Many of the environmental, social, and political challenges that confront the financial sector are magnified in emerging markets. Environmental risk is generally less transparent, huge segments of the population are financially excluded, and socio-economic inequality is a major challenge. A recent publication from the UNEP Finance Initiative, Sustainability Management and Reporting, highlights the leadership Brazil’s banks have shown in addressing these risks.
Unibanco, the third-largest private bank in Brazil, has been actively involved in driving the sustainable finance agenda and has contributed significantly to its current growth. It was the first emerging market bank to start complying with the Equator Principles, a set of social and environmental criteria used to evaluate and approve credits for infrastructure projects, and was also one of the first emerging market banks to offer research reports on the social and environmental performance of firms in its home market.
Because Unibanco pays as much attention to the sustainability of its own business practices as those of other Brazilian firms, it was also one of the inaugural firms included in the Sao Paulo Stock Exchange’s new Corporate Sustainability Index. The BOVESPA exchange launched its sustainability index in December 2005 to provide asset managers and investors with a reliable and objective benchmark of the best corporate sustainability practices in the country. The sustainability index project was financed by IFC.
Using the BOVESPA ISE index as a benchmark, ABN AMRO’s Brazilian affiliate launched the first emerging market socially responsible investment fund. According to UNEP’s publication, ABN AMRO Fundo Ethical was awarded best performing SRI fund since inception out of 221 socially responsible funds tracked by Bloomberg.