It’s day two of UKSIF’s Autumn Conference and the debate shifts to identifying the best way to influence countries via investment. Today sustainable PR experts of The Wilful Group attended the Hurdles in Sovereign Debt ESG session moderated by Dominic Webb, Reporter at Responsible Investor to hear the discussion on ESG challenges the sector faces.
Should investors exclude countries with a history of deforestation or human rights violations or do we allocate investment to these countries and engage them by educating leaders about the value in protecting their green (and social) assets?
Graham Stock, partner and senior sovereign strategist for emerging markets at BlueBay Asset Management says their approach has been to set certain metrics across ESG and focus on where there is a realistic chance of influencing behaviour. In the case of Brazil, BlueBay was able to convene the Ministries of Environment and the central bank to present how deforestation could affect Brazil’s future investment prospects by providing data on the knock-on effect to its economy as a result of deforestation. While deforestation has continued, Stock remains optimistic that the recent election win by President Lula could spark change.
Kroum Sourov, Lead Sovereign ESG analyst at Candriam, says that natural capital and the environment takes centre stage. While he acknowledges that some investors will consider it harsh to exclude oppressive regimes from sustainable funding strategies, and bemoan the lost opportunity to gain higher investment yields, Sourov says that historically these expected yields have not materialised anyway. So, they remain committed to excluding countries that rely excessively on fossil fuels and have a reputation for human rights exploitations.
The debate today has surely highlighted the double-edged sword of finance. It can be seen to influence a country to take better care of its citizens and environment because it wants to receive investment, or if wielded with too little consideration, could be seen as turning a blind eye to undesirable behaviour and missing a chance to communicate that ESG considerations really do matter.
To learn out more about ESG challenges facing your business, contact our team of sustainable PR experts at hello@thewilful.com.
