SMS: Case Study
"Sustainable Finance in Argentina" project comes to an end
The "Sustainable Finance in Argentina" project, promoted by the SMS Sustainability team, together with 5 banks and 3 non-banking financial entities in 8 provinces of the country, has come to an end. SMS reflects on the opportunities it has discovered.
The valuable objective of this project was to generate greater financing opportunities for green and inclusive activities, through the development of sustainable credit products. The initiative was selected among several from around the world by the UK PACT programme and funded through its Green Recovery Challenge Fund, promoted by the British government.
The SMS proposal sought that banks, as local actors that stand out within the financial system, integrate sustainability as an opportunity in their commercial and financial strategies, contributing in the long term to the financing of productive models that help face the challenges of Climate Change.
"This is a British cooperation programme to promote mitigation and adaptation to climate change and, in our role as executors of the project, what we do from SMS is to accompany provincial and local banks, so that they can develop the financing of sustainable activities," said Julian Costabile, Partner of SMS Sustainability.
Partner of SMS Sustainability
The programme was launched in March 2021, initially focused on the northern provinces of Argentina, to promote the financing of environmentally responsible production systems and, at the same time, provide opportunities in areas with vulnerable populations.
Between 2021 and 2023, more than 700 sustainable investment opportunities were identified, for an accumulated amount of approximately $2.2m. The main sectors of the local economy in which opportunities were found were: agriculture, construction, industry and renewable energies (mainly water, energy and/or thermal efficiency, sustainable repairs and constructions, energy generation, waste, and effluent treatment).
In total, more than 150 interviews were conducted in the Argentine provinces of Misiones, Corrientes, Chaco, Formosa, La Rioja, Entre Ríos, Mendoza and Neuquén. These interviews included actors from the public sector, private sector, civil society, and non-governmental organisations. Approximately 90 opportunities in each province were identified in this mapping, yielding between $170m and $570m of sustainable investment opportunities in each province.
Within this total, more than $38m correspond to projects that favor gender equity, and more than $1bn in investment opportunities in models that favor the inclusion of vulnerable producers.
"Our survey had a good scope, but there are still more sustainable investment opportunities. If we extrapolate to the number of actors that could lead these investments, it could reach a maximum universe of 75,000 cases," remarked Marc Benhamou, a member of the SMS Sustainability team in charge of the project.
In addition, based on the surveys carried out in each province, technical assistance was provided to participating financial institutions for the preliminary design of green and/or social credit products. This included training through a series of workshops related to sustainability, and financial education sessions for rural producers and women entrepreneurs.
"Financial Institutions have a challenge in acquiring the necessary capabilities to develop and implement sustainable credit products, as well as monitor and report the results, so technical assistance and consulting to these organisations is necessary," explained Costábile. "There is a great opportunity to raise funds to finance these opportunities in the capital market by issuing social, green or sustainable bonds. This is in addition to generating alliances with intermediary organisations and offering instruments based on blended finance to grant loans at differentiated rates," he added.
"Banks and financial institutions have a key role to play in the transition to sustainable production models. Public incentive, support and/or co-financing policies are necessary for some of the opportunities identified to materialise, in particular opportunities with the greatest social impact, and investments led by vulnerable groups," concluded Benhamou.
During this initiative, SMS felt inspired by the opportunity to make a difference and promote a more sustainable economy. We remain committed to our purpose of continuing to promote initiatives that foster environmental and social responsibility, and we hope to continue to generate a positive impact at every opportunity. Regarding this project, we are proud of the work done, the impact generated and the participation of all the teams involved in strengthening sustainable finance in Argentina.