The Brazil special edition: Covid, the Agenda 2030, SDGs and ESGs

The question the world is asking.

What is really happening on the ground in Brazil, right now, as a result of the Covid-19 pandemic?

Today I speak with Claudio Fernandes, a Brazilian Economist and Policy Advisor who has participated in a number of UN negotiations, has been part of working groups to develop strategies for the G20, and is the co-founder and member of the Brazilian working group for the 2030 Agenda implementation of the Sustainable Development Goals.

We cover a lot in this episode.

And we ask a lot of big questions.

What is the reality for this country that has not faced such a traumatic or complex crisis as the one it is facing right now?

We talk about what is happening around the world in relation to vaccines. And what the situation looks like for developing countries.

Claudio brings to life how Brazil is in relation to the sustainable development goals (SDGs) and reaching the Agenda in 2030.

He reminds us that the SDGs are anchored in three pillars: Environment, Social, and Economics. And explains that one thing cannot bypass the other. And then talks about what happens when they do.

And we discuss ESGs. Claudio provides some fascinating insights from his point of view, and we talk about what corporate responsibility depends on.

And he explains what determines all of the problems we talked about in this episode.

What are the financial and trade determinants of the burning of the forests, or the pollution of the oceans and rivers? And how can the financial markets be a part of the solution?

You can find the 2030 Agenda for Sustainable Development Spotlight Report for Brazil here in English. And you can find out more about Gestos here

Please do let us know what you think of this episode. And don’t forget to leave a review, rating, and subscribe.

If you would like to get involved with TIE, and be a part of the important change that needs to be made in the world, do get in touch here.

00:00:07:19 – 00:00:29:11
Philippa White
So the questions are these How can we really activate the best of the private sector to meet the challenges of the real world? Is there a way to accelerate my career that doesn’t involve boring online or classroom courses? And can I really impact people in the developing world with the skills that I have? Can I finally feel proud of what I know?

00:00:30:04 – 00:01:01:14
Philippa White
Those are the questions and this podcast will give you the answers. My name is Philippa White and this is TIE Unearthed. Keep listening and you can follow us on our journey as we show you how we’re connecting the private sector with the social sector. To me, she Hello everyone. PHILIPPa Whyte here and welcome to Episode 21 of Ties Podcast.

00:01:01:15 – 00:01:15:04
Philippa White
Now today I’m speaking with my friend Claudio Fernandez. He’s an economist and policy advisor based in Brazil, but is actually currently in San Francisco. Now, Claudio, it’s really great to have you with us today. Hello.

00:01:15:15 – 00:01:18:05
Claudio Fernandes
Hello, PHILIPPa. Yes, definitely. Fantastic.

00:01:19:00 – 00:01:41:01
Philippa White
Now, I would love our listeners to better understand you and your background as it sort of puts all of this in perspective. So I’ve known Claudio since I moved to Brazil in 2005, and actually he was involved with our first ever typewriter act with Justice Chris Jackson and Leo BURNETT all the way back in 2007. So, yeah, we go way back.

00:01:41:17 – 00:02:12:21
Philippa White
Now, Claudio is an economist who has been working in the sustainable development field since 2008. He has participated in a number of U.N. negotiations, has been part of working groups to develop strategies for the G20, and is the co-founder and member of the Brazilian Working Group for the 2030 Agenda implementation. Now, this is the 2030 agenda that all countries should be working towards to meet the 17 Sustainable Development Goals.

00:02:13:08 – 00:02:37:05
Philippa White
Now, Claudio co-edited and was the creative director of the Spotlight Report for Sustainable Development in Brazil. Now, this is what we’re going to be talking a lot about today. It really is a fantastic read, if you want to understand that the reality on the ground in Brazil today, right now. This tells you that. So you can find it on the link on the bottom of this blurb, of this podcast.

