The United Nations Environment Program (UNEP) launched, Wednesday, May 10, in Rio, Brazil, the Principles for Responsible Investing in Latin America, to encourage financial institutions to incorporate the concept of corporate governance in their investments, loans, and other financial operations.
Corporate governance includes concerns over the environment, social development, and institutional quality.
According to Careen Abb, who is in charge of this sector in the UN regional office, the Principles have already been promulgated in the United States and Europe, and around 50 financial institutions have already endorsed these precepts.
"Our idea is, for example, to encourage investors to give preference to the activities of institutions with good social practices. And for investors to negotiate with the others to meet these criteria as a prerequisite for receiving financial resources."
The Bank of Brazil’s Employees’ Pension Fund (PREVI) is the first Brazilian investor to subscribe to the principles. The fund is establishing a work group to develop concrete methods to apply the principles.
"We will seek tools to be able to measure the level of social responsibility in economic terms," informed the president of the PREVI, Sérgio Rosa.
The president of the Brazilian Foundation for Sustainable Development, Isaura Frondizi, said she believes that a large number of Brazilian investors will be interested.
"Besides not wanting their image to be associated with enterprises that harm society, there is the credit risk, especially for long-term investments, such as in the construction of a hydroelectric plant.
"If 20 years from now its [generating] capacity falls as a result of a diminished water supply, it will be financially impaired."