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Get the news on sustainable finance & investment in Latin America Email * Company * Δ NEWSLETTER DELIVERED MONTHLY THANKS TO The US pullback from global sustainability efforts doesn’t seem to be slowing momentum in the ESG finance market in Latin America, according to analysts and corporate advisors. With European and Asian investors still active, issuers in the region are finding plenty of buyers for bonds designed to finance green, sustainable and social mobility projects. While the backlash led by US President Donald Trump against ESG practices may soften US investment in sustainability projects, deals are happening nonetheless, and analysts expect the years-long growth of Latin America’s sustainable debt market to continue relatively unimpeded. “There’s no major shift” in activity this so far this year, said Tamara Tisminetzky, director of research at Sustainable Fitch. ADVERTISEMENT IDB Invest – Three Smartphone Trends to Advance an Inclusive Digital Future With democratization, coverage and access to mobile devices, more and more people will have an increasing wealth of technologies at their fingertips. The challenge is to unleash the power of smartphones to advance progress. Sustainable bond issuances should be “marginally higher” this year than in 2024, said Rafael Janequine, director at S&P Global Ratings. That’s the case even if some issuers remain in “wait-and-see” mode as they await for a clearer outlook for US tariff policies and still-high interest rates, he said. Others are already pulling the trigger, such as Brazilian energy company Raízen, which issued $750 million worth of green bonds in the international market earlier this month. On the sovereign side, Chile sold €1.7 billion ($1.76 million) in social bonds in January and multilateral institutions such as the World Bank and the Inter-American Development Bank also remain active this year. ESG deals continue to flow in domestic bond markets too, with Argentina’s Genneia financing solar power parks and the Colombian natural gas company Promigas selling social bonds. BREAKING GROUND Latin America “remains a bastion for innovation,” analysts at S&P Global Ratings said in a report this month, predicting sustainable bond issuances will hold steady globally in 2025. New guidelines on Amazon-themed bonds from both the World Bank and IDB should “unlock additional financing opportunities” for the region, the S&P analysts added. And this year’s UN Climate Change Conference, which will be held in the Amazon, may also drive more activity. One major headwind could be dwindling US investment, as some US financial firms pull back from their past focus on sustainability. Efforts by the Biden administration to prod markets toward more climate financing never quite gained steam — and are now all but dead. And the Securities and Exchange Commission has now frozen a past rule to implement corporate climate-related disclosures, with its acting chairman calling the effort “deeply flawed.” But the US was never a leader in climate finance, and European countries still have their own climate regulations in place prodding more investment. “Once you apply these new regulations, you need to invest, and you need to invest in a sustainable way,” said Sandra Carrillo, a Peru-based sustainable finance expert at the consultancy ERM. STEERING INVESTMENT Similar efforts are gaining speed in Latin America, with Costa Rica recently joining countries such as Brazil, Mexico, Chile and Colombia in developing taxonomies that are widely understood by investors. The efforts categorize green-friendly investments into commonly used buckets, giving a global audience a better framework for investment opportunities in climate change adaptation, water management and other areas. Those initiatives have stirred the interest of issuers, Carrillo said. “And after assessing the climate risk, they understand that they need an adaptation plan. But to implement an adaptation plan, they need funding,” she added. Using those taxonomies should help companies get a more receptive audience among global investors. “A European investor that’s never been to South America doesn’t understand the challenges on the ground, but these taxonomies really provide transparency,” said Bryan Popoola, associate director of sustainable finance at S&P. COMPETITION CONCERNS What path Europe and other sustainability-focused regions take will be a key factor to watch, according to Luisa Palacios, deputy research director of the Center on Global Energy Policy at Columbia University . The US retreat has sparked worries in Europe that firms there may be less competitive if they’re burdened by onerous climate regulations. Citing those pressures, European officials this week proposed excluding 80% of companies from sustainability reporting requirements. Palacios, who was previously chairwoman of the US-based and Venezuelan government-owned oil company Citgo and an emerging market bond analyst, said Latin America’s sustainable sector won’t be “completely immune” from a US-led pullback. But the years of momentum in ESG finance will be hard to fully subdue. “This is something real, and something that is probably going to continue,” she added. 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