00:02:37:23 – 00:03:02:20
Philippa White
But yeah, we’re going to be bringing that to life today. So Claudio is back in San Francisco for now, for a short time, where he lived for ten years as a pioneer, graphic motion and interactive designer, just as the Internet was being invented, which would have been an incredible time to be there. But he’s there currently in preparations for an important UN meeting on financing for development and for the IMF world Bank spring meetings.

00:03:03:02 – 00:03:15:00
Philippa White
They’re both happening in April of this year. So, Claudio, I would just first of all, just love for you to talk to us about your work, about just us. Can you bring that to light for us?

00:03:15:00 – 00:03:47:16
Claudio Fernandes
Sure. Justice is a non-governmental organization based in Pernambuco, Brazil, that was founded in 1993 to try and respond to the AIDS epidemic. And throughout the nineties, disasters worked a lot from the grassroots point of perspective to try and help people that were in dire conditions being affected. And at that time, there was no treatment for HIV. So it was a very complicated situation.

00:03:48:00 – 00:04:38:16
Claudio Fernandes
By the end of the nineties, Justice has realized that the driving force behind the HIV epidemic in developing countries was very much a political and economic structural issue. So many things needed to change to be able to save people’s lives from then on, just to start to participate in the world arena or the world stage. And when Alessandra nilo, co-founder and the current executive director and Coordinator of Justice, participated at the UN General Assembly special session on AIDS in 2001, from that point on, Justice became part of a global civil society movement to try and solve some of the world pressing problems.

00:04:38:22 – 00:05:05:13
Claudio Fernandes
I came on board in 2008. I’m an economist, as you said, but for the longest time I was working a lot on graphic design and filmmaking, particularly here in San Francisco, when the World Wide Web was being born and being developed in that process. Also, I co-founded a company called Zoom Media and that that company in 2005 was acquired by another company.

00:05:05:13 – 00:05:41:08
Claudio Fernandes
And Zoom Media was specialized in two areas, mainly the clients came from two areas. One was the biotechnology and pharmaceutical sector, and the other one was the venture capital sector. So it was a tie in between biotechnology and science development and the financing arm of that process for innovation since 2008, I started working more closely with just those in the economic development perspective to try and solve some of the world’s pressing issues.

00:05:41:13 – 00:06:25:18
Claudio Fernandes
Since HIV and AIDS, you know, was such an emergency at that moment. But after, for instance, treatment became available, then one of the main issues became access to treatment in a developed world. Access to treatment was somewhat guaranteed by the whole process of public health systems and even private health systems. But in developing countries, even those countries that do have a public health system, they were not willing to spend the necessary resources to acquire the treatment for population that was identified as somewhat of a marginalized population.

00:06:26:07 – 00:06:56:18
Claudio Fernandes
So became part of the advocacy of all of the AIDS organizations of the world to put pressure both on the U.N., also on the Global Fund. Now, Global Fund mean the main financing source for responding to HIV and AIDS that was created on the unfolding processes of the UNGASS, which is the U.N. General Assembly special session that happened in 2001.

00:06:57:09 – 00:07:28:15
Claudio Fernandes
So the next step was to create the Global Fund to treat malaria, tuberculosis and AIDS. There are other initiatives to fund AIDS, but that’s the main initiative that funds the access to treatment for people living with HIV in developing countries. In that process, then other issues start piling up. Then is not only a question of of access to medicine, but then it becomes a question of human rights.

00:07:29:04 – 00:08:01:09
Claudio Fernandes
It becomes a question of eliminating prejudices. It becomes a question of gender equality. So we realized then that the issue was a cross-cutting issue, among many other issues in that process. And nowadays, since 2015, for instance, when the 2030 Agenda for Sustainable Development was negotiated and approved by the United Nations, approved actually not by the United Nations, approved by 192 countries.

