Colombia

Between 2015 and 2018, under the banner of its Green Growth Mission, the Colombian government began to define key inputs and actions to re-orientate the economy to a green growth trajectory by 2030. The three-year mission provided the necessary technical inputs to develop (in synergy with multiple public institutions and the private sector) a new National Green Growth Public Policy (CONPES 3934). Forming an umbrella framework for future planning and development, the policy sets out a pathway for the transition towards green growth and a climate compatible economy by 2030. A key focus is reducing the countrys reliance on carbon and petroleum exports for fiscal income by diversifying the energy mix and introducing a bioeconomy model. The policy takes into account and builds on existing climate policy, including the 2017 National Climate Policy, 2018 Climate Change Law, the National Plan for Adaptation to Climate Change, and the Colombian Strategy for Low Carbon Development. The Green Growth Public Policy sets out specific targets and goals for key public institutions and a tracking platform has been developed where the general public can monitor progress.

In December 2020 Colombia also submitted its updated NDC with substantially increased ambition, calling for a reduction of 51% of carbon emissions (raised from 20%) against business as usual) by 2030. At COP26 in Glasgow, the country presented its long-term strategy, pledging to reach net zero emissions by 2050.

Colombia's National Development Plan 2018-2022 calls for the establishment of a robust national system for managing public participation throughout the policy development process, building on a law approved in 2015 which set out processes for democratic participation. The law requires that public entities (at all levels of governance) design and maintain mechanisms to permit citizen participation throughout the policy cycle (including problem diagnosis, policy formulation, implementation, evaluation and monitoring), and develop Action Plans detailing participation activities. While Colombia does have a Gender Equity Policy in place, the hierarchical nature of government decision-making and the lack of women in positions of seniority results in unequal representation in practice. There appears to be no guidance or support for inclusion in corporate governance, with limited, voluntary consultation and employee involvement according to standards set by the companies themselves.

Colombia was one of the country leaders that led the inception of the SDGs at the UN. Since then, the government has continued to prioritise sustainable development in national programmes. Columbia has produced several national strategies to encourage sustainable development in the private sector, including a 10-year Sustainable Consumption and Production Strategy (2011-2021), a National Plan on Green Business (2014) and a Green Growth Policy (2016) - alongside establishing a Green Business Hub to support green businesses and the transition to a circular economy. However, these strategies have recently expired, leaving businesses currently lacking support for taking action to achieve the SDGs.

In 2018, the government released its own long term plan for implementing the SDGs (CONPES 3918), but did not set out specific initiatives to harness private sector engagement. An SDG Tracker has been developed to provide a consistent reporting methology and platform for corporations to report to GRI standards. UNDP has also developed its Enterprises initiative which maps companies positively impacting on the SDGs and raises their profile to promote further investment and growth.

Colombia has been advancing environmental economic accounting since 1992, with the governments statistics division (DANE) having developed some natural capital accounts with support from the World Banks WAVES program.

At present, the country has a limited wealth accounting framework based on GDP, but since 2020 the National Planning Department (DNP) began leading discussions on the incorporation of existing natural capital accounts into wealth accounting (using complementary measures such as Gross Ecosystem Product). Dialogue between the DNP, Ministry of Finance and Central Bank in collaboration with the Natural Capital Lab at Stanford University is anticipated to continue with no plans as yet underway.

According to a recent report by the World Bank, Colombia ranks among the top three emerging markets in terms of incorporating sustainability in the financial sector. Colombia leads its Latin American peers in sustainable finance, having been the first to formalise and agree green commitments between the government and the financial sector via the development of a Green Protocol or Protocolo Verde de Asobancaria. In 2022 the protocol was renewed for a further 5 years and updated to incorporate a climate finance approach. It has been signed by over 25 financial institutions with the objective of implementing policies and practices that are in accordance with sustainable development.

In 2016 Bancolombia became one of the first banks in Latin America to launch green bond issuance and recently two other development banks have followed suit. Colombia's National Climate Change System (SISCLIMA) has a climate finance committee which publishes a National Climate Finance Strategy setting out specific plans and tools for issuing green and climate-friendly finance. More recently, the government commenced work on a national, EU-aligned green taxonomy led by the Colombian Financial Regulator (Superintendencia Financiera de Colombia) and the Ministry of Finance. The first phase of the project was completed and made public in late 2021, alongside release of the first Sovereign Green Bonds.

