Sign up to myFT Daily Digest to be the first to know about Brazilian economy news.
Brazil’s government may come in for criticism around the world for failing to do enough to protect the Amazon, but the country’s newly independent central bank is determined to blaze a different trail.
Roberto Campos Neto, the bank’s University of California-educated president, has launched a wide-ranging sustainability agenda which includes everything from satellite monitoring of farms taking rural credit to a crackdown on “greenwashing” — the passing-off of business-as-usual borrowing as environmentally friendly.
“The central bank was the first one to be pushing this agenda,” Campos Neto, 51, tells the Financial Times, noting that the institution adopted a policy for socio-environmental responsibility in 2014 and mandated financial institutions in Brazil to measure social and environmental risks several years ago.
One of his main concerns is the risk of “greenwashing” and the need to prevent it, by forcing better disclosure. This is a particular problem in the bond market, Campos Neto believes.
“I’m seeing a lot of green bonds,” he says. “We need to make sure that we don’t have [greenwashing] because, if we do, everyone suffers from the reputation and you basically destroy the market before it is born.”
Like other leaders in government and business, Campos Neto is encouraged by what he believes is a permanent shift in public attitudes in Brazil. “When the 2008 [financial] crisis came, nobody talked about sustainability,” he says. “It was completely forgotten . . . Now it’s just the opposite. As we are coming out of the pandemic, more and more people are talking about it.”
The Biden factor
Since Joe Biden’s arrival in the White House, even Brazil’s federal government has shifted its official stance on the environment, replacing Trumpian hostility with a restated commitment to ending Amazon deforestation by 2030 and a new pledge to bring forward by a decade the target date for achieving net zero carbon emissions. But, given President Jair Bolsonaro’s record so far — only last September, he blamed indigenous peoples for burning down the Amazon — many are sceptical of the sincerity of the new pledges.
Campos Neto, however, highlights consumer demands and fresh attitudes among business leaders as the key drivers of change. “Why are the companies making this shift? Because the consumers are telling them: ‘If you don’t, I’m not going to be buying your products’,” he says. “More importantly, the companies now understand this is not a cost. This is revenue . . . it’s actually going to give me more revenue, being sustainable.”
Brazil’s vast agribusiness sector poses challenges, though. Meat and soy companies have been targeted by environmentalists for using deforested land in the Amazon. So the central bank is conferring with financial institutions to agree a taxonomy for environmental information and is using a geo-referencing database to locate farms receiving rural credits, in order to prevent money going to illegal land-grabbers.
“We’re going to have a map of the whole country and we are going to be able to see who is using land that has . . . been invaded,” he says. “Everything is going to become very transparent.”
Transparency on social issues is key too, Campos Neto says. Brazil has some of the world’s worst income inequalities and a history of racism against the black population. He cites the example of the supermarket chain Carrefour in Brazil, which faced a backlash last year after its security guards beat a black man to death in a car park after an altercation in a store: it shows, he says, how a social issue “can disrupt a company, can disrupt a sector and can even create a bank run, depending on how you look at it”.
The central bank’s autonomy, finally achieved this year after tortuous negotiations in congress, has given Campos Neto a stronger institutional footing on which to push his green agenda. “I think the autonomy helps us,” he says. “I, personally, have raised these issues with ministers in many meetings.”
Campos Neto is central banking aristocracy — his grandfather, Roberto de Oliveira Campos, was instrumental as planning minister in the founding of Brazil’s central bank in 1964.
“The central bank was actually born in 1964 with independence and that didn’t last very long,” Campos Neto says. “The following president, Costa e Silva, decided to reverse it. My grandfather went to him and complained . . . [saying] I think you are making a mistake . . . the central bank is the guardian of the currency. And the president replied to my grandfather: ‘No, no, no, I am the guardian of the currency’.”
More than five decades — and several bouts of hyperinflation — later, Brazil’s central bank has its independence back. “I think people in general see it as an advance,” Campos Neto says.
“I think it’s going to be very hard for a new president to step in and reverse that. Very hard.”
Where climate change meets business, markets and politics. Explore the FT’s coverage here
Get alerts on Brazilian economy when a new story is published