Why Chile is facing a challenge to finance green infra

The need to produce green infrastructure will generate financing pressure for Chile as it will have to compete with other countries for funding, while also making sure that its market rules can prevent greenwashing and comply with international sustainability principles, according to public sector officials.

Regarding the first issue, the concessions office of the public works ministry (MOP) is starting to include sustainability objectives in the design stage of projects to ensure they can access funds through green bonds and other sustainability-related financing instruments. 

“We need to make [concessions] attractive not only for investors, but for financing as well,” the office’s head, Marcela Hernández, said at a webinar about such financing that was held by Spanish infrastructure and renewable energy group Acciona and Chilean infrastructure think tank CPI.

The financing needs for green infrastructure are massive worldwide, which will force Chile to compete for such funding, said Hernández.

On the regulatory front, the country’s financial market commission (CMF) is expected to unveil its ESG (environmental, social and governance) framework for all security issuers this month.

“They will have to report information and indicators related to the issues of governance, sustainability and climate change,” CMF board member Bernardita Piedrabuena told the webinar.

She added that CMF and other agencies are working on a framework for preventing greenwashing and ensuring that investors adhere to sustainability principles.

CMF is also studying how climate change is indirectly affecting banks and insurers as they work closely with companies that are more directly exposed to risks related to the environment. 

PRIVATE SECTOR VIEW

From the point of view of Acciona, green investments and regulatory frameworks should be seen as an opportunity, according to the group’s global sustainability director, José Luis Blasco.

Answering a question from BNamericas during the webinar, Blasco said an internal audit found that 90% of Acciona’s capex and over 70% of its sales were aligned with the EU’s sustainability standards, in both 2019 and 2020.

“Taxonomy is a strategic tool that has allowed us to identify where the opportunities to promote and boost green infrastructure are, or where they will be,” he said.

When asked whether private firms should work with the same emission reduction targets as governments do, Blasco said Acciona is already doing this with a 60% reduction goal for greenhouse emissions by 2030 and becoming a net-zero emitter by 2040.