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Governance and Transparency

During the last years, Chile has demonstrated strong efforts to face Climate change

Green Bond Issuances (since 2019)
Nationally Determined Contributions Paris Agreement (NDCs – since 2015)
Framework Law on Climate Change (2022)
Chilean Taxonomy of Environmentally Sustainable Economic Activities (2025)
Long-Term Climate Strategy 2050

Bond issuances aligned with international standards and backed by robust reporting.
2019 – First Sovereign Green Bond in the region.

Chile becomes the first country in the region to issue a sovereign green bond, setting a regional precedent in climate finance.

2020 – Expansion to Social and Sustainability Bonds.

Framework updated to include social categories. Proceeds used to finance pandemic response, education, health, and social protection programs.

2021 - 2025 – Regular ESG Issuance in Multiple Currencies.

Chile consolidates its position with consistent ESG bond issuance in USD, EUR, CLP, UF, diversifying its investor base.

Chile’s path toward sustainable finance leadership

ESG Issuance History of the Republic of Chile

Billions of USD

Adoption of the Kunming-Montreal Global Biodiversity Framework (2022)
Signatory of the Paris Agreement (2017)
Adopted 2030 Sustainable Development Agenda (2015)
Beijing Platform for Action (1995)
Convention on the Rights of the Child (1989)
Universal Declaration of Human Rights, the International Covenant of Civil and Political Rights and the International Covenant on Economic, Social and Cultural Rights (1966)

Strong Track Record of International Commitments

Background

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SLB instruments are firmly embedded in Chile’s financing strategy.
2022 – First Sovereign Sustainability-Linked Bond (SLB)

Becoming the first sovereign issuer in the world of a Sustainability-Linked Bond (SLB).
2023 – SLB Framework updated to include a gender KPI.

Current KPIs:

KPI 1: Greenhouse Gas (GHG) Emissions

Target: Do not exceed 95 MtCO₂e annually by 2030 & cumulative cap of 1,100 MtCO₂e between 2020 and 2030.

KPI 2: Share of Non-Conventional Renewable Energy (NCRE)

Target: 50% of NCRE generation by 2028 & 60% of NCRE generation by 2032.

KPI 3: Women on Boards of CMF-Supervised Companies

Target: 40% female representation on corporate boards by 2031.

2025 – SLB Framework update to include a Biodiversity KPI

Innovation and credibility in the sovereign SLB market

SLB Bonds

First Sovereign Green Bond in the region

Inclusion of Social Bonds

First Sustainable Issuance

First Sovereign SLB Bond

SLB Framework Update

(Gender KPI)

SLB Framework Update (Biodiversity KPI)

2019

2022

2020

2021

2025

2023

Key Developments in Chile’s ESG Strategy

(2019 - present)

Source: Ministry of Finance.

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National Biodiversity Strategy Aligned with Global Frameworks:

Chile’s Updated Nationally Determined Contribution (NDC) Target.
Kunming-Montreal Global Biodiversity Framework (KMGBF) – Target 3 (30by30).
National Biodiversity Strategy and Action Plan (NBSAP) 2017-2030 updating and -Aligned with the KMGBF.

Chile’s Commitment to Biodiversity Protection

Legal Background

Protected Areas in National Environmental Legislation:

Definition of Protected Areas categories aligned with the IUCN standard as defined by the Nature Law (No. 21,600): a) Virgin Region Reserve; b) National Park; c) Natural Monument; d) National Reserve; e) Multiple-Use Conservation Area; f) Indigenous Peoples Conservation Area.
Chile recognizes Priority Sites for Biodiversity Conservation under its national legislation, in line with the Key Biodiversity Areas (KBA) methodology.
In 2023, the Law (No. 21,600) that creates the National Service for Biodiversity and Protected Areas (“SBAP”, in Spanish) was approved.
Specialized entity tasked with overseeing the conservation of the national biodiversity within and beyond Protected Areas.
Additional tools provided to enhance SBAP mandate include economic instruments, ecological planning, additional personnel and fiscal budget expected to help address the 2030 objectives gap.

