9/11/2020
On September 8, the Brazilian Stock Exchange B3 and S&P Dow Jones announced the S&P/B3 Brasil ESG, a stock performance index to companies with good environmental, social and corporate governance practices (ESG). The measure follows the trend of the main foreign stock exchanges with the launch of specific indexes of this nature and highlights the relevance that ESG factors have been gaining in the national market.
The S&P/B3 Brasil ESG is based on companies listed on the B3 that compose the S&P Brazil BMI index (Broad Market Index), excluding those that do not adhere to the principles of the United Nations Global Compact or that are members of specific sectors such as arms, tobacco and thermal coal. As an illustration, the new index has the same nature as traditional ones, such as Ibovespa, S&P 500 and Nasdaq 100, with the difference that it will be composed exclusively of Brazilian companies that meet the ESG criteria defined by S&P and B3.
B3 already maintained indexes to monitor the performance of companies with good sustainability practices, such as the Corporate Sustainability Index (ISE), created in 2005, and the Carbon Efficient Index (ICO2), created in 2010, both currently under review. However, for the first time B3 now has an index for the ESG factors jointly considered.
In addition to serving as a reference for investors committed to ESG purposes, the trend is that these indexes encourage companies of various sizes, listed or not on stock exchanges, to incorporate environmental, social and governance issues into their practices. In this sense, they may be placed alongside with ESG investment funds and large companies that support the matter.
In view of such initiatives and the prominence of ESG abroad and in Brazil, companies that do not adapt to this new paradigm of the corporate world may face difficulties in developing their activities, especially in critical aspects such as fundraising, brand strengthening, customer loyalty and talent retention.
L.O. Baptista’s Corporate, Social, Environmental and Digital Governance team is available to assess clients in relation to development of policies, implementation of strategies and risk management for the achievement of the excellence standards of the ESG process.
