As of August 2022, the Itau BBA had structured dozens of sustainability linked bonds, which made future interest payments a function of the borrower meeting a target for a sustainability metric, and had solidified its reputation as a pioneer of sustainable finance in Latin America. The next few years would provide the firm an opportunity to broaden its sustainable finance portfolio by engaging more firms in measuring and improving their performance on ESG issues, such as carbon emissions, biodiversity, workplace safety, and diversity and inclusion. At the same time, Itau BBA would need to carefully navigate the financial and reputational risks associated with underwriting, marketing, and distributing sustainable debt of firms exposed to significant ESG risks. Should Itau expand its sustainable debt business to firms with high ESG risks and if so, what must be done to gain support from Itau executives, investors, and high-risk issuers? What systems should Itau adopt to alleviate concerns and would the transaction costs of these systems, such as enhanced disclosure or monitoring, be too steep to justify underwriting the product? Luiza Dias Lopes Vasconcellos, the partner heading sustainable finance at Itau BBA, wondered whether pursuing growth in sustainable debt was worth the risks involved.

The case explores the collateralization of intellectual property in a loan agreement between a highly leveraged apparel company and a large US bank. Leveraging intangibles in the credit market is a new practice that has significantly grown over the past few years. However, estimating their liquidation value is not directly intuitive, since intangibles are highly illiquid assets and have uncertain future cash flows. Can banks reliably secure corporate loans by intellectual property, and how can they alleviate the challenges in estimating a loan-to-value ratio for this collateral?

Executives often complain that investors' obsession with short-term returns forces them to make decisions that are bad in the long term. New research shows that it works both ways: Companies with a short-term orientation attract investors interested in short-term time frames.