00:08:01:16 – 00:08:39:07
Claudio Fernandes
This is a consensus document approved by 192 countries that pledged to change the paradigm of development in their economies based on the Sustainable Development Goals that are anchored in three pillars environment, social and economics. One thing cannot bypass the other because every time that economics, for instance, gets the prevalence of a social and environment, then we have major disturbances and asymmetries in the environment and social that ends up affecting also the results of economics.

00:08:40:00 – 00:08:48:00
Claudio Fernandes
So these three pillars need to be tackled in unison, and that’s what the Sustainable Development Goals are about and the 2030 agenda as well.

00:08:48:04 – 00:09:14:02
Philippa White
And so just just moving back before we move forward to talk about the these goals and the importance of them and all of these countries working towards them. Just give us an idea of the actual situation currently right now in Brazil. So for example, I’m aware that you’re preparing for these meetings that are happening next month. If I’m not mistaken, you had a meeting earlier today.

00:09:14:02 – 00:09:36:11
Philippa White
Just can you bring that to life? Because Brazil is currently facing and we will talk about Brazil in more detail in a second. But Brazil is currently facing one of the most challenging moments of its history because of COVID. And I just love to understand, in your view, a bit of a synopsis of, you know, the conversation that you had earlier today and what we’re facing right now.

00:09:36:18 – 00:10:15:02
Claudio Fernandes
Indeed. I think since colonization, Brazil has never faced a traumatic and complex crisis as this one because of the COVID 19 pandemic. So the preparation I’m making for these meetings is, since I’m part of the economic and financing arm of of the monitoring process, of the implementation of the agenda in the countries, it’s pretty much on trying to find solutions, financial solutions to stop the bleeding.

00:10:15:09 – 00:10:44:01
Claudio Fernandes
Let’s put it this way, because even a country like Brazil, which is a middle income country that has had been upgraded in the first decade of this century, upgraded as a middle income country to a middle, high income country. But even though Brazil was upgraded by the World Bank to be a middle high income country, Brazil is a extremely unequal country.

00:10:44:17 – 00:11:19:05
Claudio Fernandes
And that inequality is has come to the surface in startling images that is happening right now because of the crisis. So this morning, actually, very early in the morning, because it was New York time in the morning, Pacific Standard Time, there was a meeting convened by the Secretary-General with the Global Citizens Society Group that follows and monitors the financing for Sustainable Development, which is our part, and the Undersecretary of the United Nations, Ms..

00:11:19:14 – 00:12:00:03
Claudio Fernandes
Amina mohamed, and several ambassadors and Permanent Representative of the countries were part in this meeting, particularly the Ambassador from Canada, Mr. Bob Rae, and Mr. Courtney Rattray. Ambassador from Jamaica. Because Canada, Jamaica and the Secretary General put together a process to try and find a solution, financial solutions for the situation under the COVID 19 pandemic. So for instance, there are about 54 country right now in debt distress, almost default in their debt, in their public debt, in their external debt.

00:12:00:11 – 00:12:23:13
Claudio Fernandes
And not only this situation is extremely complicated, but also add on to the fact that these countries still need to buy the vaccines to vaccinate their population. And so they are already in debt distress and they are being forced to borrow more to be able to buy the vaccines. And so it’s a very complicated matter at this moment.

00:12:23:15 – 00:12:54:17
Claudio Fernandes
So it’s a very complicated situation because some of the countries, for instance, they’re trying to help the least developed countries that are in this very dire situation, both in the health sector and in the financial end of it. At the same time, these developed countries are opposing a proposal from the World Trade Organization to waive the intellectual property rights on the vaccines so there will be more production of vaccines in every country.

00:12:54:24 – 00:13:24:24
Claudio Fernandes
There will be technology transfer in every country. And then people would be able to access the vaccines. But the developed countries were the main pharmaceutical companies that have developed the vaccine so far oppose this World Trade Organization trips waiver. When I say TRIPS is the Treaty on the Rights of intellectual property so that there was a negotiation that had occurred during the first decade of this century.