Over the last three decades Colombia has adopted some financial instruments to try to limit the adverse impact of economic development on society and the environment though there has been no comprehensive formal review of fiscal and monetary policy. These include applying taxes to water management, carbon pollution, plastic bags, retribution rates for water, atmosphere and soil contamination, and incentivising positive impacts through payments for ecosystem services, tax exemptions for green technology, renewables and electric vehicles. In 2014 a fund was established 'Fondo de Energías No Convencionales y Gestión Eficiente de la Energía' (under Law 1715) to support the diversification of the national energy mix and incentivise private capital investments in renewable energy. The Ministry of Finance also recently began to include natural risks in its Medium-Term Fiscal Framework.

On monetary policy, Columbia leads the green bond market in Latin America, having issued its first green bond in 2017. The Superintendence of Columbia has published guidance on good practice in green bond issuance and is currently developing a Sovereign Green Bond Framework. Meanwhile, the central bank is beginning to analyse the impact of climate change on inflation.

The Central Bank of Colombia currently conducts regular macroprudential stress tests assessing both the solvency and liquidity of the banking sector, publishing the results in its termly Financial Stability Report - but these do not incorporate environmental or social components.

More recently, the World Bank and the Financial Superintendence of Colombia, the financial supervisor, have conducted an initial pilot stress test exercise aligned with the classification adopted by the Network for Greening the Financial System representing the first climate-risk stress test in an emerging market. Focusing on risks most pertinent to the Colombian context (such as large-scale floods and delayed policy action related to decarbonisation), testing identified several climate-related risks to the Colombian banking sector establishing a framework for Colombia and similar emerging economies to adopt basic climate stress testing in the near future.

The Colombian government adopted a carbon tax of approximately US$5/tCO2e in 2017 as part of a wider decree (Ley 1819: reforma Tributaria Estructural) aiming to prevent sharply declining oil-tax revenues from negatively impacting the countrys budget through simplifying the tax code, preventing evasion, and modernizing regulations. The tax applies to fossil fuels, specifically gasolene, kerosene, jet fuel, diesel fuel and fuel oil estimated to cover approximately 23% of national GHG emissions. Law 2169 in December 2021 established that, as of 2023, 50% of tax proceeds will be used for coastal erosion management, water resources conservation and ecosystem protection, among other uses. However, the tax does include a loophole (set out in Decree 926) whereby businesses can buy credits from carbon-offset projects and receive carbon tax exemptions. Through a lack of credit regulation, investigators reveal fossil fuel companies are purchasing hot air credits and using them as a substitute for paying the carbon tax costing the country millions of dollars in tax revenue and undermining its carbon goal.

The Climate Action Law (Ley de Acci Climica), which came into force in December 2021, sets the national goal of implementing an Emissions Trading Scheme (ETS) by 2030 with ETS design currently under review by the government. To avoid double taxation, the countrys climate bill includes an allowance whereby payments under the existing carbon tax can be recognised as a means for emitters to meet their compliance obligations under a potential future ETS.

Colombia has a Long-Term Green Growth Policy 2018-2030 in place, administered by the National Planning Department (DNP), setting out sustainable development milestones and action plans to be delivered by 2030. The policy was developed by a national Green Growth Taskforce after widespread consultation and a series of technical studies spanning 10 thematic areas with contributions of more than 40 national and international experts on topics such as bioeconomy, forestry, renewable energy and energy efficiency, circular economy, efficient use of water, soil productivity, green business, human capital, and science, technology and innovation.

While the policy sets a broad range of policy commitments spanning several economic sectors, the focus is squarely on establishing new green programs and incentivising green growth, with little mention of reforms to existing environmentally-harmful policies and sectors. Multisectoral policy cohesion and cross-departmental coordination considerations are also lacking leaving much still resting with the DNP to initiate.

