Page 25 - Respond 2022 Magazine

Photo: © Iguá Saneamento

filtering companies with good practices We cannot just depend on the growth of advances. We were also able to quickly
from companies with bad practices from emerging markets, but also on our ability incorporate transparency practices into
an ESG metrics standpoint. However, to identify assets that can be transformed the company's corporate governance and
experience shows that most companies in and valued based on good ESG practices. supply chain and fight corruption in the
emerging markets do not yet have good The local market wins, consumers win, infrastructure sector in Brazil.
ESG practices. society wins and the planet wins because
all can buy, use and enjoy more sustainable All of this was directly reflected in the
Very few companies in emerging markets businesses and products. And, of course, appreciation of the assets we acquired in
adopt ESG metrics and, most importantly, the investor wins, because, in addition a short turnaround time (approximately
very few incorporate such metrics as to contributing to the well-being of the 4 years) and in the attraction of large
performance indicators (KPIs). Even fewer impacted communities, he/she can international funds for the long-term
still integrate these metrics into strategic generate a good return. Therefore, investing financing of investments, while monitoring
planning policies and thus, the financial in emerging markets is very worthwhile, ESG metrics as part of the company's KPIs.
valuation of the company. High levels of as there are a large number of businesses Recently, Iguá Saneamento was evaluated
environmental pollution ("E"), low levels of that can be significantly valued by serious by GRESB (gresb.com) and received ESG
social development, social discrimination and responsible work in implementing scores comparatively above the average
and little gender and race diversity in ESG policies. This is what we call “ESG in of sanitation companies in North America
decision-making positions in the workplace Action” and by through we have aligned and Europe.
("S"), and high rates of corruption and lack all our portfolio companies with the Net
of transparency in corporate governance of Zero race, diversity, equality and inclusion We cannot continue to think of investments
companies (“G”) are, unfortunately, factors clear targets and internationally recognized in emerging markets in a traditional way,
that determine the realities of emerging governance practices. focusing only on generating value from
markets. growth. We need to have the purpose of
I can cite a practical example. The biggest providing our investors with returns, but
What to do then? Not to invest in emerging investment we've made so far in emerging while also transforming and valuing assets
markets? Thinking about sustainable markets has been in the sanitation area in emerging markets with ESG metrics with
finance implies the understanding that a in Brazil (Iguá Saneamento S.A.), an a broader social and environmental impact
more sustainable planet requires a more area in which the country has a lot of in mind.
sustainable form of global capitalism. In this need and which, for obvious reasons,
sense, emerging markets cannot be left has a huge impact on people's lives as
out of investments with the requirement to well as the environment. The "ESG in
adopt good ESG practices. Action" transformation has enabled our
sanitation company to positively impact
For this to be possible, investments in the communities it serves, with innovative
emerging markets should focus not only engineering projects, the use of materials
on economic growth, but, essentially, on and construction methods that reduce in
transforming companies based on ESG carbon emissions, the creation of renewable
metrics. The focus should be on carrying energy solutions, an accelerated increase in
out business turnarounds in emerging the capacity to collect and treat sewage, the
markets with the implementation of reduction of water loss with the involvement
social and environmental governance in of local communities and social and
companies' performance indicators. environmental awareness, amongst other
RESPOND 23