Since early 2000s Environmental, Social and Governance (ESG) risks has become a global agenda for financial institutions, including regulators and supervisors, as they understood the magnitude of its impacts to economic systems stability and from there on regulators and policymakers around the world have been designing norms and frameworks for ESG disclosure.
As graduate consultants to the Inter-American Development Bank (IDB), the SIPA Capstone team aimed to assess how the Latin American and Caribbean (LAC) countries had been addressing ESG assessment and recommend guidelines for sustainable finance disclosure regulation in banking institutions in the region. The team used existing reports, especially the European Banking Authority (EBA), which is the most established framework for ESG banking disclosure as references to provide harmonized rules for financial markets.
The project focused on examining the latest developments in three representative countries in the LAC region that had already started some development in the regulation and reporting of ESG risk field: Brazil, Chile, and Colombia. The group interviewed influential public and private sector experts in the region and deepened the desk research in the EBA regulation to draft recommendations for banks in the LAC region on transparency with regards to the integration of sustainability risks and the provision of ESG and climate change information with respect to financial instruments.