The ESG initiative working group calls aim to explore the best practices for how investors can integrate ESG factors into an investment framework, as well as how they can effectively advocate for the best ESG practices in sovereign and corporate sectors. The Emerging Markets Investors Alliance was honored to host Ric Marshall at a call on May 12, 2020. Ric Marshall, ESG and Corporate Governance Researcher at MSCI ESG Research, spoke about ESG investing in Emerging Markets. On the call, Ric overviewed multiple ESG indexes and their performances, as well as discussed the different approaches to ESG investing. Additionally, Ric reviewed the aspects of equity investing, while also explaining the expansion of MSCI ESG Research’s methodologies to encompass fixed income investing.

Marfrig is a food company that aims to supply the best protein globally by establishing quality relationships with consumers and producing safe products based on a high standard. On May 8, 2020, the Emerging Markets Investors Alliance was joined by Paulo Pianez, the Director of Sustainability for Marfrig’s North and South American Operations, on a working group call. Paulo provided a detailed overview of Marfrig’s current sustainability practices and new initiatives. He reviewed the aspects of the company’s newly developed sustainability framework, as well as spoke about improvement efforts in their monitoring capabilities of direct and indirect suppliers in the livestock supply chain. Paulo also discussed Marfrig’s progress toward reaching their emission targets, ensuring the safety of their employees during COVID-19 operations, and diversifying their product line, distributing more environmentally friendly products.

New Zealand is among the highest-ranked countries for budget transparency in government finances. New Zealand is a good example of the benefits found in strengthening public sector balance sheets for both developed and emerging markets. On May 5, 2020, the Emerging Markets Investors Alliance was joined by Ian Ball for a working group call to discuss his recent article for Public Finance Focus, “Back to the Future for Fiscal Policy?”. Ian Ball, Professor of Public Financial Management at Wellington School of Business and Government, talked about the important conclusions from his short article. On the call, Ian also briefly overviewed New Zealand’s public financial system and its achievements. Ian applied this financial analysis to emerging markets, providing key insight into their financial operation. Additionally, Ian explained how interventions due to the COVID-19 pandemic have negatively impacted the fiscal balance sheets and public financial management of governments.

Minerva Foods is one of the South American leaders in live cattle exports, and beef production and distribution. The Emerging Markets Investors Alliance was joined by Taciano Custodio, Head of Sustainability at Minerva Foods, at a working group call on April 17, 2020.

Taciano overviewed the latest modifications in Minerva’s operations due to the COVID-19 pandemic, as well as the company’s recent sustainability efforts. Discussions covered topics related to Minerva’s geographical footprint, exports, environmental compliance, and sustainability benchmarks associated with their corporate and social governance. Taciano also explained the changes in the company’s monitoring practices of their indirect suppliers and supply chains, providing details of their plans to expand surveillance in Paraguay and other South American countries.

On April 14, 2020, the Emerging Market Investors Alliance had the honor of hosting Mike Lubrano on an ESG Initiative working group call. Mike Lubrano, Principal of Lubrano Advisory Services, spoke about ESG integration and engagement strategies. On the call, Mike provided a detailed overview of investment decision-making, the types of ESG investors, investment objectives, and the ways of incorporating ESG into the investment process. Mike also explained the aspects of impact investing, risks associated with different strategies, as well as the diverse and scarce skillset that is essential to executing different ESG strategies.

On April 2nd, 2020, the Alliance hosted an investor working group call where Pierre de Pasquale, of the Responsible Mining Foundation, presented on the 2020 Responsible Mining Index, a methodological assessment of the ESG practices and policies of global mining companies. During the presentation, de Pasquale describes various metrics used in the index to assess a mining company’s ESG performance, including economic development, business conduct, lifecycle management, working conditions, community wellbeing, and environmental responsibility. De Pasquale also analyses the findings of the report, noting that despite recent progress, most mining companies reviewed in the index are falling short of meeting key ESG indicators in their policies and practices

The Emerging Markets Investors Alliance had the honor to have Pedro  Amaral, Deputy Director of Proforest, and Rachael Sherman, Director, Global Sustainability McDonald's, speak at the Agriculture Working Group call on March 13, 2020. Pedro provided an overview of the legal framework and some key initiatives to manage soy deforestation risk. Rachel discussed McDonald’s soy and beef procurement policies in the region and how the company is implementing them for itself along with its animal protein suppliers and franchisees.

On March 10, 2020, the Emerging Markets Investors Alliance had the honor of hosting Graham Stock, My-Linh Ngo, and various other presenters at an ESG initiatives working group call. These presenters provided a detailed explanation of ESG Integration at BlueBay. On this call, they discussed the incorporation of ESG into emerging market debt investing and sovereign debt. Their presentations focus on the role of ESG factors, overviewing BlueBay’s executive summary, research, key findings, and possible implications for sovereign debt investing. Discussions also covered topics related to their emerging market debt investing approaches, such as their ESG investment management, sources of data, evaluation, and engagement.

On March 5th, 2020, the Alliance hosted an investor working group call on ESG in the gold mining industry, presented by Terry Hayman and Matt Mark of the World Gold Council (WGC), and Sabrina Brockman of Anglogold Ashanti. During the presentation, Hayman, Mark, and Brockman discuss the importance of gold in emerging market economies, as global demand for the valuable mineral continues to increase, while also highlighting how mining companies are embracing responsible gold mining principles.

