In the midst of the pandemic and following discussions about sustainability, four Brazilian fund managers who together generate over R$ 1.2 trillion, have committed to prioritize climate issues in their investment decisions. BTG Pactual Asset Management, Itaú Asset Management, JGP and Santander Asset Management this week pledged their commitment to the initiative Investors for the Climate (IPC), which is led by SITAWI Finance for Good, with support from the Institute for Climate and Society (iCS), in partnership with the CDP and PRI (Principles for Responsible Investment).
Since October 2019, when the IPC was launched, a group of 15 professional Brazilian investors with assets under management of over R$ 2 trillion has been meeting to qualify themselves and outline ways to act with climate change. After six meetings, four of these investors have now decided to formally and publicly pledge their commitment.
By adhering to this commitment, the investors are declaring the importance of the challenges, risks and opportunities imposed by climate change. This document also states that it is part of the fiduciary duty of investors, before clients and beneficiaries, to appreciate the security, resilience and perpetuity of their investments, as well as to contribute to a secure future for the next generations. In this context, they undertake to report publicly the progress in the management of climate risks and opportunities, when possible in accordance with the guidelines of the Task Force on Climate-Related Financial Disclosures (TCFD).
Additionally, the investors are committed to exercising active ownership, through engagement and voting practices, in relation to the subject. As the commitment highlights, the investors will continue to work together on the theme, which are the first steps on this journey.
The role in pledging to this commitment is especially relevant in the current context of the COVID-19 pandemic, because it represents a look towards the potential larger crisis of the future.
IPC discussion group has 15 professional investors
The launch of the IPC, in October 2019, involved over 50 participants, including investors and other stakeholders, and national and international speakers, who highlighted the importance of the subject.
After this meeting, a more restricted group, of about 15 investors, started to meet on a monthly basis to qualify themselves on specific subjects, such as: portfolio climate analysis, portfolio climate management, and active ownership (engagement and voting), in relation to the climate and climate commitments.
As a result of this work, three important actions are being carried out: (1) analysis and management of investment products with a climate perspective in 10 portfolios from 6 investors; (2) a campaign of collective engagement of 6 investors with companies with intensive emissions of Greenhouse Gases (GHG); and (3) the formalization of the commitment to Investors for the Climate.
“We believe that there is still much work to be carried out for the subject to gain the required importance. In this context, the IPC will expand and reinforce its operation in the next three years, seeking to engage, qualify and commit more investors, including expanding the scope and depth of the operation of the initiative,” says Carla Schuchmann, Manager of Sustainable Finance at SITAWI and leader of the IPC.
Beatriz Freitas, the Environmental, Social and Governance (ESG) executive director at BTG Pactual, says that “in 2019, we took an important step and developed the discussions with other investors about the risks and opportunities related to climate change. We have many challenges ahead in relation to the climate agenda, especially those linked to the disclosure of information that invested companies provide on these aspects and the related impacts and opportunities of their respective businesses. The joint work that we perform over the next three years with the IPC will mark a new phase in the integration of the ESG aspects in the analysis of the assets and in the decision-making process of the investors.”
Renato Eid Tucci, a Portfolio Manager at Itaú Asset Management, emphasizes that “climate change presents risks and opportunities with a potential impact on the value of the assets in which we invest. Our participation in the IPC initiative has the objective to contribute so that the investment industry continues to advance with the integration of the subject of climate change in the investment analyses and decisions, at the same time encouraging more transparency and reporting by the invested companies. This is one more important step in our journey to encourage good practices related to responsible investment.”
According to Marcos di Tullio, an Investment Analyst, “JGP considers the ESG criteria as part of its fiduciary duty. One of the main contributions we can give society is to take an active role in the process of encouraging the adoption of the best sustainable practices by companies. Those companies that do not yet perceive the importance of climate issues run the risk of ceasing to exist, similar to what happened with those that did not give due importance to the effects of digitalization 20 years ago.”
See the full document pledged by the managers: http://bit.ly/300OYBn