BNP Paribas has made an environmental, social and governance virtue out of its legacy commitment to the mining and energy sectors in Latin America. A decade ago, the bank saw which way the wind was blowing and, noting that it was towards renewable power turbines, moved early into sustainable finance.
This gave it a head start against most of its global competitors and certainly against those with large capital exposure to Latin America.
Today, under the leadership in Latin America of Hervé Duteil, chief sustainability officer, and Anne Van Riel, head of sustainable finance capital markets Americas, BNPP continues to lead. Its landmark sustainability-linked bond for Chile was the first ever for a sovereign and has attracted interest from other countries wishing to emulate the deal.
The mandate grew out of a longstanding relationship with the Republic of Chile, which included the country’s first green bonds in 2019 and a large social bond issuance in 2021.
And it is not just Chile that BNPP has been bringing to market with sustainable structures – the Republic of Peru issued a $2.25 billion green bond in October 2021. The bank has also brought many corporates to market with sustainable bond deals in the past year, including Suzano, CMPC, America Movil and BCI.
Given BNPP’s longstanding commitment to building its ESG business, it is looking past the recent pushback in some sectors of the financial markets against this business. Van Riel emphasizes that the bank is certain that ESG investing will move sustainable finance to the mainstream of corporate finance.
To that end, BNPP is embedding sustainability into products beyond debt capital markets: the bank has pioneered a sustainable repo agreement with Banco do Brasil and developed a peso-denominated structured note with Scotiabank and the Inter-American Development Bank that generates funding for companies in the region with leading ESG policies.
BNP Paribas has also been looking internally to ensure that its own ESG practices are in line with a bank that is pushing the frontier of sustainability for its clients. In 2022 it introduced new internal restrictions on funding rules for corporates active in the Amazon area, which points to the bank’s belief that while Latin America has unique ESG-related challenges, it is also a region that has an outsized opportunity from adopting sustainable finance in the coming years.