Colombia

Colombia submitted in December 2020 an update of its Nationally Determined Contribution (NDC) which substantially increases the ambition of the country’s emissions mitigation targets originally submitted in 2015. While the initial submission called for a reduction of the country’s carbon emissions of 20% of its 2030 emissions based on a Business as Usual (BAU) analysis, the most recent submission calls for a 51% reduction in comparison to the estimated growth trajectory for emissions. Despite this welcomed increase of the country’s emissions reduction target, the stated target remains insufficiently ambitious to meet the Paris Agreement target of maintaining global temperature increases to 1.5 degrees in comparison to the pre-industrial era. The lack of a strict baseline reduction target means that the country’s emissions are expected to peak in the 2027-2030 period. On a positive note, the country recently (June 2020) committed to reaching net zero emissions by mid-century as part of a process to draft a long-term strategy to achieve the Paris Agreement (E2050). However, few details have been submitted regarding the Strategy.

Prior to these more recent developments, Colombia approved in 2017 its National Climate Change Policy and in 2018 a Climate Change Law, which established the guidelines for managing the response to climate change in the country. This legislative and policy framework in integrated and coordinated via the National Climate Change System established in 2016. The resulting governance structure coordinates the policies, strategies, plans, programs, projects and actions to mitigate greenhouse gas emissions and to adapt to climate change. These include the National Plan for Adaptation to Climate Change, the Colombian Strategy for Low Carbon Development, and the National Strategy for the Reduction of Emissions due to Deforestation and Forest Degradation of Colombia

Colombia’s National Development Plan 2014-2018 calls for the establishment of a robust national system for managing public participation in the public policy development process. In this regards, article 2 of Law 1757 of 2015, establishes that public entities at all levels of governance must design and maintain mechanisms to permit citizen participation throughout the public management cycle (problem diagnosis, policy formulation, implementation, evaluation and monitoring). As part of this system, public entities must develop Action Plans detailing the activities that they are going to carry out to promote citizen participation. In terms of gender equity, Colombia has a Gender Equity Policy Building on this, the National Development Plan 2014-2018 calls for the strengthening, from a gender perspective, of the processes of planning, monitoring, evaluating and budgeting by public entities. In terms of worker representation of corporate boards, currently there are no laws that mandate work councils or other employee representatives in the corporate governance structure of Colombian businesses. The most recent National Development Plan, covering the period 2018-2022 further consolidates efforts to develop and expand mechanisms for facilitating and encouraging citizen participation in the policymaking process.

The Government of Colombia developed in 2011 the Sustainable Consumption and Production Policy as a long-term strategy (10 years) aligned with the 1299 decree in 2008 which regulates the Environmental Management Department on industries. This policy intended to modify the production and consumption patterns of Colombians to more sustainable ones; enlisted specific goals on energy intensity reduction, water consumption efficiency, and the increase the value of environmental goods and services certificated for its sustainable production process. The implementation of this policy remains on the following strategies: sustainable infrastructure, responsible purchasing, training and research, and environmental legislation. Later, in 2014, the Ministry of Environment and Sustainable Development set in motion the National Plan on Green Businesses which provides economic and financial instruments on environmental matters for green business as tax incentives, payment for ecosystem services, and the green protocol and promotion and support tools as guidelines on ecodesign and eco-labeling and financing mechanisms. It is worth highlighting the creation of Green Business Hubs to promote and positioning green businesses.

In 2016 was developed the Green Growth Policy was developed, the purpose is to determine the governance framework to coordinate policy actions on green business. It also defines the roadmap for the transition to a circular economy through the funding of green businesses.

The Ministry of environment also elaborated the National Sustainable Biotrade Program (NSBP) 2014-2024 and the National Strategy on Circular Economy 2019.

Colombia is part of the Wealth Accounting and Valuation of Ecosystem Services (WAVES). Currently, the WAVES technical committee of Colombia is developing physical, economic, and heritage assets for water and timber provision ecosystem services.

The National Administrative Department for Statistics (DANE) of Colombia elaborates the following satellite accounts:

Agroindustry pilot account Culture and orange economy account Care economy account IT account Tourism account health care accounts and; natural capital accounts.

