Regional Brazil development banks boost ESG footprint

Bnamericas Published: Monday, June 07, 2021
Regional Brazil development banks boost ESG footprint

Following national institutions, regional development banks like São Paulo state’s Desenvolve SP or Minas Gerais’ BDMG are also increasing loan offers to finance ESG-related projects.

"Local development agencies have major expertise in identifying sustainable projects at regional levels and therefore end up being vehicles used by large banks and even by global multilateral institutions to foster projects linked to an ESG agenda," Luis Santacreu, a finance analyst at local agency Austin Rating, told BNamericas. 

"With large banks, along with global and local multilateral institutions offering more and more credits for sustainable projects, these [projects] are becoming more financially viable for small and medium-sized companies as well," Santacreu added.

Desenvolve SP launched a US$100mn Green Economy Line (LEV) for micro, small and medium-sized companies working on sanitation projects like water preservation and solid waste treatment.

The entity obtained the funds from the International Finance Corporation and Banco Santander Brasil.

"It is urgent to understand that companies need to go beyond financial results and become responsible for environmental and social sustainability as well. Desenvolve SP, as a bank for entrepreneurs, has the mission of stimulating this new, more sustainable economic model, directing resources in this direction," Desenvolve SP president Nelson de Souza said in a press release.

Meanwhile, BDMG launched special credit lines for renewable energy generation in Minas Gerais. Financing can be contracted by firms of all sizes.

The objective is to boost especially the photovoltaic segment, including self-consumption and larger scale solar plants. Financing is also available for small hydroelectric plants, hydroelectric generation plants, sustainable lighting (LED lamps), and energy efficiency initiatives.

"The launch of these green credit lines is in line with the purpose of BDMG being an inducing agent for a more sustainable economic recovery, taking advantage of our state’s natural vocation and its leadership in distributed generation of solar energy in the country," BDMG president Sergio Gusmão said in a release.

In 2020, BDMG provided 97.8mn reais in loans for renewable energy projects, mainly for photovoltaic solar, an increase of 67% over the previous year.

Minas Gerais is the leader in the solar energy segment, responsible for 18% of the country’s installed potential, as 844 cities are self-suppliers.

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