July 28, 2025
The Ministry of Finance has published an updated version of its Sustainability-Linked Bond (SLB) Framework, reassuring its commitment to sustainable finances and positioning Chile as a global leader in ESG instruments. The previous Framework (2023) already allowed the issuance of SLB Bonds associated with social and climate goals. Now, the incorporation of measures for the effective protection of nature expands the possible sovereign issuances.
The new Key Performance Indicator (KPI) linked to biodiversity considers 2 targets, oriented to increase and strengthen the management of national protected areas, in line with international commitments adopted by Chile, when it adhered to the Kunming-Montreal Global Biodiversity Framework, during the COP 15 of Biodiversity in 2023. Another innovation incorporated is the possibility of a coupon reduction (step-down, in addition to the step-up), in case both targets associated with the new KPI are achieved.
The structure of the indicator is result of a long-term plan jointly developed by the Ministry of Finance and the Ministry of Environment, as anticipated in the COP 16 of Biodiversity, in Colombia (2024). The indicator comprises two components:
• KPI 4a: Percentage of protected areas and/or Other Effective Area-Based Conservation Measures (OECMs) in terrestrial ecosystems (including inland waters), with the objective of achieving at least 30% of the total national land surface by 2030, in line with Target 3 of the Kunming-Montreal Global Biodiversity Framework. Currently, the coverage under this indicator stands at 21.6% of the national territory.
• KPI 4b: Percentage of national terrestrial ecosystems (including inland waters) in protected areas that meet all key effectiveness metrics of governance, planning, personnel, and monitoring, with the goal of achieving at least 10% of the total national land surface by 2030.
The implementation of the new KPI is supported by the recent creation of the Biodiversity and Protected Areas Service (SBAP), an institution that brings together under a single entity the responsibility for the conservation and management of protected areas. This institutional framework strengthens the State’s capacity to advance in fulfilling its biodiversity commitments.
It is worth noting that previous SLB Bonds have allowed the country access to a broader base of investors, achieving favorable rates, even in moments of volatility in the international markets.
"With this framework, Chile once again positions itself at the forefront of innovation and environmental policy, always prioritizing prudent public financial management, which is fully compatible with these efforts," stated the Minister of Finance, Mario Marcel.
“It is important to highlight that this framework is the first of its kind. It is a joint innovation carried out by the Ministry of Environment and the Ministry of Finance, which demonstrates that it is possible to achieve development with adequate protection of nature. For two years we have worked to develop metrics to meet 30x30 targets of the Global Biodiversity Framework, seeking to expand the conservation and protected areas, while ensuring effective management through management plans, governance, personnel and monitoring, in line with the best available evidence”, Maximiliano Proaño, acting Minister of Environment, stated.
The structure of the new KPI has been recognized by technical experts. In particular, The Pew Charitable Trust considered that the proposed KPI “is aligned with recognized protected area management standards, such as the IUCN’s Green List and the Guidance on using the indicators of the monitoring framework of the KMGBF by the Convention on Biological Diversity”. Pew also highlighted that, “when measured, independently verified, these indicators would be a credible and pragmatic approach to measure Chile’s progress towards the terrestrial components of the 30x30 Goal, as well as Chile’s progress with respect to the KMGBF’s overall purpose of halting and reversing biodiversity loss”.
Additionally, the updated Framework was reviewed by Sustainalytics, entity that issued a Second Party Opinion, in which it concludes that the new KPI is aligned with SLB ICMA principles. At the same time, it was considered as “very strong” and its targets as “highly ambitious”, the best assessment provided by the entity, highlighting its relevance and methodological strength.
With this update, Chile consolidates its leadership in ESG instruments at the global level, integrating ambitious environmental targets with a high standard of transparency and technical rigor. After this publication, Chile is well positioned to issue SLB bonds in the future, subject to market conditions.
The Framework is available at the following link.