Page 24 - Respond 2022 Magazine

Delivering
responsible value
Paulo Mattos,
CEO of IG4 Capital and Chairman of Iguá Saneamento S.A.
ESG in action: the challenge
of unleashing the trillions in
private finance that are needed
to achieve the NET ZERO
ambition.
IG4 Capital
IG4 Capital is a specialist
alternative investment asset
management firm focused on
generating superior performance
with purpose through value
creation, ESG integration and
sustainable capitalism in the
emerging markets. With offices
in London, São Paulo, Santiago,
Lima and Madrid, IG4 has
approximately USD 700 million
under management.
1 Source:
Edelman Trust Barometer/Porter Novelli - Cone
2 Source:
Edelman Trust Barometer/Korn Ferry/GlassDoor especially with incentives for companies
22
www.ig4capital.com
All over the world, the transformation and often encounters economic and even
of economic activity into socially and cultural barriers. Carrying out the ESG
environmentally sustainable ventures is transformation in emerging markets, but
a major challenge. Today, sustainability without losing sight of return on capital over
is intimately linked to business strategy, time, is a major challenge albeit a huge
consumer behaviour and capital value generation lever.
deployment. Consumers now expect
brands to take stands on societal issues. Commonly, as they are less developed and
Younger generations are buying with an eye thus have high growth potential, emerging
towards environmental and social drivers: markets are seen as great investment
72% of Gen Zs consider a company's opportunities due to the accelerated
purpose when deciding what to buy . This increase in their consumption of goods
1
social revolution has become a focus of and services. The entry of new consumers
companies not only because of the change into these markets and their increase in
in their customers’ behaviour, but also in purchasing power over time are factors that
the attitudes of their potential employees. attract investors to emerging markets.
According to the 2020 Edelman Trust
Barometer, which measures changes in However, although the expansion of
societal and cultural values, 79% of adults consumption of goods and services
would consider a company’s mission and can mean economic growth, it does not
purpose before applying for a job and 56% necessarily mean growth with sustainable
of them would consider company culture development. On the contrary, expansionist
to be more important than salary when it policies based on increasing in the
2
comes to being satisfied at work . consumer base without structural changes
in the quality of economic and social
In Europe, investors are increasingly development in emerging countries can
demanding that companies implement generate destructive effects.
social and environmental sustainability
policies. A new breed of investor is We cannot bet on the isolated thesis of
redefining the parameters of the capital growth in emerging markets. We have to
markets. This kind of investor is not only look for assets that can be valued with
driven by profit, but he/she is mission- good ESG practices. But many of these
driven and seeks to shape a better world to assets may be in companies that currently
leave behind for the next generation. In fact, do not fit into proper ESG metrics. Selecting
ESG (environmental, social and governance) assets for investments in emerging markets
practices have long been shaping European will always have the big challenge of
companies, especially based on EU and
UK directives, allowing for the adoption of
directly related metrics to the businesses’ Certified B Corporations
KPIs (key performance indicators). In the
United States, similar movements, although
not so deep, are beginning to gain ground, COMMUNITY
to adopt social and environmental
responsibility metrics and goals. A good
example is the certification of companies as WORKERS CUSTOMERS
“B Corporations” (bcorporation.net), with the
aim of creating a balance between profit
and social and environmental purpose.
However, in emerging markets, for various
GOVERNANCE ENVIRONMENT
reasons, the transformation of companies
and the adoption of ESG metrics is slower