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  • October 2022
  • Case
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Sustainable Finance at Itau BBA

By: George Serafeim, Maria Loumioti and Benjamin Maletta
  • Format:Print
  • | Language:English
  • | Pages:24
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Abstract

As of August 2022, the Itau BBA had structured dozens of sustainability linked bonds, which made future interest payments a function of the borrower meeting a target for a sustainability metric, and had solidified its reputation as a pioneer of sustainable finance in Latin America. The next few years would provide the firm an opportunity to broaden its sustainable finance portfolio by engaging more firms in measuring and improving their performance on ESG issues, such as carbon emissions, biodiversity, workplace safety, and diversity and inclusion. At the same time, Itau BBA would need to carefully navigate the financial and reputational risks associated with underwriting, marketing, and distributing sustainable debt of firms exposed to significant ESG risks. Should Itau expand its sustainable debt business to firms with high ESG risks and if so, what must be done to gain support from Itau executives, investors, and high-risk issuers? What systems should Itau adopt to alleviate concerns and would the transaction costs of these systems, such as enhanced disclosure or monitoring, be too steep to justify underwriting the product? Luiza Dias Lopes Vasconcellos, the partner heading sustainable finance at Itau BBA, wondered whether pursuing growth in sustainable debt was worth the risks involved.

Keywords

Sustainable Finance; Corporate Social Responsibility; Environmental Sustainability; Growth Strategy; Debt Contracting; Performance Metrics; Risk Assessment; ESG (Environmental, Social, Governance) Performance; Financial Instruments; Risk Management; Debt Securities; Measurement and Metrics; Banking Industry; Pulp and Paper Industry; Latin America

Citation

Serafeim, George, Maria Loumioti, and Benjamin Maletta. "Sustainable Finance at Itau BBA." Harvard Business School Case 123-036, October 2022.
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About The Author

George Serafeim

Accounting and Management
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Related Work

    • June 2024
    • Faculty Research

    Sustainable Finance at Itau BBA

    By: George Serafeim
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  • Sustainable Finance at Itau BBA By: George Serafeim
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