New Financial Instruments for Sustainable Development
Brazil has been innovating in raising funds to finance sustainable projects. Two important financial instruments have been gaining prominence: Development Credit Notes (LCDs) and Incentivized Debentures. Both allow investors to directly finance projects aimed at ecological transformation and sustainable economic development in the country.
Development Credit Notes (LCDs): Incentive to Sustainable Development
Created in 2024, LCDs allow development banks to raise funds directly in the capital market, focusing on financing sustainable projects.
🔹 They work like fixed-income securities, with tax benefits similar to LCIs (Real Estate Credit Notes) and LCAs (Agribusiness Credit Notes).
🔹 They offer an income tax exemption for individuals and a reduced rate for companies, making them an attractive investment.
🔹 Financing of infrastructure, innovation, industry and small business projects, promoting sustainable development.
Annual Issuance: Each development bank can issue up to R$10 billion in LCDs. In 2024, approximately R$10 billion was raised, with significant growth expected in 2025.
Incentivized Debentures: Record Fundraising for Green Infrastructure
Another highlight in sustainable financing is Incentivized Debentures (or Tax-Exempt Debentures), a financial instrument that allows fundraising for infrastructure with tax incentives for investors. 🔹 These debentures are exempt from income tax for individuals and have reduced rates for institutional investors 🔹 Financing of strategic projects such as renewable energy, sanitation, sustainable transportation and green logistics 🔹 In 2024, issuances hit a record of R$120.3 billion, accounting for a 66.4% growth over the previous year |
Impact on Ecological TransformationWith LCDs and Incentivized Debentures, Brazil has expanded its sources of financing for sustainable projects, boosting the transition to a green and resilient economy. |