Brazilian law firm Machado Meyer has invested for years developing expertise in the legal underpinnings of sustainability – and its efforts are now paying off as the transition to a cleaner economy gathers pace.
The firm, which wins the award for Sustainable Infrastructure Law Firm of the Year, put its sustainability credentials to work on a number of award-winning transactions, including the financing for the Mendubim solar plant (Renewable Energy Financing of the Year) and the blue bond issued by BRK Ambiental in the Brazilian market (Sustainable Infrastructure Financing of the Year).
“We have had plenty of work on the renewables front, even though some investors put a foot on the brakes in the first half of 2023. But many had their operations already structured last year,†says Ana Karina E. de Souza, a partner at Machado Meyer in São Paulo.
She notes that important recent regulatory developments in Brazil allowed the market to seek new sources of funding. The most important of these was the approval of a new foreign currency exchange framework that allows utility companies to sign dollar-denominated power purchase agreements and use them as guarantees to raise funding in international markets. Mendubim is perhaps the most emblematic case to employ this structure so far.
“We have seen several deals being structured based on the new rules,†she says.
José VirgÃlio Lopes Enei, another partner at Machado Meyer, notes that the same rules can be deployed by other sectors to raise funding for greenfield projects.
“Digital infrastructure is one example,†he says. “We are working with several data center companies that often sign contracts in dollar with international tech groups.
He adds that work for legal sustainability and ESG experts is unlikely to fade any time soon in the infrastructure market. “There is an increasing concern among companies about their carbon footprint,†Enei says. “We are also seeing forest concessions and many other initiatives that have a focus on sustainability.â€
The firm is currently working on a range of projects linked to the energy transition, including the electrification of public bus fleets, metro lines, water and sanitation and digital infrastructure. Enei says that infrastructure investment funds are adjusting their focus to include sustainability features in their strategies.
Souza, for her part, stresses that the new infrastructure investment plan announced by the Brazilian government earlier this year, the PAC, identified sustainable finance as one of its key pillars.
“Now BNDES has a directorship dedicated to the energy transition,†she says. “It is a theme that has gained strength of late and is here to stay.â€
