Value of share trading in 2008: US$750.3 billion
Number of listed companies: 389
Web address: www.bmfBOVESPA.com.br
The São Paulo stock exchange, BOVESPA (now BM&FBOVESPA) has played a proactive and highly influential role in raising ESG standards in the Brazilian market for nearly a decade.
This report focuses on initiatives related to the environmental and social aspects of investment, as corporate governance-related initiatives are a more mature field that is already well documented. However, BM&FBOVESPA’s recent initiatives on environmental and social issues cannot be discussed in context without first mentioning the exchange’s earlier leadership on corporate governance. In 2001, BOVESPA launched special listing segments based on differentiated levels of corporate governance, including the internationally acclaimed Novo Mercado. Today, companies in these higher corporate governance tiers make up about 66% of the exchange’s domestic market capitalisation, and the Novo Mercado is now the usual choice for IPOs.
Brazilian fund managers, institutional investors and middle-class savers have been early converts to the business case for considering environment and social considerations as well as corporate governance in their investment strategies. Brazil’s first ‘socially responsible’ retail mutual fund (Banco Real’s Fundo Ethical) was launched in same year as the Novo Mercado. By December 2008, nine other asset managers had entered this niche market with their own ESG-screened funds.
On the institutional front, the emphasis is on integrating ESG issues and shareholder engagement into the mainstream investment process. This is partly due to the leadership of PREVI, which at US$55 billion is the country’s largest pension fund. PREVI and 17 other Brazilian pension funds are signatories to the UN Principles for Responsible Investment: their combined assets amount to US$110 billion, about 60% of the country’s total pension fund corpus.
Working closely with the Brazilian Association of Pension Funds (ABRAPP) and the National Association of Investment Banks (ANBID), asset managers and institutional investors in Brazil are successfully improving corporate ESG disclosure through the local implementation of international programs such as the Global Reporting Initiative (GRI) and the Carbon Disclosure Project (CDP). They also now beginning to collaborate on shareholder engagement campaigns on issues such as slave labour in the iron and steel industry’s supply chain.
Top
Back