Welcome to the inaugural Latin America Green Guide.
Compared to Europe, North America and East Asia, Latin America has lagged behind in awareness and adoption of ESG practices. The region remains marked by social inequality, environmental degradation and political corruption, and would highly benefit from decarbonisation to address the growing threat of climate disasters.
However, over the past couple of years, ESG issues have moved into focus as the region has seen a recent explosion of ESG debt issuance. Latin America’s corporates have embraced sustainable debt financing and there has been a notable shift in Latin American companies taking a more ESG-driven approach.
Government regulators are also increasingly driving ESG efforts across Latin America. Amidst the Covid-19 pandemic, Latin American governments have been using ESG as an instrument to address social and environmental matters, and consequences of the pandemic. Various countries have been promoting and starting to implement ESG policies to attract investors and drive investment to the region. Mexico, Chile and Colombia, for example, have made recent regulatory advancements in the ESG arena.
In Brazil, the largest country in the region and therefore a key player, president Jair Bolsonaro campaigned to take the country out of the Paris Agreement, and his engagement with the issue of climate change has been widely seen to be limiting at best and detrimental at worst – with deforestation being a major concern. This stands in stark contrast to the private sector where large Brazilian companies appear to be on board with a more sustainable approach to business, not least due to commercial and reputational concerns.
As some jurisdictions are further along than others, a country that stands out above the rest is longstanding environmental leader Costa Rica, often hailed as Latin America’s climate champion. With its National Decarbonisation Plan which aims to achieve carbon neutrality by 2050, the country has set itself a goal more ambitious than its Paris Agreement targets, and has simultaneously paved the way for other countries, particularly in Central America, to adjust their commitments.
ESG concerns are doubtlessly continuing to climb up the corporate agenda in Latin America, and law firms will consequently play an increasingly important role in assisting companies with sustainability goals and business transformation. We hope you find this initial guide to some of the key firms engaging with sustainability within the context of the Latin American market useful, and look forward to continually evolving our coverage as the market develops.