Sustainable Finance: Navigating Multiple ESG Frameworks & Standards in International Bond Markets

This article was originally published in BNAmericas. Any opinions in this article are not those of Winston & Strawn or its clients. The opinions in this article are the author’s opinions only.

The UN Climate Conference held in November 2022, known as COP27, presented an opportunity to refocus international attention on the challenge of financing climate change initiatives. According to the Climate Bonds Initiative, an international organization working to mobilize global capital for climate action, in the first six months of 2022 about US$380bn was invested globally in thematic bonds (green, social and/or sustainability).

During that same time frame, Latin America represented 3.6% of that global issuance, or US$13.7bn. Although Latin America has lagged behind the U.S. and numerous European countries, the Latin American thematic bonds market has grown over 159% from 2014 to 2021. Latin America, including, Brazil, Chile, Peru and Colombia, has vast, untapped potential to issue thematic bonds, particularly given the significant amount of resources needed to address environmental, social or corporate governance (collectively, “ESG”) shortfalls or challenges in the region.

That said, the Latin American thematic bonds market faces significant headwinds and challenges, including political and economic risk, recessionary pressures, and the absence of clear regulatory and other guidelines governing these bonds. This article focuses on the issues created by the absence of a bright-line legal and regulatory framework and proposals to address those issues.

Read the full article published by BNAmericas.