00:13:25:11 – 00:13:30:08
Claudio Fernandes
And that’s what governs the intellectual property laws and procedures in the world.

00:13:30:15 – 00:14:03:21
Philippa White
Yeah, as far as the situation in Brazil, because we’re all aware that there’s so many different forces at play here with regards to the, you know, the lack of vaccines. It’s not because of money. Brazil has money to buy them. It’s lack of leadership. There’s a lot of poverty in Brazil. And as a result of the fact that there’s more informal workers locking down has, you know, huge a huge impact on the population and the economy.

00:14:04:02 – 00:14:32:09
Philippa White
But at the same time, if we don’t lock down, we, you know, a country of 200 million people where there is people congregating all the time in the streets, we’re now seeing the rise of numbers of COVID to a level where the hospital system is now shutting down. And, you know, it’s and we’re creating a super virus. I’m just keen to know, is this is is this known?

00:14:32:10 – 00:14:39:21
Philippa White
Is this something that is being talked about on a on a on an international U.N. level? Can you just bring this to life? Sure.

00:14:40:23 – 00:15:11:24
Claudio Fernandes
Interesting that you said that, because today, even though the meeting with the general secretariat was about debt, liquidity and finance, I had an opportunity to speak. And when I took the floor, I called attention to that fact because I heard it from the neuroscientists. A Brazilian neuroscientist called Miguel Nicolelis that the situation in Brazil is definitely pointing towards a high probability of a complete mutation of the virus.

00:15:12:10 – 00:15:39:20
Claudio Fernandes
Not only a different set of the same virus, like a SARS-CoV-2 as the P1, for instance, that came out of South Africa or the P2 that came out of Brazil, or the other variant that also exists at the UK at this moment. No, he was talking about a completely different virus, something that he called quote unquote a source called the three.

00:15:40:11 – 00:16:08:17
Claudio Fernandes
And that would make the vaccines that were created for the SARS-CoV-2 completely irrelevant for that. So the risk is very high. I called attention of the U.N. Secretariat on that, and I even suggested, from my capacity as a civil society organization for the secretary general to convene a special meeting of the Security Council to discuss the matter. Why?

00:16:08:17 – 00:16:39:05
Claudio Fernandes
Because in Brazil, as you said, and you are completely right, Brazil is not a poor country. Brazil is a country with a lot of poverty. It’s a country with a lot of wealth because it’s a big country. I usually I say that Brazil has a very big economy because it’s a big country, but it’s not that great of an economy because the economy is very much prime primary products for export and a lot of informality in the labor market.

00:16:39:23 – 00:17:13:07
Claudio Fernandes
Informality in the labor market means exactly what you said. People need to go out and make a living. And not only that, when they are locked in their homes, they do not have access to Social Security, because if you live based on informality, you don’t contribute to Social Security, so you have no savings. So the situation is quite complex, but the dispute between economic mix and health is not a real issue for Brazil.

00:17:13:23 – 00:17:42:13
Claudio Fernandes
Why? Because, first of all, you have to take care of the health emergency. And here I would like to highlight that this is not a simple type of health emergency. Just imagine if the HIV virus had the same facility to spread among people. So the HIV virus can be contained. Because if you were condom and if you practice safe sex, then you can contain the HIV virus.

00:17:42:23 – 00:18:11:23
Claudio Fernandes
But people cannot stop breathing. And even with masks, it’s not enough to contain the SARS-CoV-2 that created the COVID 19 pandemic. But as you said, in Brazil, there is enough resource this. Brazil is not a country in that distress, despite what the government tends to say. And the press in Brazil tends to comply with this lie because it’s a lie.

00:18:11:24 – 00:18:37:24
Claudio Fernandes
It’s not true that Brazil is in that distress. Much the opposite. If you compare Brazil with a country that is our neighbor, Argentina, Argentina is in that distress. Argentina default on its payment. Argentina borrowed 57 billion from the IMF and Argentina issued a 100 year bond that was bought in two years ago. It was bought in less than 24 hours by a lot of investment banks.

