Brazil - Promoting Sustainable Housing in Brazil Project

Overview & Synopsis

Promoting Sustainable Housing in Brazil Project for Brazil has development objectives to expand finance for sustainable housing construction and efficient urban development in the country. The Project will be implemented by Caixa Economica Federal and will use a credit line combined with technical assistance to scale sustainability-certified housing that reduces resource consumption, improves urban resilience, and strengthens market acceptance and financing tools for certified assets. Component 1: Financing for Construction of Certified Sustainable Housing supports sub-loans to developers for new construction and retrofits of residential buildings that obtain recognized sustainability certifications, including Selo Casa Azul + CAIXA, Leadership in Energy and Environmental Design (LEED), Excellence in Design for Greater Efficiencies (EDGE), High Environmental Quality (AQUA HQE), Building Research Establishment Environmental Assessment Method (BREEAM), or the Living Building Challenge, among others acceptable to the World Bank. It finances construction activities (not land or upfront studies) and incorporates sustainability-linked pricing that differentiates loan terms by certification level, applies a maximum average unit sale price to target lower and lower middle income segments eligible for mortgage finance, prioritizes underserved regions such as the North, Northeast, and the Legal Amazon on a best effort basis, and requires certified features such as energy and water efficiency, improved construction practices and materials, urban quality and location in low-risk areas, and social measures including labor, training, and community relations. The component is designed as a transitional program to demonstrate viability, crowd in private capital through developer equity, and avoid market distortion by focusing on a segment not typically targeted by commercial banks. Component 2: Technical Assistance addresses market barriers to adoption of sustainable construction, strengthens institutional capacity, and develops financing instruments that mobilize private investment. Sub-components are as follows. Sub-components 2.1: Strengthening Institutions and Organizations for Sustainable Housing Certification will upgrade and align Selo Casa Azul + CAIXA with international standards, improve methodological rigor and reporting, introduce third-party audits, integrate gender equality and gender-based violence prevention and response measures, and finance awareness, training, practical guides, tools, events, and project audits for public and private actors. Sub-components 2.2: Strengthening Financing for Sustainable Housing will design and pilot innovative housing product lines and financing instruments to broaden market reach and deepen private capital mobilization, including tailored products for retrofits, social rental housing, public private partnerships, modular construction, and low-income certification modalities, as well as sustainable finance solutions such as risk mitigation facilities, second tier lending to commercial banks, green bonds and mortgages, securitization, and refinancing options, supported by a strategic roadmap and feasibility work to build a pipeline of transactions suitable for market take-up.