For over a decade, Scotiabank has invested in developing its ESG capabilities in the belief that financial markets would ultimately embrace sustainability.
The commitment has paid off for its Latin American infrastructure business, as the Canadian bank has been involved in some of the most compelling financings of renewable energy and sustainable infrastructure projects over the past.
“We are very proud to have developed an entire team dedicated to sustainability in Latin American infrastructure,” says Marc Chouchani, the co-head of infrastructure and project finance at Scotiabank Global Banking and Markets.
“We have a global concept, but each individual jurisdiction has its nuances, whether it is the categorization of clean energy certificates or other concepts,” says Chouchani of his team, which is based out of Toronto with offices in New York and Mexico City. “Our specialists work directly in the region, which really allows us to add value for Latin American-focused clients,” he says.
Scotiabank was the joint lead arranger and green loan coordinator in the $525 million financial package for the acquisition of Atlas Renewables by GIP, the private equity firm and winner of Project Sponsor of the Year. The bank also coordinated the $55.8 million green loan for solar energy producer GPG Chile in July 2022, a pioneering deal for small and medium-sized power generation plants. That same month, it coordinated a $250 million green loan for Engie Energia Chile, which will use the proceeds to fund clean energy projects.
“Many of our clients have been implementing sustainability policies,” Chouchani says. “So it is very natural to create KPIs that are consistent with their business model, as well as encouraging the continuation of those efforts.”
For sustainable financings, KPIs are sustainability targets that issuers or sponsors need to meet in order to benefit from better terms. One such indicator figured prominently in the 2.76 billion pesos ($138 million) sustainability-linked bond issued by GAP, a Mexican airport group, in September last year. Scotiabank was the joint bookrunner for that deal and then for another 5.4 billion pesos ($291 million) sustainability-linked bond issued by GAP in March.
There has been a slump in the issuance of green securities over the past year, however, as higher interest rates put a damper on the ambitions of many issuers. Project sponsors have looked to lenders to fund their sustainable energy plans, especially when attractive acquisition opportunities emerged. This has happened in particular as early players in the renewable market are now looking to monetize their more mature investments, Chouchani says.
“M&A has dominated the renewable market recently, but greenfield financings should accelerate again in years to come,” he says.
Scotiabank has committed overall to mobilizing $350 billion towards climate-related finance by 2030 – a fact which guides its relationships, products, and services. It has set two interim targets by that date to reduce the financed emissions intensity of its oil & gas portfolio and power & utilities portfolio by 30% and 60%, respectively.