MINAE) of Costa Rica, Enid Chaverri, said: “In this way, the taxonomy will favor transparency and create a favorable environment for investments in sustainable finance. This will help quantify and reduce the financial gap to achieve the objectives of addressing climate change through the definition of public-private climate financing strategies.”
Head of Political Affairs and First Counsellor at the Delegation of the European Union in Costa Rica, Katja de Sadeleer, said that “while local specificities must be considered, ensuring comparability and interoperability of taxonomies across different jurisdictions provides credibility, integrity, and transparency to the market, allowing the mobilization of cross-border capital flows.”
Costa Rica’s geographical location exposes Central America country to the risks associated with climate change. Official estimates show that, in the last three decades, the fiscal cost of the direct effects of extreme hydro-meteorological disasters varied between 0.3% and 1.7% of GDP per year, mainly concerning the repair and reconstruction of damaged infrastructure.