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.

Iman Effendi, the Research and Engagement Manager at the Farm Animal Investment Risk and Return (FAIRR) Initiative, gave a detailed explanation of FAIRR’s Protein Producer Index. Iman overviewed the index’s function, to act as a valuable lens to scrutinize the global animal protein sector based on environmental, social, and governance issues. On the call, she used current issues to demonstrate the Protein Producer Index’s methodology and offer key insights on current issues that plague the agricultural industry.

On October 24th 2019, the Alliance hosted a seminar on oil and gas payments transparency, with the principal objectives of

(1) educating investors on the importance of resource transparency and

(2) advocating for greater transparency and accountability in the extractives industry.

Leading experts in the fields of oil and natural gas extraction discussed how high levels of financial transparency improves sovereign and corporate governance and supports citizen oversight of government spending, while low levels of fiscal transparency leads to corruption and financial mismanagement. Industry experts and panel members concluded that markets benefit from increased disclosure of government payments, while investors gain detailed financial insight that helps in their assessment of company valuations. 

Due to the alarming rise of global debt levels, policymakers and private sector leaders have been focusing on ways to foster debt sustainability. Both debt and fiscal transparency can facilitate good governance, aid the fight against corruption and help improve the market’s health. On October 16, 2019, the Emerging Markets Investors Alliance hosted a roundtable with a diverse panel of institutional investors, policymakers, and debt managers to discuss the benefits of transparency. The objective of this roundtable was to educate investors and sovereign advisors, introducing non-traditional data sources to help them assess sovereign risk more accurately, and to integrate Environmental, Social, and Governance (ESG) analysis into their investment frameworks. In addition, to advocate directly for debt and fiscal transparency. Discussions covered numerous topics related to effective methodologies to implement debt transparency in the market, including the latest initiatives and model examples from successful countries in Latin America.

From January to August 2019, forest fires in Brazil increased by 76% year over year, according to the Brazilian National Institute for Space Research. The raging fires are heightening concerns about deforestation and sustainability in the Brazilian Amazon.

        * What is the “tipping point” beyond which the Amazon’s hydrological cycle will be

          unable to support rainforest systems?

        * What is the role of Brazil’s cattle industry in this dilemma and how can sustainability

          be strengthened in the industry?

        * What are the major risks to investors and how can investors contribute to solutions?

On September 23rd, 2019, the Alliance invited Andrea Pradilla to lead an investor call on ESG reporting standards. Pradilla, who is the director of GRI Hispanic America, describes the creation and evolution of ESG sustainability reporting, highlighting the increasing importance of ESG transparency for investors and examining the benefits companies gain from sustainability reporting.

The Alliance was honored to host both Pedro Amaral, Deputy Director at Proforest, and Pedro Burnier, Program Manager for Sustainable Livestock Production at Amigos da Terra, on an Agriculture Working Group call on September 20, 2019. Pedro Amaral and Pedro Burnier gave a detailed overview of deforestation in Brazil and its efforts to make the industry more sustainable. They explained the social and environmental concerns linked to the cattle industry, the importance of managing supply chain risk, as well as dilemmas surrounding indirect suppliers. Toward the conclusion of the discussion they draw attention to several programs in the public sector supporting a more ethical beef industry, giving valuable recommendations by answering the important question, what role can investors play in reforming the beef industry?

The Emerging Markets Investors Alliance takes a holistic approach to fiscal transparency, defining “fiscal” as all assets and liabilities across all public sector entities (both financial and non-financial). EMIA believes that transparency leads to accountability, and that accountability can improve policy decisions made by the government's emerging markets. To educate and advocate for fiscal transparency and good governance, on September 12, 2019, the Emerging Markets Investors Alliance hosted part four of their series of roundtables on fiscal transparency. In this roundtable, they discussed fiscal transparency, debt transparency, tax transparency, and extractive industries transparency. Discussions covered a variety of topics related to advances in fiscal disclosure, credit rating agencies’ adoption of the Open Budget Index, and advances in debt disclosure.

The Alliance was honored to host Taciano Custodio on an Agriculture Working Group call on September 7, 2019. Taciano Custodio, the Sustainability Executive Manager at Minerva Foods, gave a detailed explanation of Minerva’s views on the Amazon biome, as well as their approach to sustainability and supply chain compliance. Taciano discussed Minerva’s role as the South American leader in beef exports and food processing. On the call, he overviewed Minerva’s outstanding reputation based on procedures they use for monitoring their large supply chain, promoting transparency and compliance. In addition, Taciano examined Minerva’s diverse opinion on deforestation in the Amazon, citing illegal land use and exploitation, not cattle ranching, as being the main contributor.

