We held another edition of G5 Talks in September 2020, this time with the participation of Carolina da Costa, partner at Mauá Capital and professor at Insper. In the virtual chat, Carolina talked with Corrado Varoli, the CEO of G5 Partners, as well as with Levindo Santos (senior partner) and Liran Gostein (analyst) regarding ESG (environmental, social and corporate governance) investing and its impacts on companies, investors and society as a whole.
G5 Talks is a project in which business leaders exchange experiences and lessons learned with the G5 team.
The group discussed the current ESG scenario in Brazil, including the challenge of incorporating ESG principles and best practices in companies listed in the financial market, and the catalyst role that investors play in this transformation.
Carolina explained that ESG is a way of doing business, that is, a model backed by principles that imply a more robust and challenging agenda.
“Social principles are associated with mitigating negative impacts and generating social values. On the environmental side, it is necessary to observe the inherent risks of business activities in relation to the negative impact they can cause to the environment. Governance is more than compliance, and involves breakdown of responsibilities, information transparency, equity and diversity”.
The appropriation of ESG practices and values by asset managers is something that began recently, and the number of companies interested in adhering to this set of initiatives has been growing in Brazil. According to Carolina, the Covid-19 crisis accelerated this process since society became more alert to the real value of this agenda.
“Society has become more sensitive to certain agendas that directly impact future generations. Today, we have second and third generation family members who are inquiring investors on what they are investing in. ESG investment will be the nutritional table for investors 10 years from now”.
Consequently, this dynamic “offers a special scenario for the financial market” since the market taken on an activist role and driven companies’ actions and investments for this agenda.
“There are two ultra-strong driving forces that transform society: consumers and investors. The financial market has the opportunity to take on a more protagonist agenda”.
The professor also further stated that, once society is engaged, the agenda does not allow room for inconsistencies, that is, businesses must have the same level of excellence charged for their investments.
How can the ESG agenda move forward in the financial market?
The professor affirms that, for the agenda to increasingly advance in the financial market, collaboration is required among companies.
“We need to combine competition with collaboration and find ways to work together. We need to understand there is an opportunity for innovation. For us to take an innovation leap, we need to invest. Individual gains will be sacrificed to benefit an agenda that will gain leverage in the future”.