The sustainable future has arrived in Uruguay

In his speech at Agro en Punta, Herman Kamil, the Director of the Debt Management Unit of the MEF, explained how the country aligns its environmental goals with its economic objectives.
Publication date: 08/02/2024

In a world increasingly aware of climate urgency, Uruguay is positioning itself as a benchmark in integrating environmental sustainability with its economic and financial strategy. During his recent participation in the Agro en Punta panel, the director of the Debt Management Unit of the Ministry of Economy and Finance, Herman Kamil, broke down the initiatives the country is implementing to align its environmental commitments with its economic goals.

Kamil highlighted the Uruguayan government’s priority for climate change mitigation and adaptation, “a priority established in the 2020 Budget Law.”

According to his statements, since 2018, interactions with international investors revealed a growing interest in the environmental footprint, decisively influencing their investment decisions.

Faced with this scenario, Uruguay adapted and innovated: “What we set out to think about in 2020 was how we could align the government’s financing strategy with the environmental mitigation goals that the country had already committed to before the Paris Agreement.” The result was the development of a global sovereign bond that, for the first time, explicitly links the country’s cost of borrowing to its performance on sustainability goals.

For Kamil, this strategy benefits the country by reducing the interest rate if it achieves or exceeds its environmental goals. He explained that Uruguay has set these ambitious targets and built a robust statistical infrastructure for reporting, monitoring, and verifying its emissions, establishing itself as an “example in the world.”

“By promoting this bond, we are also trying to promote the idea that achieving environmental goals to achieve greater productivity in the country is not only the government’s responsibility, it is a national effort that includes the public and private sectors,” he said.

This sustainable bond generated strong demand, broadening the investor base and improving the country’s bargaining power. Beyond the immediate benefits, the strategy underscores the global trend towards decarbonization and biodiversity protection, increasingly relevant factors in international economic and diplomatic relations.

Uruguay sees tackling climate change not only as risk management but also as an opportunity to enhance its food security and productivity sustainably. “The window we are showing to the world is that of a country that seeks to contribute to food security sustainably," concluded Kamil, predicting a promising future for Uruguay on the global sustainability stage.