A new IDB Invest post discusses the role of regulators and the private sector in sustainable development. As a contextual framework, the authors describe that in Latin America and the Caribbean (LAC) there is a wide range of corporate responses to the challenges of climate change. Some companies are at the absolute forefront by responding to new market trends, identifying risks and opportunities when investing, creating detailed plans and actions that fit perfectly with government-level sustainability commitments, and with a transparent approach to communicating achievements. However, many other companies are just getting started.
The authors argue that a sustainable approach should not be a burden for a private company. Even when sustainability plans imply higher costs in specific segments, the fact is that they also help to retain and attract talent, access new markets and increase the investor base which will potentially help to reduce borrowing costs. Moreover, financial markets have many players (pension and hedge funds, investment conglomerates, etc.) that are using sustainability principles to guide their investment.
Many of LAC’s sustainable bond issues in recent years have been structured or underwritten by BID Invest, or both. Through these actions they seek to help companies take advantage of sustainability-driven financial markets, to better report on their own initiatives and to better track the actual effects of implemented policies.
The authors conclude that the region is a massive reservoir of diversity and natural wealth, and is key to supply chains in multiple industries, including agribusiness. If LAC can present itself as the most sustainable region in the world, more investment could flow in and one of the most difficult problems the region has always had, which is the lack of investment capital, will be solved.