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The Growth of Impact Investing in Latin America: Insights From Latibex Forum 2022

Posted on December 21, 2022

Maayan Beeber
Maayan Beeber
Director, Equity Capital Markets & Corporate Solutions
Jennifer Li
Jennifer Li
ESG Solutions Specialist, Equity Capital Markets and Corporate Solutions
Jessica Schulz
Jessica Schulz
Associate, Equity Capital Markets & Corporate Solutions
In this year’s 24th annual Latibex Forum, Maayan Beeber, Morningstar Sustainalytics Director of Equity Capital Markets and Corporate Solutions, participated as a panelist at the event, which provides an opportunity for businesses in Latin America to connect with European investors. In this blog post, we share insights on the rising interest in ESG and impact investing, and the growing sophistication among issuers in Latin America in demonstrating their commitments to impact.

As the consideration of environmental, social and governance (ESG) issues in financing and investment decision-making advances globally, we are also seeing a shift in Latin America, with financing from banks, institutional investors, private equities, and multilateral financial institutions increasingly linked to ESG criteria. Alongside greater integration of ESG in investment decisions, we are seeing a growing focus on impact investing in Latin America and beyond.  

Differentiating ESG From Impact Considerations

ESG and impact are two interconnected concepts with different, yet complementary focuses and considerations. Impact investing as defined by the Global Impact Investment Network (GIIN) is, “investments made with the intention to generate positive, measurable social and environmental impact alongside a financial return.”1 ESG considerations in investing include environmental, social, and governance issues that could impact a company’s enterprise value. These considerations are incorporated into numerous investment strategies to varying degrees. For the most part, the approaches related to ESG and impact can be distinguished as follows:

ESG considerations typically: Impact considerations typically: 
  • Focus inward  
  • Consider how a company’s actions materially impact its own economic/enterprise value 
  • Prioritize financial returns and mitigation of risk
  • Focus outward 
  • Consider how a company’s actions and activities are impacting the world and the effects of these actions on society, people, and the planet 
  • Prioritize tangible, measurable environmental and/or social outcomes 


Focus on ESG and Impact Growing Among Investors and Issuers in Latin America

Asset owners and asset managers in Latin America are not only turning their focus to ESG, but are publicly committing to incorporate ESG considerations into their investment decisions. Among new signatories to the Principles for Responsible Investment between 2021 and 2022, growth from Latin America was more than 30% year-over-year, representing one of the highest regional increases globally.2 

Looking at impact investing, more than 3,000 organizations globally with US$1.2 trillion in impact investments are allocating capital towards the funding gap required to achieve impact objectives.3 Impact investing is also on the rise in Latin America, having grown more than tenfold in a decade to US$25 billion and with demand for impact investing solutions coming mainly from Mexico, Brazil and Chile. 

Among issuers in Latin America, there is more sophistication in how they are demonstrating their commitments to having a positive impact. They are leveraging labelled bonds to fund projects with impactful use of proceeds and key performance indicators. Sustainalytics recently worked on a notable issuance from BRK Ambiental, the largest privately owned water and waste management organization in Brazil. The company issued the first blue bond in Brazil, focusing on water supply and sanitation. This award-winning initiative was recognized as, “an innovative use-of-proceeds blue bond paving the way for corporate issuance in emerging markets in a critical sector with significant environmental and social benefits.” 

Returns Versus Outcomes: What’s Valued by Impact Investors? 

The merits of impact investing are an important topic of debate among market participants. According to GIIN’s impact investor survey, the top three reasons why investors make impact investments are: 

  • It is central to their mission to intentionally pursue impact through their investments;
  • Impact investments are part of an investor’s commitment as a responsible investor; and 
  • Impact investments are an efficient way to meet their impact goals.5 

Globally, two thirds of impact investors target market-rate returns from their impact investments, while one third are willing to take a lower return in exchange for greater impact. In Latin America, it’s evenly split, with half of investors targeting market-rate returns and half willing to take a lower return. These results show the significant diversity within the impact investment market in terms of capital expectations and impact profiles. 

Among impact investors in Latin America, we see a greater focus on environmental and social impact alongside financial returns. In fact, the BRK bond issuance came to market with a 20-year term and was oversubscribed by 1.6 times. The use of proceeds will be directed towards business solutions for oceanic health, freshwater, and to improve access to water and sanitation. 

Challenges and Opportunities for Considering Impact 

Within the impact investing space today, one of the biggest challenges is the lack of consistency in identifying and measuring the impact of investments. This leads to comparability issues. Without consistent, reliable, and comparable data on an issuer’s impact on the environment and society, through voluntary standards or mandatory regulations, the problem of greenwashing often surfaces. In fact, investors in Latin America see measuring outcomes, standardization, and the associated resources and costs as the top challenges in impact measurement.6 However, as GIIN replaces the International Finance Corporation as the new host of the Operating Principles for Impact Management, a framework for managing impact capital, we are starting to see a meaningful shift towards market standardization. 

In the absence of clear market expectations and a standardized reporting framework, the opportunity lies with companies and investors to continue to shape the foundation of the impact investment market. Investors in Latin America have focused their efforts beyond immediate financial returns to consider long-term impacts on society, the planet, and people. Corporate issuers in the region have also leveraged debt instruments to help support a broad range of socio-economic and environmental developments. These efforts will continue the momentum towards more consistent and standardized reporting on impact across jurisdictions and regions.

For more information on how the impact investing industry is evolving and affecting projects and products across the financial market, please reach out to our Sustainalytics Corporate Solutions team at [email protected].



1 Global Impact Investing Network. Impact Investing.

2 PRI. 2022. Principles for Responsible Investment Annual Report 2022.

3 Hand, D., Ringel, B., and Danel, A. 2022. Sizing the Impact Investing Market: 2022. The Global Impact Investing Network (GIIN).

4 Schwartz, J. and Arévalo-Carpenter, M. 2021. “Impact investing in Latin America and addressing the 'missing middle'” World Economic Forum.

5 Hand, D., Dithrich, H., Sunderji, S., and Nova, N. 2020. Annual Impact Investor Survey 2020. The Global Impact Investing Network (GIIN).  

6 Hume, V., Davidson, A., and Guttentag, M. 2020. Impact Investing in Latin America – Trends: 2018-2019. Aspen Network of Development Entrepreneurs.

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