ESG Investment Trends in Latin America and the Caribbean

Main Photo: pxfuel.com

On August 26, 2021, the Inter-American Dialogue’s Corporate Program hosted “ESG Investment Trends in Latin America and the Caribbean,” an online event.

Three speakers led the discussion: Andrea Bonime-Blanc, CEO of GEC Risk Advisory; María José Cortés, the head of ESG at Atlas Renewable Energy; and Ben Ho, vice president of BlackRock Sustainable Investments. 

Devry Boughner Vorwerk, the CEO of DevryBV Sustainable Strategies and a former corporate vice president at Cargill and Grubhub, moderated the event.  

In his welcome remarks, Inter-American Dialogue president Michael Shifter defined ESG investing as “the practice of using environmental, social and corporate governance factors in measuring the sustainability and societal impact of a business.” 

Bonime-Blanc urged participants of the event not to get caught up over what is and isn’t considered ESG, suggesting people view the term as “an umbrella of intangible non-financial risks with really tangible financial impacts” on businesses and society overall. Ben Ho of BlackRock said, from the investor’s perspective, sustainability means incorporating the nonfinancial insights provided by ESG indicators and translating those into the best possible risk-adjusted returns for clients.

The speakers noted that ESG investing has been slower to take hold in Latin America and the Caribbean as compared to other parts of the world, but looking ahead the region has opportunities for potentially explosive growth in ESG investing if it takes advantage of the trend. 

The speakers talked about ways Latin America and the Caribbean differs from other parts of the world when considering ESG. 

Latin America stands out because of its role in global climate change. Boughner Vorwerk referenced recent droughts in South America and the controversy over deforestation in the Amazon. “Climate risks in [Latin America] are elevated relative to the rest of the world,” Ho agreed. He added that this is largely a result of the economic concentration on more carbon-intensive sectors such as natural resource extraction. 

María José Cortés with Atlas Renewable Energy noted that in her industry, the mindset had historically been, “just because we’re green, that’s enough,” but her company has chosen to go further. “The mainstream definitions of sustainability were not fitting for the kind of business we want to build,” she said. 

The company’s ESG efforts have focused on creating better economic opportunities in local communities, expanding diversity and inclusion, and putting a heavy weight on sustainable supply chain and labor considerations, Cortés said.

Bonime-Blanc noted that another way Latin America stands apart is that the majority of large businesses in the region are family-owned or privately held as opposed to publicly listed. Some lack boards of directors entirely, and many have few or no independent board directors at all. Ben Ho agreed and echoed the importance of improving corporate governance practices in the region in order to attract international investment.

Bonime-Blanc said those improvements could be coming now that younger generations are “ringing the ESG bell,” which may change how family-run businesses address sustainability. Cortés agreed that more businesses need to act. “There’s no point in doing the right thing if we don’t guarantee that other people will follow,” she said.

WATCH THE RECORDING HERE: