Our Responsible Investment overlays
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Focus theme: Biodiversity
Example case of a biodiversity engagement: Brazilian Government
E S G
Background: Citing the negative financial materiality of the rainforest destruction, in 2019 we decided we would no longer buy Brazilian government bonds for any of our internally managed Emerging Market debt strategies, including Nordea’s Emerging STARS Bond strategy. Engagement and outcome: Our suspension of Brazilian government bond purchases won the attention of both govern- ment agencies and the media. Nordea is one of many investors that have urged the government of Brazil to take a tougher stance on deforestation and environmental protection. The wide ranging regulations on ESG that the Central Bank of Brazil announced in September 2021 is therefore a good step. The new regulation includes the requirement that all environmen- tal, social and climate impact is taken into consideration for all financial services and products. In August, the Central Bank of Brazil also announced that it is preparing to require banks to account for potential losses from climate change-related phenomena such as droughts, floods and forest fires. In addition, the Central Bank has outlined rules to forbid rural loans to projects in indigenous or deforested land and has demanded more disclosure on how banks deal with social and environ- mental risks, including deforestation. In October we were invited to an conference on sustainable agriculture in Brazil organized by The Embassy of Brazil in Denmark, with institutional support from the Danish Agricultural & Food Council, Food Nation, DAKOFO and the Brazilian Trade and Investment Promotion Agency. In connection with the conference we attended a separate meeting with govern- ment representatives from the Brazilian delegation and discussed investor expectations regarding deforestation and also the financing gap to stop deforestation in Brazil and sustainable agriculture.
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