00:18:38:08 – 00:19:18:00
Claudio Fernandes
So Argentina is in that distress. Brazil’s not. The other thing is Brazil has a very well equipped public health system, and Brazil has for the longest time a very good experience on vaccination. The vaccination campaigns in Brazil against polio, against measles, for instance, against several other vaccination processes have been extremely successful because the logistics of the public health system in Brazil called SOS asks us or the Unified Health system was all in place.

00:19:18:09 – 00:19:29:07
Claudio Fernandes
But there is a lack of leadership in every part of the current federal government and in most state governments.

00:19:29:16 – 00:20:08:20
Philippa White
So this actually brings me nicely to the spotlight report that you and your team created to capture the situation in Brazil with regards to the country’s ability to reach the 2030 agenda, which we talked about earlier with regards to the Brazilian Sustainable Development Goals. Now, just for our listeners, this report is extraordinary, Mary. It’s it’s full of so much current data that, if I’m not mistaken, that’s not coming out of any other organization, if it is the only document of its kind to my right in Brazil.

00:20:08:21 – 00:20:17:04
Claudio Fernandes
Yes, it’s the only document of this kind. And actually in the world is one of the few documents of this kind in the whole world.

00:20:17:12 – 00:20:44:01
Philippa White
Well, I mean, it’s it’s extraordinary. And they break down the 17 Sustainable Development Goals and explaining exactly where Brazil is at in each goal. Now, if you read this, which I highly recommend you do, if you want to understand the actual reality of Brazil on the ground, because the government back in of as you touched on it as well, back in sort of 2012, 2011, Brazil did a wonderful job of selling Brazil.

00:20:44:02 – 00:21:11:06
Philippa White
The exchange rate showed this trust that investors had in the country. But I kept thinking, this doesn’t make sense because there’s no investment in the actual infrastructure of this country. When you look at education, when you look at the health system, when you look at the situation of the water system, and I just kept saying, how is it that they how is it that Brazil is able to compete with Canada and the UK and, you know, European countries?

00:21:11:20 – 00:21:33:23
Philippa White
And we are now seeing that actually this isn’t the case. And I just this document really brings this to life. It’s incredibly dense. You know, it’s it’s extremely useful. There’s a lot of data there. You know, for example, one thing that really struck me was the examples of the 26 billion liters of sewage that were pumped into nature.

00:21:33:23 – 00:22:03:23
Philippa White
So rivers and oceans every single day. And in 2008, when the last data came out and there’s no improvement. So that 43% of all sewage and this led to 233,000 hospitalizations related to waterborne diseases in just children of that year. And with no investment in this area, I can’t believe that it’s got any better. Is there any other I mean, there was just so many interesting points in that document that I thought, oh, my God.

00:22:03:23 – 00:22:25:08
Philippa White
And I just wonder, just from your point of view, having pulled this together and obviously we could talk about this for like we could do a course at university on this. But I’m just wondering, you know, in in these areas that we’re talking about that really are points that people are interested, I just wonder, is there any data that stands out to you that you can bring to life for us?

00:22:26:08 – 00:23:07:19
Claudio Fernandes
Definitely. There’s that’s what this document is all about. It’s all about data. It’s all about evidence based, concrete data. It’s not a speech is not a narrative, is just shows by crossing all of this data. And by the way, most of this data were produced by official institutions, meaning the Brazilian statistics and geographies, situations meaning the transparency portal of the federal government, meaning the Ministry of Finance, the Ministry of Commerce, Trade and and Services, the Ministry of Foreign Affairs.

00:23:07:19 – 00:23:48:04
Claudio Fernandes
So they’re all, most of them, official data. The only parts where we don’t use official data is when the data is not available. Okay. So just to bring some other things, for instance, you are talking about water and sanitation. So for every 100 liters sorry for the UK and the U.S. crowd, but for every 100 liters of water that is transported in Brazil to get into somebody’s tap or a shower, 38 liters gets wasted just because of holes and problems in the transmission pipes.