International Commitment

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Protected Areas in Chile: History and Legislation

Art. 3 of the “Nature Law” (21,600) defines Protected Areas as

“a specific and clearly defined geographical area, recognized through a Supreme Decree by the Ministry of the Environment, with the purpose of ensuring, in the present and in the long term, the preservation and conservation of the country's biodiversity, as well as the protection of the natural and cultural heritage and the landscape value contained within that area”

Category	Restrictions as per “Nature Law”
Virgin Region Reserve	The exploitation of natural resources for commercial purposes is prohibited in this area, and no activity may be carried out except those authorized for scientific research purposes.
National Park	The exploitation of natural resources for commercial purposes is prohibited in this area.
Natural Monument	The exploitation of natural resources for commercial purposes is prohibited in this area.
National Reserve	Economic activities that endanger the ecosystem services provided by this area.
Multiple-Use Conservation Area	Economic activities that endanger the ecosystem services provided by this area.
Indigenous Peoples Conservation Area	Activities involving ancestral or customary uses may be carried out, as well as activities involving sustainable use are allowed while they do not jeopardize the ecosystem services provided by this area.

Source: Protected Planet.

Protected Areas in Chile (2024)

Terrestrial and inland waters protected

area coverage

21.64%

Coverage

162,596 km²

Land area covered

751,265 km²

Total land area

Marine protected area coverage

41.24%

Coverage

1,515,020 km²

Marine and coastal area covered

3,673,240 km²

Total marine and coastal area

Malleco National Forestry Reserve

First Protected Area in Chile and Latin America (1907)

Source: Ministry of Environment.

Thousand

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The Pew Charitable Trusts (Pew) believes that “this indicator ”when measured, independently verified and reported as set out in the methodology developed by the Ministry of the Environment, would be a credible and pragmatic approach to measure Chile’s progress towards the terrestrial components of the 30x30 Goal”.

Inclusion of a Biodiversity KPI related to Protected Areas and Effective Management

New commitments linked to Chile’s National Biodiversity Strategy, the Kunming-Montreal Global Biodiversity Framework, particularly Target 3, and the Nationally Determined Contribution (NDC)
Developed in close collaboration between Chile’s Ministry of Finance and Ministry of the Environment, with the support of the National Forestry Corporation (CONAF).
Dual-component biodiversity KPI that considers:

An aggregate measure of protection, measured as percentage of the national terrestrial territory (KPI 4a) ; and
And additional level of assurance, through an indicator of Effective Management (KPI 4b).

Step-Up and Step-Down Component

Coupon Step-Up will be triggered if Chile fails to meet SPT 4a (related to Protected Areas)
Coupon Step-Down will be triggered if Chile achieves both STP 4a and SPT 4b (related to Effective Management)

Verification and Transparency

KPI 4a (Coverage) 🡪 Protected Planet: coverage will be verified using data submitted by Chile and cross-validated by its global publicly available database
KPI 4b (Effective Management) 🡪 External Assurance: will be subject to a limited assurance review conducted by an independent third-party audit firm (as assurance report will be included annually)

Key Highlights: Sustainability-Linked Framework Update

Chile's Sustainability Linked Bond Framework (2025)

Source: Ministry of Finance.

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KPI 4 Overview: Terrestrial Protection and Effective Management�

A dual-component biodiversity KPI aligned with Chile’s international and national commitments

KPI	Performance Target	Definition
KPI 4a	Terrestrial Protection	Achieve a surface area under official protection of at least 30% of terrestrial ecosystems by 2030
KPI 4b	Effective Management of Protected Areas	Achieve at least 10% of total national land surface area (including inland waters) under protected areas that meet all key effectiveness metrics of governance, planning, personnel, and monitoring by 2030. KPI 4b is further divided into four subcomponents*: Governance�Participation of civil society and local communities in area governance Planning�Validated conservation plans with defined objectives and strategies Personnel�Adequate number of park rangers based on standard developed by CONAF Monitoring Systems�Biodiversity monitoring tools in place (e.g. camera traps, remote sensing)

* For KPI 4b to be considered achieved, each protected area must simultaneously meet all four indicators of effective governance and management.

