CHILE Law and Practice Contributed by: Macarena Ravinet and Federico Espinosa, Cuatrecasas
reducing costs, and enabling more customised finan- cial products, particularly benefiting SMEs and retail borrowers. The market is thus shifting toward flex- ible, multi-layered structures aligned with international best practices, thereby enhancing funding options for growth and projects. 1.6 ESG/Sustainability-Linked Lending Regulatory and Market Momentum Chile has made significant progress in ESG (Environ- mental, Social, and Governance) and sustainability- linked finance, establishing itself as a regional leader in these areas. A major milestone was the introduction of T-MAS, the national taxonomy for environmentally sustainable economic activities, which guides inves- tors in channelling funds toward green and socially responsible projects. The government and financial regulators have actively promoted sustainable finance, aligning local standards with international best prac- tices and meeting the increasing demand of investors for responsible investment products. Key regulatory advancements include the ongoing implementation of the Sustainable Finance Roadmap by the Financial Market Commission (CMF), which has mandated new disclosure requirements for banks, insurers, and listed companies regarding climate and ESG risks. The CMF has also pushed for the integra- tion of ESG criteria into risk management and credit assessment, encouraging financial institutions to embed sustainability into their core operations. Growth in Sustainability-Linked Lending The Chilean loan market has experienced strong growth in sustainability-linked loans (SLLs) and green loans, with the Ministry of Finance committing up to 38% of public debt to green, social, and sustainabil- ity-linked instruments. Chile was the first sovereign in the Americas to issue sustainability-linked bonds (SLBs) with ambitious climate and social KPIs, such as greenhouse gas reduction, renewable energy, gen- der diversity, and biodiversity protection. Commercial banks have expanded ESG offerings, with SLLs now common in large corporate financings, often featuring terms tied to ESG performance. Banks such as Itaú Chile and Banco del Estado de Chile have adopted sustainability finance frameworks, supporting lending in renewable energy, clean transportation, affordable
housing, and financial inclusion, while setting higher standards for ESG lending through external verifica- tion and impact reporting. Prevalent Product Areas and Industries • Energy and infrastructure: The renewable energy sector is the most active in ESG and sustainability- linked lending, reflecting Chile’s ambitious decar- bonisation agenda and its status as a global leader in solar and wind power. Project finance for green hydrogen, transmission lines, and clean energy infrastructure frequently incorporates sustainability- linked features. • Mining: As the world’s largest copper producer, Chilean mining companies are under increasing pressure from global investors to demonstrate ESG leadership. Sustainability-linked loans and bonds are being utilised to finance projects that enhance water management, decrease carbon intensity, and foster community engagement. • Real estate and construction: Green loans are increasingly used to fund sustainable building pro- jects, with eligibility often tied to certifications such as LEED or local green building standards. • Agribusiness and food production: Lenders are supporting sustainable agriculture through loans linked to environmental stewardship, resource effi- ciency, and social impact metrics. • Financial sector: Chilean banks are not only offer- ing ESG-linked products to clients but are also integrating ESG criteria into their own funding strategies, including the issuance of green and social bonds. • Overall, these developments show that ESG considerations are no longer a niche, but rather a central feature shaping financing structures and investor expectations in Chile. 2. Authorisation 2.1 Providing Financing to a Company Banks In Chile, only entities authorised under the General Banking Law (DFL N°3 of 1997) and supervised by the Financial Market Commission (CMF) may conduct core banking activities, including fund collection and credit granting. Banks must be special-purpose cor-
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