Colombia has been a pioneer in sustainable finance in the Latin American region and has consolidated its position in recent years. According to a recent report by the World Bank`s International Finance Corporation, Colombia ranks among the top three emerging markets in terms of incorporating the sustainability dimension in the financial sector. Colombia was one of the first countries in Latin America to formalize a green commitment by the financial sector via the development in 2012 of the Green Protocols for the financial system, the Protocolo Verde de Asobancaria, an agreement between the national government and the financial sector. The Protocol has been signed by over 20 financial organisations with the objective of implementing policies and practices that are in accordance with sustainable development. Bancolombia in 2016 was one of the first Banks in Latin America to launch a Green bond issuance and recently two development Banks in the country Financiera de Desarrollo Nacional and Bancóldex also issued green bonds. However, Colombia has not yet issued green or sustainable sovereign bonds as Chile remains the only country in the region to have issued sovereign sustainable debt vehicles. In 2019, Colombia consolidated its position as a leader in sustainable finance in Latin America by becoming the first country the region to initiate efforts to build its own local Green Taxonomy. Modeled after the European Union’s Taxonomy, the first phase of the project was made public in late 2021. The process has been led by the Colombian Financial Regulator, (Superintendencia Financiera de Colombia), the Ministry of Finance, the Department of Planning, the Department of Statistics and the Ministry of Environment and Sustainable development which are all part of the Supervisory Committee.

In the last three decades, Colombia has applied several economic instruments, including fiscal measures to combat the adverse effects of production and consumption patterns on the society and environment. Among those instruments are, the ecosystem services payments, retribution rates for hydric, atmosphere, and soil contamination, tax instruments on water management, carbon taxation, tax on plastic bags, recycling incentives, VAT exemptions for equipment that reduce GGE, income tax exemption for the utilization of RE, 0% tariffs for electric vehicles. In 2014 through Law 1715 was created a dedicated fund, FENOGE- Fondo de Energías No Convencionales y Gestión Eficiente de la Energía- to support the diversification of the national energy mix and incentivize private capital investments in RE.

On monetary policy, Colombia issued its first green bond in 2017 with the cooperation of Banco Interamericano de Desarrollo and leads the development of the green bond market in Latin America. In 2020, the Financial Superintendence of Colombia has published a guide to good practices in the green bond issue, with recommendations for the issuers to improve disclosing, transparency, and reporting standards. And is currently in the assessment stage of the Sovereign Green Bonds Framework.

The Financial Superintendence of Colombia is the public organ in charge of supervising, monitoring, and regulating the activity of the financial entities. It performs these duties under a comprehensive monitoring and evaluation framework, called El Marco Integral de Supervisión, whose purpose is to determine the compound risk of a supervised entity or financial conglomerate through risk-based monitoring methodology.

The central bank of Colombia,- El Banco de la República- through its financial stability department applies stress tests on solvency and liquidity. The results are published semesterly in the Financial Stability Report. The Financial Regulation unit of The Ministry of Finance and Public Credit is in charge of creating new regulations for the financial system.

Social components are included in the National Strategy on Financial Inclusion (2016) presented by the Financial Superintendence. It also present an annual report to illustrate the results of the strategy.

There is a lack of environmental components on the current legislation for financial regulation. The Financial Management Committee of SISCLIMA - the National System on Climate Change - chaired by the National Planning Department is a private-public partnership organ whose objective is to design guidelines on public policy to introduce criteria regarding climate change on economic and financial planning.

The Colombian carbon tax was established in 2016 under the Ley 1819 del 29 de Diciembre de 2016: Reforma Tributaria Estructural- A decree-law which aim is to strengthen mechanisms against tax avoidance and tax evasion and also addresses other matters, as the above mentioned, carbon tax.

Article 221 explains the nature of the tax, or more specifically, the taxable event. Article 223 is about destination-of-carbon-tax; the carbon tax revenue must be destined for coastal erosion management, water sources conservation, and the protection of the ecosystems.

The Ministry of Environment and Sustainable Development and REDD+ has developed a Voluntary Carbon Market, as a pilot initiative, but it is not regulated by law yet. However, this market is cited in article 99 Ley 1819 concerning tax-exempt income. and the decree 926 de 2017 about no causation of carbon tax-exempt or reduce the payment of the carbon tax if the enterprises present Emission Reduction Certificates for national projects only.

Colombia’s Climate Change Policy includes a focus on several key sectors in terms of climate change, including agriculture, forest and land management, energy, mining and industry and call for the development of sectoral plans for each. The Plan includes a robust intergovernmental coordination policy, although it remains to be seen how it works out in practice. In addition, however, the Policy lacks details in terms of specific quantifiable targets while its focus is insufficient in several important sectors, including energy, transportation and land use. In this respect, land use and deforestation is a central issue in Colombia’s response to climate change, as it accounts for more than a fifth of the country’s emissions as deforestation represents a problem area. The latest update of the country’s NDC calls for reducing the rate of deforestation to 50.000 hectares/year. This target is substantially weaker than a previous governmental target set out in the Integrated Strategy for Control of Deforestation which called for reaching net zero deforestation by 2030. In the energy sector, greater ambition is needed in the deployment of wind and solar power installations while the country’s high dependence on oil and coal for internal use as well as exports needs to be addressed.

