Brazil advances ESG agenda with first issuance of sustainable bonds

In recent years, the growing commitment of the corporate world to environmental, social and governance (ESG) issues has driven the pursuit of sustainability in business actions and policies. In this context, a significant and promising initiative was announced by the Brazilian federal government: the first issuance of sustainable bonds, linked to ESG targets. This transaction has generated great expectation in the financial market, and will count on the participation of renowned banks, conducted by the National Treasury Secretariat (STN).

This important move positions Brazil as a newcomer in the global ESG debt markets, bringing to the country a new range of opportunities and attracting the interest of conscious investors. In order to attract investments and reinforce its commitment to sustainability, a roadshow will be held soon to present this initiative to global markets. Currently, the terms of the sale and the exact size of the operation are under discussion, but the outlook is promising.

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The growing demand for ESG bonds has been a notable phenomenon, which was demonstrated by Brazil’s successful issuance of $2.25 billion in dollar-denominated bonds maturing in 2033 earlier this year. This outcome reflects investors’ appetite for ESG-aligned assets. The authorities will continue to monitor market conditions, considering potential traditional debt issuance abroad.

Globally, sales of green bonds and ESG loan deals significantly outpaced fossil finance (oil, fossil gas and coal) in the first half of the year. However, experts warn that it is too early to say that this represents good news in climate terms. Most of the green emissions are related to financial institutions, governments and few renewable energy companies, which creates uncertainty about the real impact on the energy transition.

Written by Arthur Manetta and Clara Couto

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