Sustainable Issuer versus Sustainable Issuance: Providing Public Issuers of Sustainable Bonds in Latin America and the Caribbean with Insight into the Nascent Universe of ESG Ratings

Based on recent works and experiences from issuers in Latin America and the Caribbean, and complemented by interviews of experts, this study provides public issuers with insight and encouragement to engage into the nascent world of environmental, social, and governance (ESG) evaluations and assessments, ratings, scoring, and profiles. Increasingly, investors are integrating ESG into their decision-making processes for various reasons, including risk-return considerations, client mandates, disclosure commitments, and regulatory requirements. Although an increasing number of investors have ESG investing strategies and responsible investment policies in place, ESG factors have primarily been integrated into decision making in equity rather than fixed income portfolios. Few investors have a systemic approach to ESG integration in debt portfolios, especially in sovereign debt. Their number is growing, however, and investors increasingly are demanding ESG ratings of bond issuers, especially thematic bond issuers, whether corporate or sovereign.