Publication of Uruguay?s inaugural Sovereign Sustainability-Linked Bond (SSLB) Framework
September 21st, 2022. The government published Uruguay?s inaugural Sovereign Sustainability-Linked Bond (SSLB) Framework.
The Framework describes Uruguay's strategic sustainability priorities and sets out goals with respect to two Key Performance Indicators (KPIs) tied to climate change mitigation and nature conservation goals: (i) reducing the intensity of Greenhouse Gas emissions and (ii) preserving the area of native forests in the country. The Sustainability Performance Targets (SPTs) are based on quantitative goals set for 2025 and are in line with Uruguay’s Nationally Determined Contribution (NDC) under the Paris Agreement, as described therein.
The Framework also introduces an interest rate structure for SSLBs that features a potential coupon adjustment (increase, stays constant or decrease), depending on whether the country fails to meet, delivers, or overperforms on its SPTs, respectively. Through this pricing mechanism, Uruguay intends to align its national financing strategy and cost of capital with its sustainability efforts, creating an innovative tool that binds borrowers and investors together in the effort to provide global public goods.
The Framework is a joint endeavor undertaken by five Ministries: Ministry of Economy and Finance; Ministry of Environment; Ministry of Industry, Energy and Mining; Ministry of Agriculture, Livestock and Fisheries and Ministry of Foreign Relations. The project benefited from technical assistance from the Interamerican Development Bank (IADB) and the United Nations Development Program (UNDP).
Access the SSLB Framework here.
Access more information, including details related to the reporting and verification process, at the following link: SSLBuruguay.mef.gub.uy