Stewardship reports show that engagement practices have been advancing in Brazil

The asset managers and pension funds that are signatory to the Amec Stewardship Code have showed a significant progress in their engagement with investees, according to the 2019 reports published on the association’s website last week. The topic gains momentum in the wake of the advancements in the sustainability agenda in the country and reinforces the positive aspect of the process.


Daniela da Costa Bulthuis, Portfolio Manager of Robeco and member of Amec’s Board of Directors.

“In Europe, stakeholder engagement is very prevalent and engagement policies are very advanced. In the USA, a stewardship culture is being created. The activism in the US market usually takes the judicial road, different from what happens in the UK and other European countries, where companies usually engage with their investees through dialogue,” says Ms. Daniela da Costa Bulthuis, Portfolio Manager of the Dutch asset Robeco and member of Amec’s Board of Directors. She explains that there are studies and statistics showing that the judicial road is more costly for both minority shareholders and companies.

Robeco’s manager is an enthusiast of stewardship and encourages its development in Brazil. “To be a signatory to the Amec Stewardship Code provides a good direction for all kinds of asset managers, especially the smaller ones. The Code serves as a guide for assets that do not have their own stewardship policy,” Ms. Bulthuis states. She also says it is an important means of showing how they are investing on the supervision of their investees. 

Renato Eid Tucci

Renato Eid Tucci, Head of Beta Strategies & ESG Integration at Itaú Asset Management.

Mr. Renato Eid Tucci, Head of Beta Strategies & ESG Integration at Itaú Asset Management, reinforces the idea that “as a manager of third-party funds, we are responsible for investing them ethically and responsibly, seeking a full understanding of the opportunities and risks involved in our decisions.” Mr. Tucci, who participated in the group that prepared Amec Stewardship Code in 2016, explains that adhering to the code was important for the asset as it has been reinforcing its commitment to providing excellent management and supervision of the securities it owns on behalf of its clients.

“The principles of excellence outlined in the Code through its seven principles organize, on a pragmatic basis, all the efforts in this area, fostering a more transparent and efficient capital market,” Mr. Tucci says.

Itaú Asset’s figures reflect a significant improvement in its stewardship initiatives. In 2018, it engaged with 35 companies of 15 business sectors. Yet in 2019, it engaged with 91 companies in 22 business sectors. With respect to proxy voting, Itaú’s asset participated in 50 shareholder meetings of its investees, which represents 26% of its net assets in shares. Last year, it participated in 81 meetings, which represents 47% of its net assets in shares.

The executive compensation in investees is a recurring topic in Itaú’s engagement. “In 2019, we had the opportunity to participate in the process to set some companies’ executive compensation packages. This is very positive as it promotes more transparency and better governance practices and helps companies and investors become more aligned,” he explains.

Pension Funds

The adhesion to the Code and the advancements in engagement practices are similar also among pension funds. Today, 4 pension funds are signatories to Amec’s Code, among which Brazil’s and Latin America’s largest pension fund Previ, which has recently adhered to it (read more here). The three other signatories, which also published their 2019 reports, are Petros, Funcef and Vivest (former Funcesp).

Paulo de Sá

Paulo de Sá Pereira, Executive Manager of Variable Income at Vivest.

“For Vivest, in addition to being an institutional commitment, the Code is a guide of best practices that helps us evolve and incorporate our areas and professionals into a program focused on our responsibilities and governance structure,” says Mr. Paulo de Sá Pereira, Executive Manager of Variable Income at the pension fund.

In 2019, Vivest had 31 individual or collaborative engagements with 9 investees. “The discussions with the companies were focused on management issues and ESG factors, on a more comprehensive basis. ESG elements are a cross-sectional pillar of our investment practices,” Mr. Pereira says.

The executive manager explains that engagement is an ever-evolving practice. In 2019, Vivest started to develop a voting policy at shareholder meetings. With that, the organization exercised its voting rights in 100% of the meetings of social security and real estate funds. “The idea is to expand this practice to other classes of assets in 2020 and 2021 and to add transparency to our participation in engagement initiatives and voting practices at our investees’ shareholder meetings,” he explains.

According to Mr. Pereira, the pension fund has been revising and reorganizing its governance practices. The initiative includes the management of risks, a program to integrate ESG factors into the analysis and management of variable income assets on a cross-sectional basis – intended to be expanded to other classes of assets – and the revision and creation of policies that ensure the fund’s transparency and integrity.

Social and Environmental Factors

In addition to the mentioned recurring issues, such as improvement of governance, integrity, and executive compensation, ESG principles and practices were gaining momentum and were a topic of great interest in 2019.

