Greening Lac’s Financial Systems Experience from the Banking Sector and Capital Markets

Given the negative impact that sustainability-related risks can have on investment returns, investors, banks, and borrowers alike are increasingly focusing on environmental, social, and governance (“ESG”) issues. Regulators, banks, and borrowers have collaborated to create new financial instruments, such as sustainability-linked loans and sustainability-linked bonds that are designed to provide greater flexibility while incentivizing companies to meet and exceed their long-term energy transition and other ESG objectives.

The session looked at LAC´s rapidly growing market for sustainability-linked instruments hearing from representatives from both the public and private sectors. Recent spikes in activity on the regulatory side in Latin America are expected to result in increased demand for sustainability-linked financing and transition finance for companies in, and outside of, “green” sectors. As ESG measurement criteria and regulations become more standardized, banks, and borrowers will strive to take a leading role in the increasingly attractive segment that is sustainable finance.