SUSTAINABILITY STOCK EXCHANGE
A new market for the billion worth market of equilibrium
Sustainability, by definition, represents every human enterprise systematically comprehending at least four characteristics: ecologically correct, economically feasible, socially fair and culturally accepted.
Nowadays any new project worth its name has imbedded in it the sustainability concept. Both government actions and best enterprise practices have adopted the virtuous sustainable cycle for the production of goods and services utilizing recycled materials and renewable energy, considering the respect to society and the market where they operate as an authentic mission.
In Brazil, as in the world, initiatives to improve sustainability started to emerge. In São Paulo Stock Exchange, from the union of several renowned institutions, an “Entrepreneurial Sustainability Index” [“Índice de Sustentabilidade Empresarial” (ISE)] has been created, representing a stock basket of companies recognized by their commitment to sustainability.
Several projects have been developed by the São Paulo State Government in order to surround state’s actions with sustainability. In the scope of the Federal Government, there are hundreds of similar initiatives, spread along Ministries, Agencies, State-owned Companies and several public politics.
Ultimately, sustainability is a fact, a practice and the future. However, despite an apparent apogee, its philosophical importance is not leading to accomplishment as an end in itself. Sustainability is still practiced as a mean, although having an apparent goal. In reality, its processes auto-extinguish and do not sum up to deliver an effective result, economically valued and thus negotiable.
Due to technological and methodological advances, nowadays it is perfectly feasible to attribute financial value to sustainability, creating indexes that reflect it and which can be negotiated in a physical or virtual environment such as a Stock Exchange.
Creating a sustainability index with financial value would allow us to have a market for “equilibrium”, where proactive efforts would be compensated by those negligent or indifferent, as occurs with carbon credits, a market in which the responsible ones are credited and paid at the expenses of the irresponsible ones.
This way, from a collective standpoint, in order to value equilibrium, the price of irresponsibility shall be added to the cost of the practice, product or service delivered and, at the same time, those who adopt clean mechanisms shall be compensated at the irresponsible ones’ expenses.
Therefore, attributing financial value to the sustainability indexes and inducing its negotiation in the market would mean giving solid value and compensation to the most healthy and advanced entrepreneurial acts, translated into credit or incentive advantages.
There is no doubt that all companies that are aware of the equilibrium value shall set their efforts to profit from it. In opposition, those that bet on the market ignorance should change their practices quickly.
Ideally, the Brazilian Government, through all its layers and within its respective competences, should regulate the sustainability market in a physical environment, such as a Stock Exchange like BOVESPA, as well as in a Clearing House or even in a virtual environment, arranged and regulated by Government Agents in an integrated form.
Should the Brazilian Government have not the creativity, capability or political will, we could, on the other hand, count on a private regulation of free adhesion, which could be discussed and encouraged in the scope of the many Institutions that have been adopting sustainability as a true mission. Look at the remarkable example given by the Brazilian banks Bradesco and Itaú-Unibanco, representing almost 50% of the ISE/BOVESPA!
Maybe this proposition is just another visionary example of Brazilian creativity and versatility for the balanced development of our world, maybe it is an idea that can inspire and result in a new economic order for the world, where the ends are accounted and compensate the means, not merely justify it.
Anyway, although technicians, politicians and non-believers do not want to jump from their chairs and get out of their comfort zone, one fact is unquestionable: sustainability is already worth billions and even if its valuation and financial negotiation seem a mirage, it is just a matter of time, just a few years, for it to become as real as carbon credits negotiation is today.
Sao Paulo, April 7th, 2.009.
Antonio Otero
Brazilian Bar Association – São Paulo Branch 166740
11 7880-0185 – 8181-5585
A new market for the billion worth market of equilibrium
Sustainability, by definition, represents every human enterprise systematically comprehending at least four characteristics: ecologically correct, economically feasible, socially fair and culturally accepted.
Nowadays any new project worth its name has imbedded in it the sustainability concept. Both government actions and best enterprise practices have adopted the virtuous sustainable cycle for the production of goods and services utilizing recycled materials and renewable energy, considering the respect to society and the market where they operate as an authentic mission.
In Brazil, as in the world, initiatives to improve sustainability started to emerge. In São Paulo Stock Exchange, from the union of several renowned institutions, an “Entrepreneurial Sustainability Index” [“Índice de Sustentabilidade Empresarial” (ISE)] has been created, representing a stock basket of companies recognized by their commitment to sustainability.
Several projects have been developed by the São Paulo State Government in order to surround state’s actions with sustainability. In the scope of the Federal Government, there are hundreds of similar initiatives, spread along Ministries, Agencies, State-owned Companies and several public politics.
Ultimately, sustainability is a fact, a practice and the future. However, despite an apparent apogee, its philosophical importance is not leading to accomplishment as an end in itself. Sustainability is still practiced as a mean, although having an apparent goal. In reality, its processes auto-extinguish and do not sum up to deliver an effective result, economically valued and thus negotiable.
Due to technological and methodological advances, nowadays it is perfectly feasible to attribute financial value to sustainability, creating indexes that reflect it and which can be negotiated in a physical or virtual environment such as a Stock Exchange.
Creating a sustainability index with financial value would allow us to have a market for “equilibrium”, where proactive efforts would be compensated by those negligent or indifferent, as occurs with carbon credits, a market in which the responsible ones are credited and paid at the expenses of the irresponsible ones.
This way, from a collective standpoint, in order to value equilibrium, the price of irresponsibility shall be added to the cost of the practice, product or service delivered and, at the same time, those who adopt clean mechanisms shall be compensated at the irresponsible ones’ expenses.
Therefore, attributing financial value to the sustainability indexes and inducing its negotiation in the market would mean giving solid value and compensation to the most healthy and advanced entrepreneurial acts, translated into credit or incentive advantages.
There is no doubt that all companies that are aware of the equilibrium value shall set their efforts to profit from it. In opposition, those that bet on the market ignorance should change their practices quickly.
Ideally, the Brazilian Government, through all its layers and within its respective competences, should regulate the sustainability market in a physical environment, such as a Stock Exchange like BOVESPA, as well as in a Clearing House or even in a virtual environment, arranged and regulated by Government Agents in an integrated form.
Should the Brazilian Government have not the creativity, capability or political will, we could, on the other hand, count on a private regulation of free adhesion, which could be discussed and encouraged in the scope of the many Institutions that have been adopting sustainability as a true mission. Look at the remarkable example given by the Brazilian banks Bradesco and Itaú-Unibanco, representing almost 50% of the ISE/BOVESPA!
Maybe this proposition is just another visionary example of Brazilian creativity and versatility for the balanced development of our world, maybe it is an idea that can inspire and result in a new economic order for the world, where the ends are accounted and compensate the means, not merely justify it.
Anyway, although technicians, politicians and non-believers do not want to jump from their chairs and get out of their comfort zone, one fact is unquestionable: sustainability is already worth billions and even if its valuation and financial negotiation seem a mirage, it is just a matter of time, just a few years, for it to become as real as carbon credits negotiation is today.
Sao Paulo, April 7th, 2.009.
Antonio Otero
Brazilian Bar Association – São Paulo Branch 166740
11 7880-0185 – 8181-5585
