Costa Rica aims to develop and implement a taxonomy of sustainable finance to classify investments and economic activities that contribute to achieving the country’s climate change objectives.
Called “Aligning the Financial Flows of the Costa Rican Financial Sector with the Climate Change Objectives of the Paris Agreement”, the project looks to create a framework to map, quantify, and disclose climate-related financial risks. These methodologies and tools will also be tested in the portfolios of banks and insurers to assess their exposure to these risks and define mitigation strategies.
In this way, the Costa Rican financial sector will be provided with the necessary guidance structure to mobilize private capital towards a low-emissions and climate-resilient economy and to strengthen its capacity to adapt to the effects of climate change.
“Costa Rican authorities will develop the taxonomy to provide standardized, science-based, and internationally harmonized criteria on which environmentally sustainable investments and economic activities can be considered. The taxonomy aims to provide certainty to investors, prevent greenwashing, support the growth of national green financial markets, and increase the country’s attractiveness for international investors,” the United Nations Environment Programme (UNEP) stated in a press release.
Costa Rica has a goal of achieving net-zero emissions by 2050. The country is already a leader in renewable energy, with 99% of its electricity coming from hydroelectric and geothermal sources. Costa Rica is also investing in other sustainable technologies, such as electric vehicles and smart grids.
The country’s National Decarbonization Plan, which was launched in 2019, outlines the steps that Costa Rica will take to achieve net-zero emissions. The plan includes a number of ambitious targets, such as phasing out fossil fuels from the electricity sector by 2030 and reducing deforestation by 50% by 2030.
Costa Rica’s goal of achieving net-zero emissions is ambitious, but it is achievable. The country has a strong track record of environmental leadership, and it is well-positioned to take advantage of the opportunities that come with the transition to a low-carbon economy.