The Alliance was honored to have Chain Reaction Research (CRR) speak at the Agriculture Working Group call on February 14, 2020. Chain Reaction Research is an association that conducts sustainability risk analysis for the finance industry, corporations, and other stakeholders. Their objective is to educate about the causes and material effects of deforestation for commodities. CRR focuses on companies in the soy, cattle, and palm oil areas. On this call, members of their organization discussed their recent report on the soy supply chain, as well as its impacts in Brazil. They overview soy-driven deforestation in Cerrado, the growing market for Brazilian soy, and the risks soy traders face in the market.

On February 13th, 2020, the Alliance welcomed Paula Luff to host an investor working group call on ESG strategy in extractive industries. Luff, who is the director of Sustainability and Impact at Inherent Group, describes the challenges of implementing sustainable practices in energy companies, while also discussing how her research tracks company performance on ESG issues.

Many countries abundant in resources struggle to convert their natural wealth into assets to improve the lives of their citizens. Insufficient fiscal transparency has created an ideal climate for corruption, causing benefits from resources to be hoarded by a minority of the population who take advantage of the current system. The risk of corruption can drastically reduce when natural resource companies are required to disclose information on payments made to governments.

The Emerging Markets Investors Alliance organized a roundtable to examine the benefits of payment transparency. Discussions covered various topics related to the advantages of payment data for investors, the materiality of government remittance disclosures, and how they impact the evaluation of companies. Participants provided a detailed overview of how a lack of transparency affects the market’s ability to mitigate corruption.

On February 11, 2020, the Emerging Markets Investors Alliance had the honor of hosting Jessica Whitt on an ESG Initiative working group call. Jessica Whitt, Head of ESG Research for Emerging Market Equities at Morgan Stanley Investment Management, provided a detailed explanation of ESG approaches and their corresponding benefits. On this call, Jessica overviewed the implementation challenges associated with ESG initiatives. The discussion also included topics related to ESG engagement and the effect of integration factors such as company size and/or industry.

The Alliance was honored to have Martin Zerfas and Maria Martin from Humane Society International (HSI) speak at the Agriculture Working Group call on January 10, 2020. Maria Fernanda Martin is the Corporate Policy and Program Manager for HSI in Brazil, and Martin Zerfas is the Program Manager for Farm Animal Welfare at HIS. They discussed global farm animal welfare trends, animal welfare as an emerging ESG issue, and introduced tools and resources available to investors to manage the risks and opportunities related to farm animal welfare.

The Alliance was honored to host Simon Hall at the Agriculture Working Group call on December 19, 2019. Simon Hall, the Senior Manager of the Tropical Forests and Agricultural Program at the National Wildlife Federation, gave a detailed overview of cattle supply chains in South American. On the call, Simon discussed the status of policies in the cattle industry, offering recommendations for reform and explaining the alarming scarcity of actions to address deforestation. In addition, he introduced practices developed to monitor indirect supplying ranches and Visipec, a tool developed to enhance traceability.

Over the past few years, extreme weather incidents in parts of the world have caused significant losses, and there have been rapid technological shifts in certain sectors moving towards a low carbon economy. This has caused financial regulators and investors to become increasingly focused on ensuring the private sector is ready for the risks and opportunities associated with climate change.

To analyze companies’ responses to climate change, the Emerging Markets Investors Alliance was honored to have Nicolette Bartlett, Global Director of Climate Change at CDP, speak at the Alliance’s conference call on December 16, 2019. Nicolette discussed the major findings from companies to CDP’s questionnaire in 2018, as well as risks and opportunities they may face from climate change and its potential financial implications.

The 4th Annual Conference on Responsible Investing in Emerging Markets, organized by the Emerging Markets Investors Alliance, was held on Dec 9, 2019. It was hosted by Alliance Bernstein and sponsored by UBS.

The discussion at the conference illuminated ESG challenges in the extractive industries, Brazilian protein industry, and government fiscal/debt transparency. The conference was attended by over 100 members of the EM institutional investment community in New York City.

Brazil has made significant strides towards improving fiscal data disclosure across the public sector. Now, in the wake of the successful passage of social security reform Brazil is setting its sights on both administrative and tax reform. Although they currently are in good condition, in terms of monetary policy, with the lowest inflation rates in Brazil there has ever been, they are still struggling on the fiscal side.  To explain the current economic landscape and future reform, the Emerging Markets Investors Alliance had the honor of hosting José Franco Medeiros de Morais and Paolo Marquez on an investor’s call on November 19, 2019. Franco, an Under-Secretary of Public Debt at the National Treasury of Brazil, and Paolo Marquez, the Head of the Investor Relations Office at the National Treasury, provided a detailed overview of Brazil’s fiscal future after pension reform. They discussed the country’s progress in enhancing fiscal transparency, recent fiscal developments as well as debt forecasts in Brazil.

On November 8th, 2019, the Alliance hosted an investor call where Anna Flemming presented on the National Oil Company Database, an online database system where investors can access detailed financial information on dozens of national oil companies (NOCs).  Flemming, of the Natural Resource Governance Institute, described how information is synthesized and categorized in the database, while also discussing the challenges in collecting data from NOCs that lack fiscal transparency, as well as the overall future of the database.