Diagnostic Study of the Role of the Financial Sector in Climate Finance in Costa Rica

GIZ supported the government of Costa Rica through the project ACCION Clima II to help this country develop the necessary capacities and tools to achieve its international climate goals and ultimately, economic and social   development with low greenhouse gas emissions. In fact, Costa Rica has set the ambitious goal of becoming carbon-neutral by 2020. The objective of this second stage is to develop an enhanced structure for the national climate regime (governance), and a national system for monitoring and improving the traceability and mobilization of climate finance. The funds available from the public sector is not sufficient to transform Costa Rica to a low-emission economy, and therefore, mobilizing private funds are essential to meeting these financing needs. In order to mobilize more private resources needed by climate action, the participation of the financial system is essential. At the international level, several initiatives and products are supporting this objective, including green credit lines, green bonds, climate insurance, initiatives of regulators to improve the management of environmental risks and creation of green indexes for stock exchanges.   GIZ commissioned Econoler to assess the current participation of Costa Rica’s financial sector in climate change finance, as well as to identify the barriers and outline the options to strengthen the role of the financial sector in mobilizing climate finance, particularly in the private sector.

Econoler was commissioned to analyze the role of the Costa Rica’s financial sector in climate change finance. Econoler carried out the following tasks:

• Identifying and assessing the financial sector’s activities which are relevant to climate finance (including regulators, banks, micro-financiers, investment funds, insurance companies, support entities, such as financial entities’ associations, etc.);
• Estimating the volume of climate finance provided by and through the financial sector;
• Suggesting actions that may encourage the financial system to participate more actively in climate finance, especially to mobilize private financial resources in the country.
• Recommending a national policy and Acción Clima II project actions to promote the integration of the financial system into climate finance.

  The expected outcome of this assignment will be the study results and findings, which will enable the government of Costa Rica, the “Dirección de Cambio Climático del Ministerio de Medio Ambiente y Energía” and GIZ to take the necessary actions to increase the financial sector’s participation in climate finance.