Patrick O’Neill, Managing Partner of Sherlock Communications and named Best Public Relations Professional in Latin America 2020 through PR Week Global Awards
From unprecedented droughts and heatwaves to tropical cyclones and floods, the spread of extreme weather events in Latin America poses an urgent threat to the continent’s future.
But there are encouraging signs that countries – and corporations – are taking matters into their own hands, adding so-called “green finance,” a movement that is gaining popularity across the continent. Does it really make a difference in the face of the difficult situations facing the region?
Essentially, green finance provides opportunities for private companies to invest in sustainable and environmentally friendly projects and sectors for countries to move towards low-carbon economies while also addressing climate risks.
Of course, such investments are by no means driven by purely altruistic concerns. Rather, as the threat of climate change becomes more real, companies are being held accountable by investors, shareholders, financial institutions and wider society who question the viability of business actions and how they can meet the United Nations’ Sustainable Development Goals.
In December 2014, Peru, Latin America’s sixth-largest economy, became one of the region’s first leaders in sustainable finance when it became the region’s first issuer of green bonds (for a truly hefty $204 million).
Although the country’s ecological progress since then has been described as “timid,” Peru reached $4. 8 billion in green, social, sustainable, and sustainability-related (GSS) agreements by the end of 2021. And paving the way for further growth, green bonds issued between January and April 2022 totaled about $1. 1 billion, or 17% of all GSS transactions in the Andean nation.
But when it comes to green finance, it’s important to know whether such investments can make a real, substantive difference or whether they are vulnerable to accusations of greenwashing. One measure is the clean development mechanism (CDM) established by the Kyoto Protocol back in 1997.
As the United Nations Framework Convention on Climate Change explains: “The CDM allows emission reduction projects in emerging countries to discharge Certified Emission Reduction (CER) credits, equivalent to one tonne of CO2. These CERs can be traded and sold. Such credits can also be used in more developed countries to meet their Kyoto emission reduction targets.
But how can marketers and business leaders across Latin America be part of the green finance revolution? And why does taking part matter?
Above all, agencies that are not aware of the issues surrounding green finance will simply be left behind because their competition is very aware of this area. Marketers deserve to keep a close eye on developments in the European Union, where analyses are underway to integrate sustainability into monetary policy. Legislative adjustments in the EU tend to spread to other parts of the world, and Latin America is no exception. The adoption of green finance across the EU will inevitably have an effect on each and every party. every corner of the world.
My company has been very concerned about the sale of green finance projects in Latin America in recent years. We, our foreign money service clients, lend to Latin American monetary institutions for green finance projects. This hands-on experience helped us draw conclusions and hone our skills. These green paints have allowed me to make very important observations and expand on a more productive practice technique that agencies can adopt in this space.
Recently, when we were selling a leading green fund in the region, we learned that the budget tends to have predetermined precedence slots for loans. These can cover a wide diversity of fields, from forestry to fisheries, and from agriculture to ecotourism. We temporarily learned that the effect of green finance has trends that go far beyond the banking world. Green trends will have a ripple effect on a wide diversity of intersecting spaces. Marketers want to be fully aware of this and avoid naively viewing green finance. through the narrow lens of banks and monetary institutions. Following some pretty undeniable tips can go a long way.
First, make sure your team stays up-to-date with the latest global developments in sustainable finance. It is understood that a non-unusual global environmental, social and governance (ESG) framework will be published soon. Therefore, I strongly propose that agencies take this into account and monitor the situation as things evolve. Similarly, the upcoming EU law could have a significant impact everywhere when it comes to green finance.
Second, explore new tactics for storytelling about green finance through a variety of online and offline communication tools. Building a strong and sustainable narrative for your consumers can give them a competitive advantage.
A vital point is to avoid greenwashing and instead focus on transparency. The practice of corporate greenwashing has been infamous for more than 20 years, with corporations looking to burnish their sustainability credentials employing less-than-realized evidence. One of the most infamous examples is Volkswagen’s emissions scandal in 2015. False claims can damage a company’s reputation, so opt for transparency and reap the potential benefits.
Finally, as fears of climate change grow, voluntary green regulations may become mandatory. In a changing regulatory environment, you can gain competitive merit by adopting sustainable finance before you (and your clients) are forced to replace your practices.
With all this in mind, it is transparent that Latin America is now a component of a global green finance movement that is developing in popularity every year. They sold out. So when considering green finance in the face of the terrifying, real, and prospective effect of climate change, there’s really only one answer: to be a force for good.
Forbes Agency Council is an invitation-only community for executives in successful public relations, media strategy, creative and advertising agencies. Do I qualify?