00:23:48:07 – 00:24:29:15
Claudio Fernandes
So that’s basic infrastructure that we are talking about, brick and mortar, basic infrastructure. But when we talk about, for instance, education, when we talk, for instance, about health, which are also infrastructure, but it’s for human capital, for human development, then the situation is very complex. When we analyze, for instance, the amount of resources that the government spend on those very important infrastructure conditions for people, because countries tend to invest in other countries and companies tend to invest in other countries.

00:24:29:15 – 00:24:57:12
Claudio Fernandes
And when they have a good pool of people that know how to do things, good pool of labor, good pool of investment facilities and rule of law, and an environment where the business can be performed in a secure, safe way, you know, so there are no extra risks to somebody investing their resources in another country without having certain guarantees.

00:24:58:05 – 00:25:31:17
Claudio Fernandes
But in education, for instance, so since 2016, the federal budget, which is the main budget for education in the country, has been stagnated because in Brazil they approved the ceiling for basic investment in education, health and social assistance and Social Security. So health, education is social assistance for a country filled with people. There are poor that needs public, you know, schools, public hospitals and public resources to fend for their lives.

00:25:32:19 – 00:25:36:02
Claudio Fernandes
It’s a recipe for disaster. So we have four.

00:25:36:17 – 00:26:00:03
Philippa White
And what stood out for me just listening to this and you’ll know the percentages, perhaps not off the top of your head, but the last year or two years ago and the money, there was a huge amount of investment that was health was an innovation, was in science, it went to the military. So I’m thinking that a lot of the budget from education probably also went there.

00:26:00:03 – 00:26:03:03
Philippa White
I don’t want to make any assumptions, but I’m guessing that’s probably the case.

00:26:03:03 – 00:26:36:01
Claudio Fernandes
Yes. But it also goes to the financial markets, because here is it’s a financial determinant of that, because in Brazil, the government thinks that the country cannot renegotiate their bonds with their creditors. And then they just try to raise the interest rates to attract financial capital through the interest rates being higher than the interest rates that all of the developed countries in the world are paying right now.

00:26:36:08 – 00:27:00:13
Claudio Fernandes
So just to give you an idea, for instance, Germany right now has a negative interest rate. The U.S. as well, it’s officially zero. But actually the pub, the bonds from the US government’s been less than zero. So imagine you put $100 in a savings account that is based on a on bonds, not a savings account, but a fund that is based on the U.S. bonds of the Japanese bonds or the German bonds.

00:27:00:24 – 00:27:24:15
Claudio Fernandes
And in the end of three months, you’re going to get not $100 back. You’re going to get $95 back. So that’s the situation in the world, because there is an excess of liquidity, which means a lot of money in the world, a lot of capital without a place to actually invest this capital with a not good return that is satisfactory for them.

00:27:25:02 – 00:27:53:03
Claudio Fernandes
So a country like Brazil tries to attract that type of capital by raising the interest rate. That’s why the interest rates in Brazil have been so high for so long. But the investment must go to the profitable areas that can give the return in mid to long term. Although we understand that financial capital does not think in mid and long term, usually things in short term, but the situation has changed.

00:27:53:04 – 00:28:21:12
Claudio Fernandes
Now there are few things. For instance, Larry Summers, ex Secretary of Treasury of the US, coined this expression called secular stagnation. The world is in Morrison is secular stagnation. For the past 15, 16 years, you know, and the financial crisis just came to confirm that. And I’m talking about the financial crisis of 2007, 2008. Right now we have a global crisis where lots of jobs have been lost.