At the government level, the National Network for Entrepreneurship, chaired by the Minister of Commerce, Industry and Tourism is responsible for formulating the National Entrepreneurship Policy under the purview of the National Entrepreneurship Law (Law 2069) which aims 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 the 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 Organizations, will develop and implement a strategy to promote social innovation in entrepreneurship, environmental sustainability, cooperation, in others, including the promotion of the Commercial Benefit and Collective Interest Companies (BIC) model and the solidarity economy. The Policy calls for thw work on this objective to be concluded by 2024.

In the 2020 update of the NDC Colombian Submission Colombia commits to elaborating carbon budgets for the period 2020-2030 at the latest from 2023 onwards.

While Colombia's achieves approximately 70% of its electricity generation form hydropower, the country still employs coal for a significant portion of its energy needs, accounting for roughly 10% of Colombia's power generation. Colombia´s renewable (wind and solar) generation capacity remains low. Recent government plans call for the development and installation of 1500 MW in new renewable capacity by 2022. In this regards, Colombia launched its first renewable energy auction in 2019 awarded total wind and energy capacity of roughly 2200 MW, surpassing the initial goal set for 2022. In addition, the country’s most recent National Development Plan (PDN) 2018-2022 calls for setting up tax-based incentives for investments in renewable energy infrastructure and sets minimum quotas for the proportion of energy coming from renewable sources for commercial energy distributors. However, the objectives set out deployment for wind and solar installations in the country are insufficient to meet the goal set out in the Paris Agreements to avoid the most catastrophic effects of climate change. In addition, due to the country’s heavy reliance on hydropower in a context of increasing uncertainty regarding future precipitation patterns brought about by climate change, would suggest a need to significantly ramp up objectives for wind and solar energy deployment. In addition, due to the importance of the coal sector in the country, the government has also sent mixed messages recently by adopting a regulation to allow pilot projects that employ unconventional techniques such as fracking for the production fossil fuels.

While the government of Colombia does not have a specific green jobs plan, the goal of facilitating the creation of green jobs is a theme in several of the country’s strategy and policy documents. For instance, the country’s National Strategy for the Circular Economy mentions the creation of environmental jobs in several important sectors, such as recycling and waste management and water treatment, both of which are in need of upgrades. In addition, the latest 4-year development Plan covering the period 2018-2022 includes several thematic areas, such as the promotion of renewable energy projects, which will increase the number of sustainability focused jobs in the country. According to the latest government statistics, in 2018 there were nearly 80.000 green jobs in Colombia. Further enhancement its push for green job creation, the government and the International Labour Organisation signed the Pact for Green Jobs and a Just Transition in Colombia, which, among other aspects, seeks to define strategies to enhance the promotion of these types of jobs, with the development of targeted labour skills and the adaptation of key productive sectors. In addition, a Green jobs law is currently being debated in the country’s legislature to further prioritise green job creation at the national level.

At the national level, Colombia has a Department of Social Prosperity which is tasked with designing and implementing social interventions in food security programs, family support measures to overcome extreme poverty, conditional cash transfer programs, as well as employability and entrepreneurship programs. The government has worked to align its poverty alleviation and food security efforts with its climate change strategy. In that regards, the Department of Social Prosperity has committed to guaranteeing that 50% of its programs implement actions for risk management, adaptation and mitigation of climate change by 2030. However, there is little detail to date on how this integration will be accomplished. In a similar vein, the Ministry of Labor is currently developing a Strategy for the just transition of the workforce in line with a low-carbon economy, which is expected to be completed by 2023. In terms of specific programs that link social and environmental objectives, the Social Innovation Groups with the department of Social Prosperity has implemented a participatory model for solid waste management for the Free Housing Program of the National Government. 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.

Colombia’s has implemented a national system for managing public participation in the public policy development process. In this regards, article 2 of Law 1757 of 2015, establishes that public entities at all levels of governance must design and maintain mechanisms to permit citizen participation throughout the public management cycle (problem diagnosis, policy formulation, implementation, evaluation and monitoring). As part of this system, public entities must develop Action Plans detailing the activities that they are going to carry out to promote citizen participation. The most recent National Development Plan, covering the period 2018-2022 further consolidates efforts to develop and expand mechanisms for facilitating and encouraging citizen participation in the policymaking process. The country’s Gender Equity Policy calls for the strengthening, from a gender perspective, the processes of planning, monitoring, evaluating and budgeting by public entities.