Colombia has a National Entrepreneurship Law (Law 2069) aiming to streamline the administrative burden for small business owners and support their growth. The law includes mention of green and social entrepreneurs but lacks substantive details about support mechanisms for these enterprises. The law has led to the development of a National Entrepreneurship Policy which, as its first objective, establishes that the Ministry of Commerce, Industry and Tourism, with the support of the Special Administrative Unit of Solidarity Organisations, will develop and implement a strategy to promote social innovation in entrepreneurship, environmental sustainability, cooperation and the promotion of the Commercial Benefit and Collective Interest Companies (BIC) model and the solidarity economy. The policy calls for work on this objective to be concluded by 2024.

In 2018 a law was passed formally recognising BIC companies, and the government has since stated that all property managers of commercial societies where the Colombian state has more the 50% of the share value must commence procedures to turn these societies into BICs.

Colombia's Climate Action Law (Law 2169) passed in December 2021, sets out the country's medium-long term carbon goals including reducing CO2 emissions by 51% by 2030 and reaching carbon neutrality by 2050. In the latest NDC revision the government commits to emitting a maximum of 169.44 MtCO2 equivalent by 2030 (equivalent to a 51% reduction over the business as usual scenario) and establishing carbon budgets for 2020-2030 by 2023 at the latest. While this update is more ambitious than Colombia's initial NDC, which pledged an unconditional emissions reduction of 20% compared with business as usual by 2030, the Climate Action Tracker ranks the target as highly insufficientand is inconsistent with the Paris Agreements 2 degree target - noting Colombia will still generate rising emissions.

Colombia starts from a high renewable energy baseline, with approximately 71% of its electricity generated by hydropower. Diversification will be important for energy security but its not yet clear whether this will be met by increasing existing low wind and solar generation, or expanding coal capacity (currently 10% of power generation).

During 2019 the previous government committed to the development and installation of 1500 MW in installed new renewable capacity by 2022 (equivalent to 9% of electricity supply). Launching its first renewable energy auction in 2019, Columbia has so far awarded 2200MW, surpassing its initial goal. In addition, the latest National Development Plan (PDN) 2018-2022 calls for launching tax-based incentives for investments in renewable energy infrastructure and minimum quotas for the proportion of energy coming from renewable sources for commercial energy distributors. However, these objectives still fall short of being Paris Agreement compatible. Looking ahead, the incoming government have affirmed their commitment to promoting renewable energy and ending new petroleum exploration but have not yet set any specific targets or announced plans for energy auctions.

The goal of green job creation is a theme in several of Colombia's strategy and policy documents, but actions leading on from planning remain limited at present. Colombia's Green Growth Policy 2018-2030, as a core planning instrument, helped initiate formal discussions on green job promotion, and in 2019 the government signed a Pledge for Green Jobs and Just Transition with the International Labour Organisation. Just transition policies have been included in a number of key documents, including National Development Plans, the 2050 Long Term Strategy, latest NDC and the National Circular Economy Strategy. While inequality issues are acknowledged in planning, a key challenge for Colombia will be ensuring fair stakeholder consultation processes that are inclusive of labour groups and indigenous communities. Looking ahead, the Ministry of Labour has announced plans to develop a national Just Transition Strategy by 2023.

In terms of specific programs that link social and environmental objectives, the Social Innovation Groups within the Department of Social Prosperity have implemented a participatory model for solid waste management as part of the national Free Housing Program. However, these linkages remain small-scale and will need to be significantly scaled in the coming years to address the important environmental and social challenges faced by the country.

At the national level, Colombia has a Department of Social Prosperity is tasked with designing and implementing social interventions in food security programs, family support measures to overcome extreme poverty, employability and entrepreneurship programs. The government has worked to integrate poverty alleviation and food security with its climate change strategy with the Department of Social Prosperity committing to ensuring 50% of programs implement actions for climate risk management, adaptation and mitigation by 2030. The World Bank provides a technical assistance grant to the department to support this work, but few details have been released on how this integration will be accomplished in practice. Meanwhile the Ministry of Labour has announced plans to develop a strategy for the just transition of the workforce in line with a low-carbon economy, anticipated to be completed by 2023.

Colombia's Law 1757, enacted in 2015, led to the establishment of a national system for managing public participation in the public policy development process. Article 2 of the law establishes that public entities at all levels of governance must design and maintain mechanisms to permit citizen participation throughout the public management cycle.

