Thursday, April 19, 2007

Brazil: Stock Exchange Sustainability Index

I read an interesting article about the Brazil stock exchange and sustainability on www.mba4success.com. I mirrored the article below.


Brazil: Leader in Sustainability

In these days Brazil begins its annual Carnival season, and the whole economy practically stops working, except for the oil extraction and refining facilities. And it’s probably a safe guess that most of the world’s population harbours an image of Brazil as fun-loving, growing as an economy, but an emerging market behind in areas such as modern management. In fact, at least part of this image is outdated.

In today’s highly visible trend of sustainability and social responsibility, Brazil is up front, way ahead of the USA and in many respects ahead of ecology-conscious Western Europe. The country recently inaugurated ISE, on of two sustainability indices worldwide as part of its Ibovespa Sao Paulo stock index. Johannesburg is the only other financial center with a similar index. Brazil´s top companies, including oil multinational Petrobras, the big banks Bradesco, Itaú and Banco Real (ABN Amro) rank among the top in sustainability, according to Management & Excellence, the Madrid-based sustainability research agency. Ethos is Brazil’s ethics foundation with over 600 corporate members, and the Novo Mercado (New Market) has some of the strictest corporate governance regulations worldwide. Gazeta Mercantil, the country’s leading daily business newspaper, dedicates an entire page every day to governance and an additional page per week to social responsibility. The volume of advertising involving sustainability and social responsibility is one of the largest worldwide. Brazil’s biggest company, Petrobras, offers its own MBA in sustainability and the country’s most famous business school FGV (Fundaçao Getulio Vargas) offers various programs in sustainability and social responsibility.

Where this explosive commitment comes from? One reason social responsibility is not new to Brazil. As a country with relatively weak social programs, the big companies have gotten used to pick up the slack and help society. Bradesco, Brazil’s biggest private bank, inaugurated its social foundation 50 years ago. Today it celebrates having built 40 schools that have produced well over 600.000 alumni, many of whom work for Bradesco. The foundation even supports itself with dividends from the Bradesco stock it owns. The company recently joined the coveted Dow Jones Sustainability Index and received a sustainability rating of AAA+.

Another factor is certainly Brazil’s heightened awareness of ecology issues. The country once known for cutting down its own rainforest is reacting vigorously and becoming more ecology oriented than most. It is now recycling old tires, using the material to construct more durable roads, and is the only industrialized country which achieved self-sufficiency in energy last year. Much of its energy comes from biological sources, not petroleum.

Education in sustainability not only happens formally, but broadly. Not only do all professional organizations, such as associations of investor relations executives, of analysts, of corporate governance, of pension funds and of communications companies dedicate their respective annual congresses to sustainability & co., the broad media breath the term in virtually every other sentence. The recent Paris report of scientists giving a bleak outlook on the issue of climate change was just another reason to treat the topic of sustainability and environment (meo ambiente) even more forcefully.

While the USA is still debating Kyoto and ExxonMobil, reporting record results of nearly $40 billion for 2006, drops out of the current ranking of most sustainable oil/gas companies, Brazilian companies are stepping up their investments and career possibilities in sustainability and social environmental responsibility. At ABN AMRO’s division in Brazil, called Banco Real, 60 people work in sustainability and social responsibility at this bank alone. Petrobras annually invests over $100 million in cultural events alone.

William H. Cox is Managing Director of Cox Communications Consultants in Germany, a strategic consultancy founded in 1985, and received his Ph.D. from the London School of Economics.

Mirrored from www.mba4success.com
More: www.bovespa.com.br

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