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Incentive Structure Based on SPT Compliance

Just like in a typical SLB structure:

A coupon adjustment will apply depending on performance against the SPTs (Step-Up / Step-Down).
The Step-Up or Step-Down, if applicable, will take effect on the first coupon payment date following the verification date.
To date, Chile has adopted the standard Step-Up structure, which penalizes non-compliance.

In this updated structure:

While not explicitly stated, SPT 4b entails a higher level of ambition and additional safeguards. Therefore:

A Coupon Step-Up will be triggered if Chile fails to meet SPT 4a.
A Coupon Step-Down will be triggered only if Chile successfully meets both SPT 4a and SPT 4b.

Reporting of SPTs subject to External Verification

Fail

SPT 4a

[ + 25 ]bps Step-Up

to Original SLB Coupon to Maturity

Achieve

SPT 4a & 4b

[ - 25] bps Step-Down

to Original SLB Coupon to Maturity

Step-Up or Step-Down occurs on first coupon payment date following verification

Chile´s SLB Maturity

Step-Up & Step-Down Mechanics

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SPT 4a is Highly Ambitious given that it is:

above past performance;
aligns with other countries targets;
benchmarkable against a framework informed by scientific findings and recommendations.

SPT 4b is Highly Ambitious given that it is:

above past performance;
best in class compared to regional and other countries; and
aligned with relevant scientific findings and recommendations.

KPI	KPI Strength
KPI 4a: Terrestrial Protection	Not Aligned	Adequate	Strong	Very Strong
KPI 4b: Effective Managment	Not Aligned	Adequate	Strong	Very Strong

SPT	SPT Ambitiousness
SPT 4a	Not Aligned	Moderately Ambitious	Ambitious	Highly Ambitious
SPT 4b	Not Aligned	Moderately Ambitious	Ambitious	Highly Ambitious

Second Party Opinion (SPO)

Sustainalytics considers Chile’s updated SLB Framework to be credible, impactful, and aligned with the Sustainability-Linked Bond Principles (ICMA, 2024).
The SPO Provider highlights robust governance, annual reporting, and third-party assurance as key strengths.
Hence, Sustainalytics has awarded the highest possible rating in its evaluation for the KPI and its corresponding SPTs

KPIs 4a and 4b are Very Strong given that they:

are highly material to Chile’s environmental objectives;
have a high scope of applicability;
are a direct measure of performance on a highly material issue:
follow a clear and consistent methodology that is externally defined; and
support comparison against an external benchmark.

Evaluation Summary

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Updated Framework
Published prior to issuance, incorporating new KPIs and targets.

Second Party Opinion (SPO)
Obtained to validate alignment with international market principles.

Framework reviewed with underwriters (banks)
To ensure market readiness and positioning.

Investor market sounding exercise
Conducted with key accounts to assess appetite, preferred format, and pricing conditions.

Pre-deal investor call / presentation
Held to explain Chile’s sustainability strategy, KPIs, and transaction rationale.

€1.5 billion Sustainability-Linked Bond (SLB) due April 2036.
Total demand reached ~€5.1 billion (3.4x oversubscribed) from 270 orders.
Initial price guidance at MS +135 bps, tightened to MS +105 bps at final pricing.
Final yield of 3.928%.
0 bps new issue concession versus secondary market references.

Strong participation from long-term institutional investors specialized in ESG strategies.
Investors valued Chile’s credible, measurable, and policy-linked sustainability commitments.
Demand profile was relatively less price-sensitive, supporting high-quality execution and favorable funding conditions.

SLB Issuance Experience – January 2026

Transaction Outcome

Key Takeaways

Transaction Preparation Process

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Concluding remarks

Chile’s Sustainability-Linked Bond

The creation of this dual-component biodiversity KPI reaffirms Chile’s firm commitment to advancing ambitious sustainability goals through innovative financial instruments.

Developed through close collaboration between the Ministry of Finance and the Ministry of the Environment, the KPI strengthens policy alignment and supports effective implementation

Chile is honored to lead the way as the first nation to establish a KPI linked to the 30-by-30 target, aiming to set a new global standard in sovereign sustainable finance.

Consistent with previous KPIs, the biodiversity target is supported by robust reporting, independent verification, and clear governance structures.

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