Public entities must develop Action Plans detailing the activities that they are going to carry out to promote citizen participation. The National Council for Economic and Social Policy (CONPES) is the highest national planning authority and acts as an advisory body to the government. CONPES review draft public policies proposed by the National Planning Department along with feedback and suggestions received from consultation and engagement exercises undertaken by the government, using the results to revise the policy. This process contributes to addressing technical issues with policy proposals by engaging with impacted citizens and stakeholders directly. However, in practice consultation exercises are implemented sporadically and impact assessment is limited, with social unrest an ongoing challenge.

Colombias National Development Plan for 2010-2014 recognised the importance of social protection for reducing extreme poverty and achieving environmental sustainability, as well economic growth and competitiveness. The latest development plan 2018-2022 includes a focus on social innovation as an instrument to reduce extreme poverty but with an increasing emphasis on peace building. In 2011 Colombia established a Department of Social Prosperity and Social Innovation Group which have together been recognised by the World Economic Forum as a prominent example of a public sector institution working to promote social innovation at all levels.

In terms of specific actions, SENA (the national institution responsible for designing technical social protection initiatives) is beginning to include green benefits (such as eco-tourism or solar installation). The governments Green Recovery Policy, launched in 2021, also proposes actions to explore the use of cash transfers conditioned to environmental actions and benefits.

During the 76th meeting of the UN General Assembly, countries pledged to protect 30% of global oceans by 2030. The former government (under President Duque) claimed Colombia had exceeded this goal in 2022.

Colombia released its multisectoral strategy Protected Areas National System (SINAP), setting out a breadth of environmental policies focused on consolidating and improving the efficiency of national conservation efforts. The strategy is supported by earlier environmental policy documents such as the Comprehensive Deforestation Control and Forests Management Strategy, the National Policy for the Integral Management of Biodiversity and Ecosystem Services , the National Plan on Forest Development and the 2001 National Environment Policy for the Sustainable Development of Ocean, Coastal and Island Space.

While SINAP does not explicitly link its framework to SDG 14 and 15, there is evidence of some progress towards these goals within the National Planning Departments SDG Progress Report 2020. Highlights include the declaration of 12 million hectares of Marine Protected Areas, creation of the SeaFlower Biosphere Preserve (part of the largest Caribbean Natural Park), formulation of the Pacto Regi Ocnos to improve sustainable ocean governance and a 10% decrease in the deforestation rate between 2018 and 2019. During 2022 Congress also approved a law on environmental crime in an attempt to ensure greater protection of oceanic and terrestrial resources.

Colombia has been developing national environmental economic accounting since 1992 and, with support from the World Banks Wealth Accounting and the Valuation of Ecosystem Services (WAVES) program, now has a number of natural capital accounts in place. The National Administrative Department for Statistics (DANE) is responsible for developing environmental accounts, quantifying and reporting annual changes in the stock and flow of environmental assets in monetary and physical terms each fiscal year. DANE also measures the impact of specific economic sectors in preserving, mitigating and protecting the environment. Colombia's environmental economic accounts include Natural Assets Accounts (for water, wood, soil, mineral, and energy resources), Flows Accounts, Environmental Protection Expenditure Accounts and Resources Management Expenditure Accounts.

Colombia does not have a natural capital advisory body, though it does recognise some limited expert input via its National Committee on Environmental Accounts (NCEA). Colombia's National Development Plan 2014-2018 legislated NCEA (an inter-agency public organ) to manage and consolidate the country's environmental and economic data.

At present, Colombia has five environmental taxes that are regulated by the Law 99 of 2013 and that cover forest use, water use, specific discharges, transfers from the electricity sector and a surcharge on tolls that are mainly regulated. While the countrys most recent National Development Plan (PDN) 2018-2022 calls for launching further tax-based incentives, there is no indication of further plans for green fiscal reform.

As part of broader tax reforms carried out in 2016, Colombia implemented a carbon tax (Law 1819) which initially dedicated 100% of the revenue to coastal erosion management, water sources conservation and the protection of ecosystems. However, this was revised down to 30% under the Paramos Law, with the remaining 70% allocated to help accomplish peace accord agreements which have sustainability criteria.