A major shift toward sustainable logistics is underway in Latin America, spearheaded by Royal America. This company specializes in selling and leasing electricity-powered equipment for logistics and cargo operations across Chile, Ecuador, and Colombia. Recently, it secured a seven-year bond worth $26 million with the backing of responsAbility, a Swiss impact investor, and IDB Invest, a development bank focused on Latin America. The funding mechanism is divided into two parts. The first tranche involves up to $16 million in Chilean Pesos designated for Royal America's Chilean division, primarily supported by IDB Invest. Meanwhile, responsAbility will contribute to the second tranche, which amounts to $10 million earmarked for Royal America's Colombian operations.
This financial arrangement aims to facilitate the adoption of eco-friendly alternatives to traditional gas-powered machinery. Specifically, the funds will be utilized to acquire electric forklifts, pallet trucks, and other equipment for sectors such as food, retail, agriculture, and manufacturing in both countries. This initiative aligns with broader trends in sustainable finance within Latin America and the Caribbean. In this region, corporate and sovereign entities have been more active in issuing green bonds than banks or local governments. For instance, Chile launched its inaugural sovereign green bond in 2019, raising nearly $1 billion for projects related to renewable energy, water management, and clean transport.
The rise of green bonds in Latin America reflects a commitment to environmental stewardship and economic progress. Various companies are contributing to this movement. Internacional de Inversiones, a real estate developer, raised $45 million in 2023 with assistance from the International Finance Corp., promoting sustainable construction in Mexico. Additionally, Sociedad Química y Minera de Chile issued $700 million in unsecured green bonds in 2021 to support lithium production for electric vehicles. These efforts demonstrate that embracing sustainable practices not only benefits the environment but also strengthens economies by fostering innovation and attracting global investment.
