How responsible investment is starting to take root in Latin America

Over the last couple of years, sustainability has become a key differentiating factor for companies in Colombia. Currently there are four Colombian
organizations listed by the Dow Jones Sustainability Index (Bancolombia, Ecopetrol, Grupo Sura and Nutresa). It’s the only country in the region besides Brazil with companies in the DJSI. In addition, Pacific Rubiales is part of the Jantzi Social Index.

The efforts by these leading companies has motivated different actors across the Colombian market to pursue high sustainability standards as well as strengthening the work of companies on ESG reporting in a way that is reliable and transparent.

Furthermore, providing the raw information for responsible investors to begin expanding the information horizon with regards to this market.

So it was with this in mind that on November 13 the Colombian Stock Exchange, Deloitte and Sustainalytics organized the second conference on sustainable investment in Colombia (http://www.inversionresponsablebvc.com/).

The main objective of the event was to raise awareness among the investment community of the importance of considering environmental, social and governance (ESG) factors to make better informed investment decisions and make the business case around sustainable investment.

Additionally the intention was to create a space where the investment community and companies could openly interact around sustainability issues.Following the event, as an initiative that will allow for a permanent space of collaboration and knowledge sharing around sustainable investment in Colombia and Latin America, a LatinSIIF (Latin American Sustainable Investment and Impact Forum) was presented.

The objective of the LatinSIIF is to create a space for the collaboration among multiple stakeholders vis a vis the effects of extra-financial factors (ESG factors specifically) on Latin American financial markets.

Local collaboration and knowledge are the key aspects that will be developed along three thematic lines: Risk, Value and Impact.

One key differentiator of the Latin American Forum is the key role played by Impact as a dedicated line of work. The latter is a response to the momentum and potential that impact investment has in the region.

Also, there will be capacity building and communications activities complementing the work of the LatinSIIF.

Clearly the consideration of ESG factors on investment decision-making as well as the impact these investments might have are long-term competitive and prosperity factors that Latin American investors are willing to address.

Though the region, with the exception of Brazil, is slightly behind the rest of the world in the development of sustainable investment, we expect that initiatives such as the Principles for Responsible Investment (PRI) will become even more relevant in Latin America. As the momentum and critical mass of responsible investment

increases, an initiative such as the LatinSIIF instrumental in the success of responsible investment in the region as it will allow to create through local knowledge and collaboration the whole ecosystem of actors that will allow this to become a reality.

As a final note we would like to call on the interesting and protagonist role Latin American stock exchanges are playing on the RI field. Stock exchanges are key articulators between investors and companies and some very interesting developments can be expected from them as a region in the coming years.

“Investors around the world are increasingly aware that ESG factors can be material to the performance of the individual companies within their portfolios and the market as a whole. Reflecting this global trend, we find this gaining momentum across Latin America and we are delighted to see the Colombian Stock Exchange, in partnership with Sustainalytics and Deloitte, taking a leading role in highlighting the relevance of these issues for local companies, pension funds and investment managers in order to advance sustainability in the market,” said Danielle Chesebrough – Manager of Investor Engagements with the UNPRI.

“The conference in Bogota indicates some interest from leading investors in Colombia,” said Michael Jantzi – CEO Sustainalytics. “Nonetheless, an ecosystem (RI industry) to support the intention of those local responsible investors has to be constructed and it is here where I consider that Sustainalytics adds value with its local presence.Additionally it is fundamental at this point in time to support the LatinSIIF that was introduced as a Catalyst for the Latin RI market.”

“The Colombian Stock Exchange is committed to promote within it issuers and the market in general, the importance of high sustainability standards which encompasses the disclosure in a transparent and consistent manner of ESG information,” said Cesar Rodriguez – Manager Corporate Responsibility Colombian Stock Exchange.

“Extra financial information disclosure clearly allows investors to make more informed decisions resulting in trust, efficiency and competitiveness of the market place. Underlying our initiative lies the fact that the identification and management of ESG factors play a key element in the capacity of firms to create value in the long term, which at the end is the name of the game.”

Eduardo Atehortua leads the sustainability service for Deloitte in Colombia. Alejandro Navarro is Responsible Investment Adviser for Sustainalytics in Colombia.