02/02/2021

Socially responsible investment is here to stay

One of the great challenges today is to accelerate market processes in terms of the development of initiatives that respond to the growing commitment of companies with good international practices in environmental, social and corporate governance matters. Sustainability is today a key issue for those seeking investments. In Argentina, the experience of BYMA (Bolsas y Mercados Argentina) has been inspiring regarding three lines of action:

Sustainability Index: developed together with the Inter-American Development Bank, it highlights the 15 issuers with the best practices in Environmental, Social, Corporate Governance and Sustainable Development (ESG-D) of the year.

The index was launched on December 2018 and is aligned with the best international practices. It is a non-commercial index, based on the Index-Americas methodology, which recognizes the leading sustainability companies in the region.

The indicators survey is conducted by Refinitiv, which analyzes issuers according to their ESG-D performance and provides objective ratings based on publicly accessible sources.

The Index seeks to promote the companies’ visibility and to raise awareness within the Capital Market regarding the benefits of reporting and being a sustainable company, the reputation and brand positioning, the loyalty of human capital, among others.

Corporate governance panel: segment constituted by BYMA-listed issuers that voluntarily decide to adopt international standards of good governance and transparency in addition to those required by the Argentine regulation.

Companies join voluntarily and this action implies the incorporation of a set of requirements aligned to the principles of Corporate Governance of the Organization for Economic Cooperation and Development (OECD), and adopted by the G20. Among the requirements are: gender diversity in the managerial body, the existence of a nomination and remuneration committee, a remuneration policy, a nomination policy, a dividend policy, integrity programs, shareholding dispersion, board evaluation, an annual report, among others.

The panel encourages the strengthening of practices regarding commitment to corporate governance, structure and operation of the board of directors, control environment, transparency and disclosure of information, and protection of shareholders' rights.

At the end of 2020, five companies integrated the panel, among which was BYMA with its issuer role.

Panel on Social, Green and Sustainable Bonds (SGS): this panel seeks to bring issuers closer to a new form of financing, promoting greater environmental and social responsibility.

The process is similar to that of any traditional negotiable bond, the difference lies in the use that the funds will be given, which must be destined to financing activities that benefit the environment or the society. In relation to the requirements, issuers must have an external review, issued by an independent third party with experience in environmental or social matters, where it is declared that the projects to be financed or refinanced with the funds raised by the bond placement are aligned with the SGS Bonds’ principles. The external reviewer must give their opinion regarding granting the green and/or social category to the issuance, for which they will evaluate the alignment with the four components of the International Capital Market Association (use of funds, evaluation process and selection of projects, fund management to ensure transparency, and traceability and reports to keep the investing public updated). Additionally, with certain periodicity, the issuer must prepare a report indicating the use of funds from the issuance; and, if having been monitored, to report the social and environmental benefits achieved by the financed or refinanced projects.

At the closing of the financial year 2020, the Panel was made up of negotiable securities, both Green --whose funds are destined to finance green constructions and the construction of wind farms- and Social -to finance the generation of employment and the access to essential services.

This panel is aligned with the initiatives of the world's stock exchanges and, together with the Corporate Governance Good Practices Panel and the Sustainability Index, they complement a strategic action plan to promote sustainable finance in the country and they contribute to the achievement of the Sustainable Development Goals. Information on each product is available on the BYMA official website.

Likewise, it seems important to emphasize that more than ever this work sector cannot rest dissociated from the daily life of the community, especially from the most vulnerable sectors, maintaining the support and commitment to the organizations that are working in the fight against the coronavirus.

Education and financial inclusion are key axes in our times. An example is the #BYMAEDUCA initiative, which seeks to generate strategic alliances with universities and educational institutions throughout the country for the dissemination of the Capital Market as an investment and financing alternative. Additionally, BYMA has a program called BYMA SIMULATION, which is a platform that allows for a free simulation of stock market operations to learn how to invest in the Capital Market according to different users’ categories.

In environmental matters, BYMA LISTADAS stands out, a website specially designed so that broadcasters can carry out multiple procedures remotely, sending BYMA electronically signed information and documents under Blockchain technology. Some of the advantages of BYMA LISTADAS are the elimination of the use of paper, agility, security and transparency, added to the costs reduction.

BYMA is accountable for its management on an annual basis through its Sustainability Report, carried out in accordance with the GRI Standards of the Global Reporting Initiative, on the Essential option, in which it communicates its actions, programs and initiatives in economic, social and environmental matters.

There is no doubt about the growing global trend of socially responsible investors. They respond to a much broader, long-term and realistic vision regarding the risks of not supporting the benefit of the ecosystem as a whole.

Gabriela Terminielli is a Master in Business Administration, Psychology graduate with a postgraduate degree in Cognitive Psychology. Director of BYMA (Bolsas y Mercados Argentinos) and of Cadec S.A. Consultant. She is Co-Director of postgraduate studies at UCEMA and Co-Chair of WCD Argentina (Women Corporate Directors).