- The first ESG credit for the real estate sector was granted by BBVA Mexico.
- The project for which the credit will be used could create up to 500,000 jobs.
- Scotiabank and Santander are among the institutions also offering “green credits” in Latin America
The first ESG credit in the real estate sector was granted by BBVA Mexico. The recipient was Mexicali EDC, a nonprofit organization founded by the local government and the business community.
The amount of this green credit was $54.7 million, and it was structured as an ESG credit because it addresses environmental, social, and corporate governance factors. The development company aims to build a state-of-the-art facility of 557,000 square feet, where Gulfstream Aerospace will operate. Additionally, the project is expected to create 1,500 new jobs in the aerospace sector in the region.
ESG Credits: Community, Responsibility, and Environmental Respect
Worldwide, the banking system is increasingly investing in what are known as ESG credits (Environmental, Social, and Governance) as part of an approach to inclusion and sustainability.
These credits, aligned with responsible and sustainable practices, aim not only to reduce environmental and social risks but also to improve access to financial services in underserved areas. This aspect is key to the agenda of entities such as BBVA Mexico, which has played a prominent role in expanding banking infrastructure at the local level, increasing access to financial services in various communities across Mexico.
According to Statista, by 2022, more than 40% of investors considered economic, social, and governance factors to be an integral part of credit analysis.
Latin America and the Adoption of ESG Credits
In the region, the drive for financial inclusion is complemented by the rise of ESG credits, an increasingly popular tool for financing projects with a positive impact on society and the environment. ESG credits have gained traction in Latin America, with significant growth, in response to the demand for sustainability and responsible investment. Organizations like the Inter-American Development Bank (IDB) and other multilateral banks have supported sustainable development funds, creating incentives for commercial banks to incorporate ESG aspects into their financing strategies.
Santander Bank offers a wide range of ESG products in the region, including green and sustainable loans and bonds in Chile and Mexico. This institution has collaborated on renewable energy projects and infrastructure financing under ESG criteria, benefiting clients in sectors such as solar and wind energy.
Scotiabank has also been actively involved in sustainable financing in Latin America, focusing on supporting the energy transition and financing projects with social and environmental impact. Scotiabank works with clients across the region to structure financing products that support sustainability and help mitigate climate risks.
In Argentina, 25 sustainability-related financial instruments (green, social, and sustainable bonds) were issued in 2023, representing a 47% increase over the previous year. Since the market’s opening, 72 sustainable debt issuances have been recorded, totaling over USD $1.5 billion. This has been led by Banco Nación, but private banks such as Banco Galicia and BICE have also been pioneers in issuing sustainable bonds. For instance, Banco Galicia issued a green bond worth USD $100 million in 2018 to finance projects that mitigate climate change.
Green Credits Around the World
A recent survey shows that a significant number of the largest banks in China are incorporating ESG practices into their operations. And here’s the key point: it’s not just about doing something good for the planet. For these banks, it’s a survival strategy.
- In 2020, 88% of publicly listed companies, 79% of venture capital and private equity firms, and 67% of private companies had implemented ESG initiatives.
- More than three out of four small and medium-sized enterprises (77%) have a formal ESG commitment.
- Almost one in five (18.5%) small and medium-sized companies use ESG standards.