“Social and environmental factors were a very difficult topic for Brazil last year,” says Ms. Daniela Bulthuis, from Robeco. An event that marked the year was the collapse of Vale’s tailings dam in the city of Brumadinho, state of Minas Gerais. The Dutch asset had been conducting engagement actions with the company since the disaster in Vale’s subsidiary Samarco, in the city of Mariana, also in Minas Gerais. “Brumadinho’s collapse was very serious and resulted in the exclusion of Vale’s from our portfolio,” she says.

Today, Vale is the only Brazilian company excluded from the asset’s analysis portfolio. Because of the previous collapse of Mariana’s tailings dam in 2015, the exclusion was an extreme measure taken after the new collapse. Robeco’s portfolio manager says that, although the asset can re-examine Vale in the future, that should not take place in the short term.

Another event that put a spotlight on the climate issue in Brazil was the rise in the fires and the illegal deforestation in the Amazon. The fact received a lot of media attention all over the world and changed the ESG status in the country. “We can say that the engagement with ESG factors started in the companies but has become a macroeconomic issue for the country,” Ms. Bulthuis explains.

The asset has been carrying out several actions, such as the support to a letter against fires published by PRI (Principles for Responsible Investment) and the adhesion to an initiative of global investors with the Brazilian federal government. Additionally, Robeco says it also encourages engagement in the cerrado, an area that, like the Amazon, has been deeply affected by deforestation.

Also in the ESG sphere, the manager highlights the asset’s adhesion to the 30% Club, a global initiative aimed to promote gender diversity. “In the proxy voting, we submit our policy focused on promoting gender diversity in our investees’ boards and also request them to disclose their diversity policies,” she says. In 2019, Robeco participated in 179 shareholders meetings by proxy in Brazil. 


Bruno Laskowsky, Director of Participations, Capital Markets & Indirect Credit at the BNDES.

Another signatory to the Amec Stewardship Code is BNDESPar, the investment branch of the Brazilian National Bank for Social and Economic Development (BNDES) responsible for investments in listed and closed companies in the domestic market.  “As one of the main agents of this market, we believe we have the duty of adhering to these principles and adopting the best ESG practices in the most comprehensive way possible. We expect that BNDESPar, through its actions and disclosure of this report, serves as a catalyst of the initiative, attracting other institutions and encouraging other agents to adopt these same measures,” says Mr. Bruno Laskowsky, Director of Participations, Capital Markets & Indirect Credit at the BNDES.

Mr. Daniel Loureiro da Silva, Operations & Control Manager at the BNDES, points out the improvements in the latest report disclosed by the institution. “We highlighted each principle separately and explained the advancements and initiatives in each of them. In the previous report, comments were generalized and several principles were addressed together.

“With this new approach, it is easier to identify the status of our measures in the scope of each principle,” he explains. He also says that the new model – with each section addressing one principle – facilitates the internal follow-up of the progresses achieved, providing a clearer view to suggest new initiatives.

Regarding the Principle #6 – collective engagement – for example, an important initiative started to be developed with the launch of the ESG Institutional Investor Survey, in January 2019. Focused on equity investments in portfolios of listed companies with or without shareholder agreements, the survey was prepared and conducted together with Previ, Petros, Real Grandeza, and Valia pension funds. In addition to the collective engagement, the survey also addressed the Principle #3 (ESG factors).

In another front, the BNDESPar worked on an initiative dealing with conflicts of interest. The institution developed a Barriers to Disclosure policy, based on the Principle #2, a very important measure considering BNDESPar’s significant portfolio of companies with so many board members. It also established policies on voting rights and on the nomination of board members, effective in 2020.

At the end of 2019, BNDESPar was signatory to 42 shareholder agreements, had 41 members nominated to boards of directors and 25 members nominated to conselhos fiscais, including full and alternate members. The institution participated in some 90 shareholder meetings of listed and closed companies last year. 

Learn more

The Amec Stewardship Code was created by the association to take a step forward in its commitment to promote the engagement in the Brazilian capital market. 23 institutional investors are signatories to the Code, of which only 5 have not disclosed a report yet because of their recent adhesion.

The Code has 7 principles to be followed by investors:

  1. Implement and disclose a stewardship program.
  2. Implement and disclose mechanisms to manage conflicts of interest.
  3. Take ESG factors into account in investment processes and stewardship activities.
  4. Monitor the issuers of invested securities.
  5. Be active and diligent in the exercise of voting rights.
  6. Establish collective engagement criteria.
  7. Be transparent as to stewardship activities.

For additional information, please visit the Stewardship section at Amec’s website.