Aligning financial flows of the financial sector in Panama with the Paris Agreement climate change goals

The proposal aims to mobilize private capital for Panama's low-emission and climate-resilient economy by addressing a lack of clarity on sustainable investments and a deficiency in climate-related financial risk management. It focuses on the banking and insurance sectors, leveraging the existing Sustainable Finance Working Group (GTFS). Key activities include creating a national taxonomy, implementing TCFD-aligned risk disclosure methodologies, and building capacity through training. The project also seeks to identify a domestic financial institution for GCF accreditation and develop a concept note for a larger mainstreaming project.

• Panama's financial sector is significantly larger than its national economy, with total assets of US$ 144 billion as of December 2020, representing over 2.2 times the country's GDP.
• The banking sector dominates the financial system, accounting for 90.2% of total financial assets, estimated at US$ 130 billion.
• Panama is highly vulnerable to climate change, with recurring weather events estimated to cost between US$ 125 and US$ 150 million annually, or 0.36% to 0.42% of GDP.
• The Panama Canal, a critical economic asset, is particularly exposed to climate risks, specifically freshwater shortages during dry seasons and El Niño periods.
• A 2020 UNEP FI survey found that while 67% of interviewed Panamanian banks have an ESG framework, only two institutions integrate proactive climate-related financial risk management through dedicated operational units.
• The Sustainable Finance Working Group (GTFS), established in 2018 with 95% participation from the financial sector, lacks the technical capacity and resources to develop the intended taxonomy and disclosure methodologies.
• The proposal will develop a national sustainable finance taxonomy to provide a common language for 'what is green', using the EU taxonomy as a methodological reference.
• The project will implement the Task Force on Climate-related Financial Disclosures (TCFD) recommendations, developing tools for banks to assess both physical and transition risks, and for insurers to assess physical risks.
• The proposal includes a plan to identify and support one domestic financial institution to meet GCF accreditation standards as a Direct Access Entity (DAE).
• The project aims to develop a GCF concept note for a larger mechanism to mainstream climate mitigation and adaptation in the financial sector, potentially using blended finance to leverage private capital.

APA

Green Climate Fund (2022). Aligning financial flows of the financial sector in Panama with the Paris Agreement climate change goals. https://www.greenclimate.fund/sites/default/files/document/panama-unep-pan003.pdf

Chicago

Green Climate Fund. Aligning financial flows of the financial sector in Panama with the Paris Agreement climate change goals. 2022. https://www.greenclimate.fund/sites/default/files/document/panama-unep-pan003.pdf.

Wikipedia

{{cite report |author=Green Climate Fund |title=Aligning financial flows of the financial sector in Panama with the Paris Agreement climate change goals |date=25 August 2022 |url=https://www.greenclimate.fund/sites/default/files/document/panama-unep-pan003.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{greenclimatefund2022aligning, author = {{Green Climate Fund}}, title = {{Aligning financial flows of the financial sector in Panama with the Paris Agreement climate change goals}}, institution = {Green Climate Fund}, year = {2022}, month = aug, url = {https://www.greenclimate.fund/sites/default/files/document/panama-unep-pan003.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }