Location
Please select your investor type by clicking on a box:
We are unable to market if your country is not listed.
You may only access the public pages of our website.
Government of Amazonas: taking sovereign engagement to the state level
Amazonas, situated in the north-west of Brazil, is the country’s largest state yet also one of the most sparsely populated. Covered predominantly by the Amazon rainforest, the region regularly makes climate change headlines for the wrong reasons.
When Graham Stock, from RBC BlueBay’s Emerging Markets Debt team, was given the opportunity to host the Governor of Amazonas, Wilson Lima, and his Environment Secretary, Eduardo Taveira, in our London offices recently, he appreciated having the opportunity to gain a more nuanced view.
It is often thought that investor stewardship activities are limited to shareholder engagement, however as established fixed income investors operating in sovereign and corporate markets, we are well placed to have our messages heard by the right people.
Graham Stock from RBC BlueBay’s fixed income team is co-chair of the Investor Policy Dialogue on Deforestation (IPDD), a collaborative initiative that engages with policymakers around the world to highlight the risks that deforestation poses to our portfolios.
In our highlights video, Graham, Wilson and Eduardo discuss sustainable initiatives to date and the obstacles facing the authorities at the state level and in Brazil more broadly. Their conversation includes:
- Why engagement and income generating opportunities for local communities are key to combatting deforestation and forest fires.
- The Cadastro Ambiental Rural (‘CAR’) – or Rural Environmental Registry – and why it matters from an investment standpoint.
- The role of the federal government (versus the state) and the need to focus on solutions more than problems.
- Why the ‘marco temporal’ (a timeframe relating to Indigenous groups’ claims to ancestral land) needs to be specific to the region.
These discussion points are aligned to Amazonas’ 2030 program, which targets net-zero deforestation in the region by 2030 through climate change mitigation, conservation & sustainable development, and strengthening the bioeconomy.
Biodiversity and climate change represent potential systemic risks that can impact a country’s creditworthiness. With nearly two-thirds of the Amazon located in Brazil, high and increasing deforestation rates not only make the country less appealing as a sovereign investment on ESG grounds, they also impact its ability to harness its forestry assets in the future for positive sustainability and finance initiatives, such as carbon financing.
Ultimately, deforestation degrades Brazil’s creditworthiness and will likely cause deterioration in the price of its assets. However, the meeting with Wilson and Eduardo gave insight into the conservation and sustainable development initiatives taking place in Brazil, and it highlighted why discussions with stakeholders are crucial to Graham, as a fixed income investor.
The IPDD in Brazil
The IPDD has focused much of its efforts to date on Brazil (as well as Indonesia), and RBC GAM is a supporting investor of the IPDD in the country. Increasingly, sovereign fixed income investors in these markets are considering deforestation as a potential risk to a country or investment’s creditworthiness. Collaborative engagement with policymakers is one way that investors can aim to manage potential risks related to deforestation.
The IPDD is now a valued initiative in Brazil, with Graham Stock spending a significant amount of time in the country engaging with companies, government ministries, the Central Bank, political consultants, lobbyists, the World Bank and the body representing Amazon states. Our message is being heard across the political and central banking infrastructure, meeting our need for engagement and awareness raising.
Sign up for insights by email
Subscribe now to receive the latest investment and economic insights from our experts, sent straight to your inbox.
This document is a marketing communication and it may be produced and issued by the following entities: in the European Economic Area (EEA), by BlueBay Funds Management Company S.A. (BBFM S.A.), which is regulated by the Commission de Surveillance du Secteur Financier (CSSF). In Germany, Italy, Spain and Netherlands the BBFM S.A is operating under a branch passport pursuant to the Undertakings for Collective Investment in Transferable Securities Directive (2009/65/EC) and the Alternative Investment Fund Managers Directive (2011/61/EU). In the United Kingdom (UK) by RBC Global Asset Management (UK) Limited (RBC GAM UK), which is authorised and regulated by the UK Financial Conduct Authority (FCA), registered with the US Securities and Exchange Commission (SEC) and a member of the National Futures Association (NFA) as authorised by the US Commodity Futures Trading Commission (CFTC). In Switzerland, by BlueBay Asset Management AG where the Representative and Paying Agent is BNP Paribas Securities Services, Paris, succursale de Zurich, Selnaustrasse 16, 8002 Zurich, Switzerland. The place of performance is at the registered office of the Representative. The courts at the registered office of the Swiss representative or at the registered office or place of residence of the investor shall have jurisdiction pertaining to claims in connection with the offering and/or advertising of shares in Switzerland. The Prospectus, the Key Investor Information Documents (KIIDs), the Packaged Retail and Insurance-based Investment Products - Key Information Documents (PRIIPs KID), where applicable, the Articles of Incorporation and any other document required, such as the Annual and Semi-Annual Reports, may be obtained free of charge from the Representative in Switzerland. In Japan, by BlueBay Asset Management International Limited which is registered with the Kanto Local Finance Bureau of Ministry of Finance, Japan. In Asia, by RBC Global Asset Management (Asia) Limited, which is registered with the Securities and Futures Commission (SFC) in Hong Kong. In Australia, RBC GAM UK is exempt from the requirement to hold an Australian financial services license under the Corporations Act in respect of financial services as it is regulated by the FCA under the laws of the UK which differ from Australian laws. In Canada, by RBC Global Asset Management Inc. (including PH&N Institutional) which is regulated by each provincial and territorial securities commission with which it is registered. RBC GAM UK is not registered under securities laws and is relying on the international dealer exemption under applicable provincial securities legislation, which permits RBC GAM UK to carry out certain specified dealer activities for those Canadian residents that qualify as "a Canadian permitted client”, as such term is defined under applicable securities legislation. In the United States, by RBC Global Asset Management (U.S.) Inc. ("RBC GAM-US"), an SEC registered investment adviser. The entities noted above are collectively referred to as “RBC BlueBay” within this document. The registrations and memberships noted should not be interpreted as an endorsement or approval of RBC BlueBay by the respective licensing or registering authorities. Not all products, services or investments described herein are available in all jurisdictions and some are available on a limited basis only, due to local regulatory and legal requirements.
This document is intended only for “Professional Clients” and “Eligible Counterparties” (as defined by the Markets in Financial Instruments Directive (“MiFID”) or the FCA); or in Switzerland for “Qualified Investors”, as defined in Article 10 of the Swiss Collective Investment Schemes Act and its implementing ordinance, or in the US by “Accredited Investors” (as defined in the Securities Act of 1933) or “Qualified Purchasers” (as defined in the Investment Company Act of 1940) as applicable and should not be relied upon by any other category of customer.
Unless otherwise stated, all data has been sourced by RBC BlueBay. To the best of RBC BlueBay’s knowledge and belief this document is true and accurate at the date hereof. RBC BlueBay makes no express or implied warranties or representations with respect to the information contained in this document and hereby expressly disclaim all warranties of accuracy, completeness or fitness for a particular purpose. Opinions and estimates constitute our judgment and are subject to change without notice. RBC BlueBay does not provide investment or other advice and nothing in this document constitutes any advice, nor should be interpreted as such. This document does not constitute an offer to sell or the solicitation of an offer to purchase any security or investment product in any jurisdiction and is for information purposes only.
No part of this document may be reproduced, redistributed or passed on, directly or indirectly, to any other person or published, in whole or in part, for any purpose in any manner without the prior written permission of RBC BlueBay. Copyright 2023 © RBC BlueBay. RBC Global Asset Management (RBC GAM) is the asset management division of Royal Bank of Canada (RBC) which includes RBC Global Asset Management (U.S.) Inc. (RBC GAM-US), RBC Global Asset Management Inc., RBC Global Asset Management (UK) Limited and RBC Global Asset Management (Asia) Limited, which are separate, but affiliated corporate entities. ® / Registered trademark(s) of Royal Bank of Canada and BlueBay Asset Management (Services) Ltd. Used under licence. BlueBay Funds Management Company S.A., registered office 4, Boulevard Royal L-2449 Luxembourg, company registered in Luxembourg number B88445. RBC Global Asset Management (UK) Limited, registered office 100 Bishopsgate, London EC2N 4AA, registered in England and Wales number 03647343. All rights reserved.
Sign up for insights by email
Subscribe now to receive the latest investment and economic insights from our experts, sent straight to your inbox.