Brazil’s booming potential for sustainable finance

With each passing year, ESG principles become more and more important for companies, financial institutions, and even governments. The acronym is in vogue — denoting Environmental, Social, and Governance practices — and is accompanied by the concept of “sustainable finance,” which claims to be a greener, more environmentally conscious form of capitalism. Brazil is still lagging behind the rest of the world when it comes to ESG, but has made massive steps in recent years.

As Laura Albuquerque, head of sustainable finance at Brazilian consultancy WayCarbon, explains, the idea behind this green capitalism is “finding projects that bring about social and environmental benefits while still providing economic returns.”

According to the Brazilian Association of Financial and Capital Market Entities (Anbima), the country had BRL 700 million (USD 135.5 million) invested in 167 ESG funds last year — almost three times the total recorded in 2019. Anbima estimates that 48 percent of Brazilian investors already have some kind of metric to allocate their resources to ESG-linked investments.

Last month, head of regulation at Brazil’s Central Bank, Otávio Damaso, pointed out that “green investments” in the country could account for more than...