The Brazilian financial sector’s role in sustainability innovation

Tackling climate change requires a coordinated effort  

The climate crisis calls for coordinated actions among various sectors, including governments, academia, the private sector and civil society. In this context, the financial sector plays a crucial role in driving the shift towards a more sustainable economy. 

Innovation in sustainability, which combines economic viability and environmental responsibility, has proven to be a promising approach for mitigating the impacts of climate change across different industries. One of the most striking examples is the production of biofuels, with the development of second-generation ethanol. To drive this agenda forward, Raízen, a Brazilian integrated energy company, has been investing in technologies that enable the same machinery to be used for both ethanol and green ammonia production.  

The sanitation sector is another example of innovation that promotes significant social changes. Aegea, one of the largest private sanitation companies in Brazil, created an Efficiency and Technology Center whose mission is to develop and seek solutions that improve the services encompassing the entire water cycle for efficiency, cost reduction and coverage expansion.  

André Pires de Oliveira Dias, Aegea’s financial and investor relations director, highlighted the positive impact of government concessions in areas such as Campo Grande, in the state of Mato Grosso do Sul, and in the Lakes region, in Rio de Janeiro. “Sanitation rates, previously below 30%, have risen significantly. This has reduced not only infections caused by contaminated water but also public health costs,” he said. For him, investments in sanitation are essential for improving the population’s quality of life and boosting the local economy. “Public-private partnerships and concessions are key to ensuring the continuity of this virtuous cycle,” he adds. 

Serra do Tigre project, Casa dos Ventos’ wind farm financed by private investment, is an example of the wind energy sector to provide customised solutions. Although renewable energy is very competitive in Brazil,  wind farms operation costs are still high. Reducing these costs is pivotal to consolidating the country as a leader in the global energy transition. 

Aligning with international commitments, such as the Paris Agreement, is key to ensuring that the transition to a low-carbon economy remains sustainable in the long term. According to Thomas Monducci, Investment Officer at the International Finance Corporation (IFC), the financial sector is committed to this mission, directing investments towards projects aligned with these objectives. 

The success of these initiatives relies on a joint effort as stated by Beatriz Secaf, sustainability leader at BNP Paribas Brazil. Secaf underscored the importance of collaboration across the private sector, governments, and society to overcome regulatory barriers and attract long-term investments. “Overcoming these barriers and ensuring the economic viability of the solutions is the great challenge going forward,” she said. 

Brazil is uniquely positioned to lead the global energy transition due its vast potential in clean and renewable energy. However, to make this happen, experience, resources and a long-term vision will have to be brought together. “Only through joint action across the different sectors can we ensure a sustainable and prosperous future for generations to come,” Secaf concludes.