English 
Spanish 
3 min read
0 comments
The discussion about investment strategies aligned with ESG (Environmental, Social and Governance) metrics becomes more complex when short-term events occur.
Side effect: war between Israel e Hamas puts pressure on prices oil and makes it difficult investments with ballast in ESG in the short term. The conversation about investments that adhere to ESG metrics (acronym in English for environmental, social and governance) becomes more difficult when short-term events – such as wars in Ucrania and in Israel – influence the rise in oil prices. However, for the long term, the bet on sustainability process may be more attractive, in the opinion of Marcos Kawakami, variable income leader at BNP Paribas Asset Management.
“It is very challenging to talk about ESG at this time. In the short term we have two wars, we have an oil shock that ends up significantly influencing this issue, as it is difficult to talk about energy alternatives quickly and sustainably. So it becomes complex to talk about this when we have specific events”, said Kawakami, during a panel at the 44th Brazilian Private Pension Congress, on Thursday, 19.
On the other hand, the person responsible for variable income at the manager highlights that ESG, also read as “sustainability”, is something that is hardly aimed at in the short term, but rather for the long term. He mentions the Paris Agreement, an international treaty with the aim of reducing global warming, which is expected to generate billions of dollars annually. “It will generate opportunities in many sectors,” says Kawakami. “We have short- or medium-term financial concerns about delivering results, of course, but in the long-term ‘little box’ [of investments], there will be opportunities.”
- The impressive numbers from the 10 oil platforms with the HIGHEST production in October: More than 2 million barrels per day in the spotlight in the pre-salt!
- Brazil to auction 78 MILLION barrels of oil! China took the majority in the last auction
- PPSA expects R$500 billion in revenue and the Union could reach the top 3 largest oil producers by 2030
- Petrobras confirms one of its biggest discoveries and has already set a date to begin exploration
Regarding risk mitigation, the expert assesses that ESG practices in investments still have “a very short history to be able to measure”. “The strongest implementation history came in 2017, 2018. Just looking at this pre-pandemic history is difficult to measure,” he says. But Kawakami highlights that the topic has led to a greater demand for sustainability in companies invested in by managers, which benefits the investor at the end.
The war between Israel and Hamas has raised concerns in markets, especially with regard to the price of oil. Instability in the region and the risk of supply interruptions have boosted commodity prices. This can directly affect investments, especially those backed by ESG, since the rise in oil prices goes against sustainable practices.
However, it is important to emphasize that ESG is a long-term investment strategy and that specific events, such as wars and geopolitical crises, should not shake confidence in this approach. Sustainability continues to be a global trend and the transition to a greener economy is inevitable.
The Paris Agreement, for example, is a strong driver of ESG investing. With the aim of reducing greenhouse gas emissions and limiting global warming, the agreement will require billion-dollar investments in sectors such as renewable energy, energy efficiency and sustainable transport. These long-term investment opportunities are not affected by short-term events.
As for risk mitigation, it is still too early to measure the impact of ESG practices on investments. The implementation history is relatively recent and more time is needed to evaluate results. However, it is clear that companies are increasingly being held accountable for sustainable practices and this benefits investors who look for companies with good corporate governance practices and social and environmental responsibility.
In short, although events like the war between Israel and Hamas can create instability in short-term markets and make the conversation about ESG investing difficult, it is important to stay focused on the long term. Sustainability is an irreversible trend and investments aligned with ESG metrics have the potential to generate solid returns in the future. It is necessary to have patience and a long-term vision to take advantage of the opportunities that will arise in this context.
