Third Mine Disaster in a Decade Tests ESG Boundaries in Brazil – by Vinícius Andrade, Giovanna Bellotti Azevedo and Mariana Durao (Bloomberg News – January 29, 2024)

https://www.bnnbloomberg.ca/

(Bloomberg) — Investors were swift to dump debt of Braskem SA after the Brazilian petrochemicals maker’s salt mine partially collapsed in December — a situation that has forced tens of thousands to evacuate the city of Maceio since 2019.

The selloff lasted less than a month before the prices recovered. It was a rebound reminiscent of what happened in the wake of Samarco’s tailings dam collapse in 2015 and the rupture of a Vale SA dam in Brumadinho that killed 270 people in 2019: Any punishment levied by the debt markets was short lived.

Again and again, Brazil is showing just how quickly money managers are willing to shrug off disasters, raising questions about the effectiveness of environmental, social and governance guidelines. It’s an example of the fading enthusiasm for what was supposed to be a new era of responsible investing worldwide.

ESG-focused funds saw net global outflows for the first time last year as investors were quick to move their money into traditional asset classes where better returns awaited. In the case of Braskem, they looked beyond the environmental and governance concerns.

For the rest of this article: https://www.bnnbloomberg.ca/third-mine-disaster-in-a-decade-tests-esg-boundaries-in-brazil-1.2027847