Latin America is one of the richest regions in the world in terms of natural resources and strategic geography. It holds vast reserves of minerals essential for the energy transition, fertile farmland, abundant renewable energy potential and a location linking the Americas, Europe and Asia. Yet despite these advantages, the region has not consistently attracted the sustained investment needed to realise its promise. 

According to the Economic Commission for Latin America and the Caribbean (“ECLAC”), Foreign Direct Investment reached USD 189 billion in 2024, a seven percent increase over the previous year. But investment intensity remains weaker than a decade ago, accounting for just 13.7 percent of gross fixed capital formation and 2.8 percent of GDP, compared with 16.8 percent and 3.3 percent in 2010. In other words, while capital flows are rising, Latin America is still underperforming relative to its potential. 

Momentum, however, is shifting. New partnerships and flagship projects are showing how the region can align sustainability, technology and profitability. Uruguay’s Paysandú Megaproject, for instance, positions the country as a leader in green hydrogen. “Highly Innovative Fuels Global (“HIF Global”) plans to invest USD 6 billion near the city of Constancia in Uruguay to build a green hydrogen production plant,” noted one of the company’s environmental consultants. “This would represent the largest foreign investment in Uruguay, surpassing even that of Finnish paper company UPM.” The project is backed by a consortium that includes Porsche AG, EIG, Baker Hughes and Gemstone Investments, and while the permitting process can be lengthy, Uruguay’s clear rule of law provides reassurance to global capital. 

“HIF Global plans to invest USD 6 billion near the city of Constancia in Uruguay to build a green hydrogen production plant... representing the largest foreign investment in Uruguay.”

HIF Global environmental consultant, Uruguay

Brazil offers another model. As one executive observed, “In Brazil, one of the most practical arrangements is setting up a joint venture or platform company with a trusted local partner. The global investor keeps control over capital and governance while the local team takes care of sourcing and execution.” Total Energies’ partnership with Casa dos Ventos, one of the largest wind developers in the country, follows this structure. These kinds of arrangements demonstrate how global governance combined with credible local execution can reduce risk while enabling scale. 

At the same time, innovative financing mechanisms are emerging to lower entry barriers. “It’s very important to reduce the entrance risk for investors,” an Inter American Development Bank (“IDB”) expert remarked. “The IDB and other development finance institutions can play a very important role, either through blended finance… or as an intermediary or catalyst helping to create the right frameworks for investors.” Blended finance, thematic bonds, climate debt swaps and securitisations are all tools already being tested in the region. The Bahamas’ Nature Bond, which refinanced USD 300 million of external debt to fund ocean conservation, and the USD 1.1 billion Galapagos Debt-for-Nature swap illustrate how creative financial engineering can align capital markets with sustainability goals. 

These mechanisms matter because the investment appetite is there. “There are trillions of USD available for impact investment globally and LatAm may deliver long-term returns for those that choose to invest in the region,” an impact finance specialist explained. “However, political polarisation, reputational aspects and safety issues harm the region’s potential.” Investors are adjusting their expectations accordingly. As one global fund manager mentioned, “Brazil’s renewables, sanitation and clean transport projects are still vital to meeting climate goals, but double-digit returns come with higher risk.” 

“Brazil’s renewables, sanitation and clean transport projects are still vital to meeting climate goals, but double-digit returns come with higher risk.”

Global fund manager

Despite these challenges, the opportunity set is broad. Clean energy, sustainable agriculture, forest regeneration and biofuels are consistently identified as the most attractive sectors. “The region might become fundamental to enable clean transport for long distances,” an environmental consultant remarked, highlighting the importance of metals, biofuels and hydrogen for the global transition. In urban mobility, Colombia is leading with the world’s largest electric bus fleet, while Brazil’s northeast is opening vast new opportunities in solar and wind as transmission projects expand. 

The conditions for success are clear. Investors need stronger public–private collaboration, greater policy certainty and projects designed to deliver both profitability and impact. As one consultant observed, “Impact investment works best when aligned with national strategies and local capacity.” In Latin America, it will take both the little and the large - the megaprojects and the policy frameworks behind them - to turn promise into performance.