Chile praised for new taxonomy of environmentally sustainable activities

The Republic of Chile is gaining international recognition following the recent launch of the Taxonomy of Environmentally Sustainable Economic Activities (T-MAS) by the Ministry of Finance.¹ This new framework, similar to the EU Taxonomy, serves as a classification system to help investors identify environmentally sustainable economic activities. T-MAS is being praised for its potential to strengthen investment and sustainable finance practices in Chile and globally, and support capital flows to important sustainability initiatives.

Scotiabank has been a proud key partner to the Republic on this journey, having served as a leading sustainable finance partner in Chile, taking part in landmark transactions for public and private issuers. Scotiabank’s Latin American Sustainable Finance team was invited to contribute to the taxonomy, participating in a Ministry of Finance-led working group, where Scotiabank experts helped test and refine the framework ahead of its July 2025 launch.

“We applaud the Republic of Chile for establishing T-MAS and for implementing a clear roadmap, criteria and shared language for sustainable investments,” commented Luis Irarrazaval, Managing Director and Head of Corporate Banking and Capital Markets, at Scotiabank Chile. “This encourages greater market transparency for the private sector, with a goal to enable easier comparability of disclosures, and strengthen investor confidence, aiding key sustainable economic activities in Chile to better access the financing they need.”

Daniel Gracian, Scotiabank’s Director of Sustainable Finance for LatAm and Caribbean, echoed this sentiment: “This ‘green taxonomy’ introduces a more cohesive and transparent system for evaluating sustainable economic activities. Over time, we believe it will help the financial sector, development banks, and financial markets to direct capital more efficiently toward sustainable development and climate action, with an aim to reduce climate risk and highlight ESG-aligned investments as a more credible and attractive asset class in the Chilean market. This can empower Chile’s corporates to better position themselves within the global marketplace, making their product offerings more attractive.”

Raising the bar for environmental criteria

The new Chilean taxonomy builds upon other sustainable finance taxonomies in the European Union, Asia and several other. “Scotiabank is proud to bring our sustainable finance expertise to the table. Our experience in both Chilean and global markets has helped shape a taxonomy that is practical, credible, and aligned with market needs”, Irarrázaval added, highlighting that Scotiabank recently earned Euromoney’s 2025 Awards for Best Bank for ESG in Chile and Best Bank for Sustainable Finance in Latin American jurisdictions, such as Colombia and Mexico, creating interoperability, so Chile can align with international markets and boost competitiveness.²

Notably, Chile is the first country in the Americas whose taxonomy classifies economic activities based on their contribution to environmental objectives. These range from ‘direct contribution to sustainability’ (such as GHG reductions and reduced environmental impact), ‘enabling activities’ (like the use of renewable energy for energy efficiency, or pollution prevention), or ‘transition activities’ (to help traditional industries shift to climate-neutral operations).

Chile’s taxonomy also dictates that, for an activity to be classified as "environmentally sustainable", it must show a Substantial Contribution to climate change mitigation and/or adaptation, comply with Do No Significant Harm (DNSH) criteria by adhering to environmental regulations aligned with key environmental objectives, and meet Minimum Social Safeguards (MSS) through effective compliance practices suited to its size and complexity.

Inclusion of mining sector in sustainable practices

In a landmark move, Chile’s T-MAS is among the first taxonomies in the world to formally incorporate the mining and quarrying sector, a critical development given the sector’s environmental footprint and its central role in Chile’s economy.

Chile’s taxonomy categorizes mining as a ‘transition activity,’ essential for moving toward a lower-carbon intensive climate-neutral economy and requires entities to demonstrate best-in-class environmental performance and not hinder the adoption of clean technologies. This can be achieved by gradually reducing greenhouse gas emissions, particularly those associated with fossil fuels. Emission levels must reflect the best performance within the sector. Furthermore, the activity must not hinder the development or adoption of low-carbon alternatives, nor should it extend the operation of carbon-intensive assets beyond their economically viable lifespan. The taxonomy introduces technical screening criteria tailored to eight eligible economic activities, including copper extraction and processing to iron ore, gold and silver, to chemical mining and salt extraction.

Chile’s emphasis on mining is noteworthy, since it remains a cornerstone of the national economy, having directly contributed approximately 14.6% to Chile’s GDP, equaled 56% of total exports in the first half of 2024, and generated approximately 10.9% of direct and indirect national employment. It is estimated that mining was responsible for approximately 7.4% of Chile’s total GHG emissions in 2022, and the sector is vulnerable to severe climate change impacts.¹

“This is a pivotal move toward integrating high-impact industries into a sustainable economy,” observed Gracian. “By including mining, Chile is paving the way for direct foreign and internal investments in activities that reduce climate impact, drive the sustainability of this critical national industry, and support the world’s sustainable development goals.” He noted that T-MAS also includes coverage across eight other industrial economic sectors, ranging from agriculture and forestry, to manufacturing and energy production, and real estate.

A shared commitment to Sustainability

Luis Irarrazaval of Scotiabank Chile emphasized that the new taxonomy reflects Chile’s long-standing leadership in sustainable finance.

“Chile has emerged as a regional and global leader in sustainable finance, particularly through its sovereign bond program, and the Republic’s leadership has had a catalytic effect on the broader market,” said Irarrazaval. “Since 2019, Chilean issuers, both public and private, have accounted for the largest volume of thematic debt issuance in Latin America, including social bonds, green bonds, sustainability bonds and sustainability-linked debt.”

Local Expertise, Global Reach

The Canada-based, multinational bank garnered these accolades due to its regional expertise, including a dedicated Latin American team, integrated with its global Sustainable Finance Group and Scotiabank’s Global Banking and Markets division, which delivers worldwide and cross-border offerings to corporate, institutional, financial and public sector clients.

Together, these teams offer high-level sustainable finance solutions across the Americas, particularly in Mexico, Peru and Chile, and showcase exceptional knowledge sharing and best practices across borders, resulting in innovative, tailored sustainable finance instruments that match local market realities. Scotiabank also earned notice in 2022, with its commitment to USD$350 billion to climate-related financings by 2030, to be deployed in coordination with its Climate-Related Finance Framework. In fiscal year 2024, Scotiabank allocated approximately USD$40 billion toward this goal, achieving a cumulative total of USD$172 billion since 2019.³

Taxonomy to shape sustainable finance markets

Although Chile’s voluntary taxonomy was only recently published – and the Republic will offer Ministry-led training sessions, a digital self-assessment platform – Gracian and Irarrazaval explained that it is already generating interest across the region. As Scotiabank collaborates with clients and stakeholders to align with the framework, they note how issuers and investors are enthusiastic about using this new tool to enhance sustainable finance credibility and transparency.

“Chile’s taxonomy is a landmark achievement,” Gracian concluded. “It reflects a deep commitment to sustainability—especially through the inclusion of robust environmental criteria, climate change mitigation thresholds and laying out specific eligibility criteria for the mining sector. At Scotiabank, we understand the complexity of today’s sustainability challenges and we are focused on playing our role as a financier and market builder in sustainable finance, by contributing to Chile’s landmark national framework.”

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