Issues are emerging around corporate transparency in the United States and globally. Emerging market economies are hit the hardest as they lose billions of GDP every year because of illegal financial practices. Tax evasion, grand corruption, illicit trade, money laundering and many other criminal operations depend on the use of anonymous companies. In addition to illegal practices, there are legal loopholes readily available for corporations to exploit. The current corporate landscape encourages corruption and threatens the ability of emerging market governments to deliver services and repay debt.

The Emerging Markets Investors Alliance had the honor of hosting Gary Kalman on an investor’s call on September 4, 2019 to discuss transparency issues and how they harm public finances. Gary, the Executive Director of The Fiscal Accountability and Corporate Transparency Coalition, provided an extensive overview of two corporate transparency issues: corporate tax avoidance and evasion and the lack of beneficial ownership information. Gary explained current ramifications due to the lack of transparency, solutions that have improved transparency in parts of the worlds and their implications.

On August 8, 2019, to respond to the growing demand of higher corporate disclosure and transparency, the Emerging Markets Investors Alliance had the honor of hosting the International Finance Corporation’s Ralitza Germanova and Jerome Lavigne-Delville on a conference call. Ralitza and Jerome provided a detailed explanation of IFC’s Toolkit, an online framework they are developing to enhance ESG disclosure and transparency in emerging markets. They discussed the toolkit’s importance because it is a place where investors can access integrated reporting guidance and company disclosures. In addition, they overviewed IFC Toolkit's methodology for establishing ESG materiality, and evaluating companies using case studies and examples from the IFC’s work in developing markets. Ralitza and Jerome explained their “Beyond the Balance Sheet” platform of creating values by facilitating connections and their recommendations for improvement.

Meggin Thwing Eastman, of MSCI, discussed the benefits of female representation in company leadership positions. Thwing used research and data analysis to describe how companies whose board of directors include women are more likely to out-perform companies led by all-male boards on a variety of metrics, including employee productivity, talent management, and entrepreneurial innovation.

The Alliance hosted an ESG in emerging markets conference, with several panels consisting of leading experts from a variety of industries to discuss the recent advancements, current challenges, and potential roadblocks ESG investment faces in the international market. The panels included:

(1) Responsible Investing,

(2) Governance, Transparency, and Environmental Risks,

(3) Brazilian Protein Industry: Deforestation and Beyond, and

(4) Oil & Mining Industries: Transparency and Anti-Corruption.

The issue of open contracting is important for investors because poor contracting practices are a huge source of corruption and inefficiency in emerging markets. Georg Neumann , the Senior Communications Manager at the Open Contracting Partnership, provided an extensive overview of open contracting on an investor call. 

On February 14th 2019, the Alliance welcomed Dayna Linley-Jones to lead a discussion on flooding risks in the mining industry during an investor call. Linley-Jones, director of research at Sustainanalytics, discusses how two dam collapses in Brazil led to a decline in the ESG rating of Vale, a Brazilian mining conglomerate that operates the mines where the dams collapsed. During the discussion, Linley-Jones provides insight into the various metrics Sustainanalytics uses to measure ESG risk in the mining industry.

Fiscal disclosure is essential for effective fiscal management. Comprehensive and frequent fiscal reporting demonstrates that policymakers are open to scrutinization by investors and the public. The Emerging Market Investors Alliances believes this accountability can help create better public policies, as well as help build trust in officials. Improving fiscal reporting has the potential to lead to lower bond spreads, higher sovereign credit ratings, and easier assessment of sovereign creditworthiness. To promote fiscal disclosure in emerging markets, on January 23, 2019, EMIA hosted part three of their series of roundtables on fiscal transparency. In this roundtable, they provided a detailed overview of the methodologies that rating analysts, investors, and public policy experts use to assess fiscal reporting, how this analysis could be made more useful, and how strengthening fiscal reporting by key players in the market could lead to increased fiscal transparency.

Understanding deforestation is key to tackling climate change. Deforestation and forest degradation are responsible for one third of carbon mitigation needed annually to keep carbon emissions in check. One of the biggest contributors to deforestation is the agricultural sector. Cattle, timber, palm oil and soy production cause 80% of deforestation. Cattle production is the main driver of deforestation in Brazil, home to the largest herds of cattle in the world. Land conversion and low productivity of the protein industry is damaging the forests at an alarming rate.

To address these concerns and offer possible resolutions, the Emerging Markets Investors Alliance had the honor of hosting Sarah Forouzesh to discuss cattle and soy production in Brazil. Sarah, a Senior Manager of the Forests division at CDP, provided a detailed analysis on the Brazilian cattle industry. She explained how cattle and soy production contribute to deforestation in Brazil’s rainforests, and how Brazil’s cattle and soy producers are attempting to curb deforestation. Sarah talked about the financial risks and opportunities investors will find in the Brazilian cattle and soy industries, while also addressing solutions to issues these industries face today.