At the public level, the concept of social innovation was first included in the National Development Plan 2010 - 2014 Prosperity for All, which recognized social innovation as a key to reduce extreme poverty and achieve environmental sustainability, as well economic growth and competitiveness in the country. Subsequent development Plans have continued with this theme as a means to adress the country's important social and environmental challenges. The new 2018-2022 development plan includes a focus on social innovation as an instrument to reduce extreme poverty but with an increasing focus on peace building. These efforts are led by the Department of Social Prosperity which was created in 2011, which includes a Social Innovation Group. The World Economic Forum selected Colombia’s Department for Social Prosperity as a prominent example of a public sector institution promoting of social innovation at all policy levels.

In the SDG Progress Report 2020 elaborated by the National Planning Department is described the public sector actions in regard to the SDG. Concerning SDG 14 & 15 highlights the creation of the SeaFlower Biosphere Preserve as part of the largest Caribbean Natural Park, the formulation of the Pacto Región Océanos to improve the management of the oceans on a governance and sustainable basis, and several agreements regarding recycling in coastal towns. The government also has declared 12 million hectares as marine protected areas, a 10% decrease in the deforestation rate between 2018 and 2019, and the increase since 2015 of terrestrial protected areas as well as areas under restoration and reforestation processes.

The Comprehensive Deforestation Control and Forests Management Strategy (EICDGB, by its Spanish initials) have an objective to reduce the forests` deforestation and degradation by promoting forest management through an integrated rural development approach. Enlist five broad goals for 2030 among those is to reach zero net deforestation, 32,4 million tonnes decrease in CO2-eq emissions by avoided deforestation and to reach forestry sector trade balance positive.

The Soil Sustainable Management Policy, (PGSS, for its Spanish initials)- published by the Ministry of Environment and Sustainable Development in 2017, provides guidance on assessment and monitoring tools of the soil that contribute to the decision-making process regarding sustainable and comprehensive regulation of this resource.

Other state policies in line with ocean and land conservation are the National Policy for the Integral Management of Biodiversity and Ecosystem Services (PNGIBSE, for its Spanish initials), the National Plan on Forest Development (2000)- a long-term strategy aimed to the zonification, conservation and restoration of forest ecosystems, support for forestry production chain and forest products trade.-, the National Environment Policy for the Sustainable Development of Ocean, Coastal and Island Space (2001)- divided seven broad programs regarding sustainability, restoration, conservation, regulation and monitoring of ocean, coastal and island spaces.

Despite the multiple regulations and national strategies the General Controller's Office of the Republic in its report, Status of Natural and Environmental Resources 2018-2019 express textually: “Cabe resaltar que la mayoría de las metas ODS que no se han implementado en el contexto nacional van ligadas al componente ambiental” in English: "It should be emphasised that most of the SGD not implemented at national context are those ones linked to environmental component”, and it continues noting that the national environmental dimension requires further work on policy design and implementation, mainly on the production of information and monitoring and assessment processes.

The National Administrative Department for Statistics (DANE) of Colombia elaborates the Satellite Account on Environment which objective is to quantify in monetary and physical units the change in stocks of environmental assets and the interaction between environment and economy for each fiscal year. Also, measures the efforts of each economic sector to preserve, mitigate and protect the environment.

The Sistema de Contabilidad Ambiental y Económica (SCAE) is structured by Natural Assets Accounts (water, wood, soil, mineral, and energy resources); Flows Accounts: Material Flows Account, Water Flows Account, Energy Flows Account and forest Flows Account, Environmental Protection Expenditure Account and Resources Management Expenditure Account.

Based on these data, formulate stock availability indicators, stock depletion indicators, also, intensity and, productivity indicators.

The National Development Plan 2014-2018 legislated the National Committee on Environmental Accounts as an interagency public organ to consolidate and harmonized economic and environmental data. Earlier, Law 99 of 1993 whereby was created the Ministry of Environment and Sustainable Development and its environmental policy where it is stated that the Government must promote to internalize the environmental costs as well as the application of economic instruments to prevent, correct, restore environmental degradation and to preserve renewable natural resources.

The Colombian government has implemented several environmental taxes, including fuel and energy consumption taxes. The country's recently implemented carbon tax targets upstream emissions and was established in 2016 as part the broader tax reform legislation, Law 1819 of 29 de December 2016: Reforma Tributaria Estructura. Article 221 of the law specifies that carbon tax revenue must be destined for coastal erosion management, water sources conservation, and the protection of the ecosystems. Notably, in Colombia, 100% of the proceeds of the tax are earmarked for environmental purposed, including 30% for protecting against erosion in coastal areas, fighting deforestation, monitoring forested areas, preserving water sources and other strategic ecosystems, and fighting climate change.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; and an additional two regulated by the 2016 tax law mentioned above that includes the carbon and a tax on the use of plastic bags. In addition, the country’s most recent National Development Plan (PDN) 2018-2022 calls for seting up tax-based incentives for investments in renewable energy infrastructure.