Funds team up with large companies against deforestation

Even before the covid-19 pandemic paralyzed the world economy, the financial market signaled changes in capital allocation towards companies adapted to environmental, social and governance (ESG) assumptions.
The milestone came from Larry Fink, president of global management Company BlackRock, who, in January, announced penalties for the companies in which he participates if they did not adapt to good practice.
In Brazil, investment funds, although small and medium-sized, have allied themselves with large companies to press the three powers against deforestation in the Amazon. The perception of experts is that they will play a key role in meeting the goals of the Paris Agreement and accelerating the energy transition.
Social and environmental and governance practices have actually become a differential between corporations and also a good business. Around the world, there is a potential for investment in sustainability of US$ 20 trillion, according to Flávio Menezes, an expert at the consultancy Bip, which used data from Bank of America. He argues that, in Brazil, the 30 companies included in the B3 Corporate Sustainability Index (ISE B3) perform in line with bovespa' but their shares are less volatile.
"Companies that do not necessarily adhere to ESG concepts, but are good payers of dividends and have liquidity in the market, will continue to be part of the portfolios of the funds in the next five years. From there, companies that are really attractive to the funds will have to present sustainability criteria," he says.
For some investors, however, the shift towards good practice began decades ago, although in recent years they have become more demanding.
Fábio Alperowitch says that he founded Fama Investimentos in the 1990s already under socio-environmental premises, but that he and his company were adapting over time, as the concept of sustainability became more judicious.
In this period of covid-19, he added even more rigid variables to his investment choices, such as labor practices in the crisis: "There are about 40 companies in which we do not invest in any way. This list has increased, unfortunately. There is a company whose controller, at the height of covid-19, gave an interview saying he was more concerned about the death of CNPJs than with the death of CPFs.
In its investment portfolio, Alperowitch accumulates R$ 2.6 billion. He says that each economic segment has its own sustainability challenges. It cites, for example, the textile sector, whose evaluation criteria are the quality of work and the diversity of race and gender. "I would never invest in Petrobras or Vale. Fossil fuels are the worst thing there is for the environment. Petrobras emits tons of CO2 per year," he says.
Despite criticism of large groups, he allied himself with a business movement that has traveled through Brasilia in defense of the Amazon, the implementation of the Forest Code and land regularization. There are 72 signatories, of which 62 are large companies, five are investment funds and five are sectoral associations.
The group has already been with the Vice President of the Republic, Hamilton Mourão, with the president of the Chamber of Deputies, Rodrigo Maia, and this week will be with the president of the Supreme Court (STF), Dias Toffoli, and with governors of the Amazon.
At the head of the movement, the president of the Brazilian Business Council for Sustainable Development (Cebds), Marina Grossi, said that the funds were the last to join and, in her opinion, this adherence is fundamental to the process of capital adequacy.
In addition to Fama, the movement incorporated Mauá Capital, JGP, Fram Capital and SulAmérica Investimentos.
In Mauá Capital, one of the focuses is the supply chain. The fund provides credit for suppliers of large companies to adapt to ESG criteria and not jeopardize the image of their contractors. Carolina da Costa, who is at the head of the area of new business, ESG and impact in Mauá, says this is not a new agenda in Brazil. He adds, however, that the business movement to which investment funds have joined has the particularity of seeking the alliance of public and political agendas. "It's a realignment of purpose so that capital is at the service of sustainability," he says.