Colombia’s Financial Superintendency Pushes Shadow Pricing Framework to Reshape How Banks Evaluate Projects

Proposal would reset how banks weigh social and climate costs

The Superintendencia Financiera de Colombia (SFC) has presented a proposal to create a national system of socio-environmental prices that supervised financial institutions would apply when evaluating and analyzing private and public development projects in Colombia. The regulator argues that the country’s financial system faces the challenge of financing projects that generate long-term social returns, not only private profitability.

The proposal was unveiled in Bogotá on May 14, 2026, during the forum Precios socioambientales: una herramienta para la inversión sostenible en Colombia, hosted at the regulator’s headquarters. Participants included Superintendent of Finance César Ferrari; Daniel Schydlowsky, professor at the Hebrew University of Jerusalem; Raúl Castro, professor at the Universidad de los Andes; Andrés Vera, technical vice president of Asobancaria; Ricardo Lara Manzano, director of infrastructure and energy for the Andean region at IDB Invest; and Andrés Trejos, economic studies coordinator at the SFC.

Ferrari noted that the methodology, also known as “shadow pricing,” gained prominence during the second half of the twentieth century before falling out of favor, and is now resurfacing globally as social and environmental dynamics increasingly affect business and the financial system. “The concept of ‘shadow prices’ is regaining importance because we are seeing the effects of climate change on the economy and on competition in business across all sectors,” Ferrari said.

“The concept of ‘shadow prices’ is regaining importance because we are seeing the effects of climate change on the economy and on competition in business across all sectors.” — César Ferrari, Colombian Superintendent of Finance

Schydlowsky explained that shadow prices measure the value of goods and services when market failures distort interest rates, exchange rates, or fiscal balances. The approach is designed to correct for the gap between observed market prices and the true economic and social cost of resources.

What the SFC is proposing

Trejos argued that social project evaluation provides a technical basis for discussing the relevance of investment initiatives in the context of public policy and the financial system, and helps select projects that raise social welfare with economic efficiency and environmental sustainability. “It is possible to prioritize projects beyond private profitability, incorporating general social welfare and, in particular, environmental sustainability,” he said.

The SFC’s proposal to build a socio-environmental pricing system for Colombia includes estimates of the social valuation of six productive factors and fundamental variables: labor, public revenue, investment, foreign exchange, carbon, and the social discount rate.

Under the proposed framework, projects would receive more favorable evaluation if they are labor-intensive — especially when they absorb idle or underemployed workers — if they generate or save foreign exchange through expanded exports or efficient import substitution, if they strengthen public revenue and the state’s capacity to provide public goods and regulation, or if they reduce carbon footprint or deliver net benefits in climate mitigation and adaptation.

The proposal does not yet carry the force of regulation. The SFC presented the framework as a methodology for supervised entities — including banks, insurers, and pension fund managers — to incorporate into their internal project evaluation processes alongside conventional financial analysis.

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