Brazilian pension funds increasingly backing sustainability index, says exchange

Brazilian pension funds are increasingly backing BM&FBOVESPA’s ISE corporate sustainability index as it enters its eighth year, the exchange operator says.

It has released a survey which showed that 75% of pension fund respondents used, or plan to use, the questionnaire that is completed by companies for the ISE selection process in the next year.

The survey involved 12 pension funds, with total assets of BRL260bn (€96bn) – or around 45% of the total funds universe.

The survey was presented by the Sustainability Study Center of the São Paulo Business Administration School of the Getúlio Vargas Foundation last month.

It found that the average return on sustainability funds was higher than for the main Ibovespa index in all of the periods assessed – and with lower volatility.

In 2012 to date, the ISE [Índice de Sustentabilidade Empresarial] has risen 14.05%, while Ibovespa is up 1.27%.
Since its inception on November 30, 2005, the ISE has gained 130.27%, against 80.08% for Ibovespa.The 37-constiuent index currently has a market value of just over BRL1trn. Fourteen companies are now allowing their questionnaire responses to be published, up from eight before, the exchange says.

Last month the exchange announced the composition of the ISE for 2013. The new portfolio is composed of 51 stocks of 37 companies, including new entrants communications firm Telefônica and industrial group WEG.

In other exchange news, the London Stock Exchange’s FTSE index arm has named Anglo-Dutch consumer products group Unilever as the first winner of the Sir Mervyn Pedelty Award. It’s named in memory of the former chief executive of the Co-operative Bank who chaired the FTSE4Good Policy Committee.

Meanwhile, a separate survey from UK asset manager Aviva Investors of global equity and fixed income managers with combined assets of around £4trn (€4.9trn) has found that 84% consider environmental, social and governance (ESG) factors in their investment process. Sixty-one percent publicly disclose how they vote at company annual meetings.