The sustainable investment recognizes companies that solve the world's biggest challenges, as these factors can contribute to their long-term financial performance. Axel Christensen, Director of Investment Strategy for Latin America, Latin America at Blackrock, tells us how the world's largest investment fund manager implements this way of doing business and encourages the creation of a better future.
What are the sustainable investment factors?
Sustainable investment criteria take into account 3 pillarsEnvironmental considerations, social responsibility and quality of corporate governance.
Why are these factors so relevant today?
Sustainability criteria are not such new elements in the investment world; in fact, some investors have been incorporating them from their own values since the 1960s. What has happened is that there is a great deal of evidence that demonstrates that applying these criteria and generating value for the company can go hand in hand. This evidence is so compelling that we have reached a point where we are now asking ourselves Why not? We know that these actions favor the good performance of the company by mitigating its risks, increasing its reputation and making better decisions.
Where does Latin America stand in terms of sustainable investments?
Latin America is at an “embryonic” stage in terms of the consideration of these criteria compared to Europe or the United States. We have companies with a long way to go. But just as this situation presents challenges, it offers great opportunities because these criteria fit with the knowledge and experience of other markets to know the most effective metrics, advance quickly and achieve more relevant improvements.
The situation of Peru is interesting, we are already beginning to see an increasing interest in investors to incorporate these elements in their investment processes and at the same time, the companies themselves are understanding the motivations of investors, both local and foreign. I believe that this perfect combination of investor interest and company receptiveness places Peru at the forefront in the region.
Why should these criteria be of interest to the investor?
Because it is not only a good way to be a good citizen and have good behaviors, but in the end it means having a good business that is not affected by regulatory changes, with its reputation at risk by not having a good relationship with its community or making the wrong decisions because it does not have good corporate governance. These criteria are aimed at making a good investment that allows income to be produced not only in the short term but also to be projected over a much longer investment horizon.
How does BlackRock measure sustainability criteria in its investments?
At BlackRock we have been incorporating these criteria for many years and this itself has led to an evolution. We started by applying filters, we wanted to eliminate or reduce exposure to companies that did not show good levels in these metrics. As we have come to understand the companies, those filters have led to interactions to maintain a long-term relationship, so we sit down with them and explain what types of objectives and metrics we are incorporating. From initially applying filters and being exclusionary, we have moved to an inclusive stage, we want to evolve together with the companies. The last stage that we have been exploring more and more intensively is to become fully active, to direct our focus to look for investment opportunities in those companies and sectors that are seeking to generate a favorable impact in the environmental, social and good corporate governance dimensions.
