The pandemic has exposed systemic weaknesses in infrastructure and urban planning in many of Latin America’s largest cities including poor access to social infrastructure, clean water, sewerage, etc. Public awareness of pollution and hygiene has also been increased and there is a swell of public and political rhetoric to accelerate the transition to a cleaner and greener economy and way of life.
Climate risk is also rising up the agenda of institutional investors and there is growing appetite internationally for sustainable investments in energy, construction, transport, waste management and industrial efficiency.
If there is public desire, political will and financing, then what is the problem? According to our sources there is one major barrier: bureaucracy.
“LatAm has an opportunity to transition to a greener economy during post-COVID-19 recovery.”
Professor specialised in green economy.
Take Colombia, the country has a pipeline of important environmental infrastructure projects which are coming up for tender and is taking its first steps towards a renewable energy transition. Investors and developers are watching closely. Five years ago, the primary concerns of our clients related to corruption risks and physical security but increasingly our clients are more concerned with regulatory risks.
The regulatory environment in Colombia is complex and investors new to the country frequently underestimate the rigor required to acquire the right environmental licenses. Cutting corners here leads to lengthy delays. A source close to the National Authority of Environmental Licenses (ANLA) explained, “Environmental licenses can be obtained in less than 15 months if you follow all the steps, but you must commission good specialised studies. By trying to save money with quick and dirty studies, you risk delays.”
“The problem is that corporates see the environment as an expense rather than an investment.”
Professor specialised in green economy.
Prior consultations can also become a headache. The challenge here is that the process of prior consultation is not regulated, and so local authorities and communities frequently and understandably try to extract as much as they can from the process. There is a draft bill floating around the Ministry of the Interior that could fix this, but it is likely to meet strong opposition.
An executive in the infrastructure sector in Colombia gave us his version, “Our efforts [to get prior consultations regulated] generate controversy because the communities feel that their rights will be limited but what we need is to have clear and specific procedures governing how far the communities and companies can go and make sure that we don’t end up replacing the role of the state. To date, there is not a proposal that has been socialised and accepted by all the parties.”
