Opinion – Marcos de Vasconcellos: Green investment is for the rich

First of all, dear reader, I would like to complement the title of the text. But I don’t know if it would be better to finish off with a pessimist “unfortunately” or an optimist “yet”. I leave it to each one.

Green, sustainable investments or investments linked to the ESG letters (which presuppose good corporate, environmental and social governance), have had a beautiful increase, all over the world, since the beginning of the coronavirus pandemic. But, let’s face it, for something that was practically non-existent, any increase is relevant in percentage.

A World Bank report published this month shows that in 2020, the number of green sovereign bonds — issued by countries to raise funds to encourage the use of renewable energy or meet carbon emission reduction targets — more than doubled. And its collection exceeded US$ 41 billion (almost R$ 215 billion).

The value is equivalent to Paraguay’s GDP (Gross Domestic Product), but just over two years after spending on the Auxílio Brasil program. And that means less than 0.5% of the world’s sovereign bond market.

The World Bank divides countries into four classes: high-income (such as the United States, Japan, and Italy); upper middle income (Brazil, China, Peru…); lower middle income (India, Senegal, Philippines…); and low-income (such as Ethiopia and Nigeria).

And the conclusion is that about 60% of high-income countries have public financial instruments linked to sustainability, while the mechanism is applied in approximately 25% of upper-middle-income countries and in just over 10% of lower-middle-income countries. . The fourth category of nations does not even appear.

When we also look at private sector debt securities (or bonds), we have “fresher” and significantly higher numbers. In 2021, the number of green bonds issued practically doubled, reaching US$ 621 billion (R$ 3.25 trillion). Where was most of it issued? In Europe, of course.

A good surprise comes from a bad reason: in the search for solutions for those most economically impacted by the pandemic, there has been a tremendous increase in “social bonds”, whose objective is to finance initiatives that work to solve housing, security and housing problems. food and access to essential services.

In 2021, there was a boom in “social bonds”, which financed projects such as home loans, financing farmers, expanding access to healthcare and drinking water. US$ 206 billion (R$ 1 trillion) were raised through this means in 2021, and the forecast is to reach US$ 300 billion (R$ 1.5 trillion) this year, according to John Gandolfo, vice president of IFC (International Finance Corporation).

You see, it’s not about charity. These are fixed income securities, issued by governments or private sector players, with different returns and risk factors.

As much as there is a clear need for funding and great projects in Brazil, the issue here is still in its infancy.

For those looking to invest in projects with social and environmental paper, an interesting path is to invest in ETFs (funds with shares traded on the stock exchange) that buy this type of paper. The variety on the Brazilian Stock Exchange is small, making it more interesting for enthusiasts to have this part of their investments abroad. After all, sustainable investment is (still) a rich (unfortunately) thing.