00:28:21:15 – 00:28:46:04
Claudio Fernandes
Actually, according to the International Labor Organization, 540 million jobs have been lost so far because of the pandemic. So that’s half a billion more than half a billion jobs that have been lost in one year. Production level is extremely low. The demand is extremely low because people do not have money in their pocket to be able to buy things to consume.

00:28:46:07 – 00:29:17:04
Claudio Fernandes
But if you look at the stock market, the stock market is booming. So there is a an a symmetry in that that needs to be brought together. And if the financial markets don’t realize that, what might happen is that the the problem is just going to be multiplied in a way that we had never seen before. The effects of unemployment because of this current crisis is already bigger than the 1930s, bigger because it has been faster.

00:29:17:16 – 00:29:44:13
Claudio Fernandes
And people keep on thinking about building back better or the recovery process. People are taking too much caffeine, I believe, because they are eager for the recovery to start without even taking care of the emergency. That is already that is continuing everywhere. And in Brazil, for instance, now there is a debate about lockdown or no lockdown. Come on.

00:29:44:13 – 00:30:12:00
Claudio Fernandes
The people are dying. There’s no more even sedatives to put people in the ICU beds. There are no more ICU beds. People are dying in a line waiting for ICU beds. So that’s a very complicated situation. But to give you an example, as far as data, when you talked about so for instance, in Brazil in 2015, there were about 9.7 billion reais, which is not that much invested in science and technology and research.

00:30:12:11 – 00:30:40:13
Claudio Fernandes
Okay. And then in 2016, because of the current crisis at that moment, it dropped to 5.9 in 2019. Now it was 4.5 and we are collecting the data for 2020. And most likely this probably was slashed by half because I know of the news of last year when the budget for copies copies is the main financier for research and academic research in Brazil.

00:30:40:13 – 00:31:06:24
Claudio Fernandes
Copies and see. Q So in they are federal agencies and the budget for copies was slashed by 75% last year. So most like in 2020, it dropped from 5.4.5 to I’m not going to give a number because I don’t know. But it dropped a lot in a country where you don’t have science, technology and innovation and you don’t have research, you don’t have human capital.

00:31:06:24 – 00:31:30:15
Claudio Fernandes
If you don’t have human capital, you just become a manufacturing plant for the for the developed countries. Like, for instance, the East Asian countries did. Right. The Southeast Asian countries did or China did for a while. But they had a plan in the Southeast Asian countries, and that plan actually panned out. So China now is not is not anymore the manufacturing plant of the world.

00:31:31:00 – 00:31:55:23
Claudio Fernandes
China is a power to be reckoned with both militarily and financially. So the point about Brazil is that Brazil is such a big country with so many bright people, with so much, you know, creativity, because that’s one thing that Brazilians have a lot is creativity. As we say, we squeeze milk out of a rock and we can tie a knot in a drop of water.

00:31:56:22 – 00:31:58:01
Claudio Fernandes
That’s the Brazilians say.

00:31:58:10 – 00:32:00:16
Philippa White
Yeah, they do. The Brazilians.

00:32:01:06 – 00:32:20:01
Claudio Fernandes
Exactly. But without investment, that just becomes an anecdote. You know what I mean? And then for the investors, they look at that and then they look at other countries where they’re investing more both and the bricks and mortar infrastructure and in the human capital infrastructure. They decide to go for those countries.

00:32:20:08 – 00:32:55:11
Philippa White
Yeah. Now, reading the document and seeing how you’ve outlined those 17 sustainable development goals and understanding the agenda that all these countries should be working towards for 2030. And corporates at the moment are talking a lot about ESG has environmental, social and governance goals. And what I, I feel is so ESG is will really only come to life and make a tangible difference because, I mean, we talked a lot about corporate social responsibility.

00:32:55:11 – 00:33:35:14
Philippa White
You know, back in 2005 when I started TIE, actually, there was a lot of talk about corporate accountability and you know, purpose and sustainability, but now it’s about ESG. And I’m just really hoping this is not sort of the flavor of the month. This is just a lot of talk I feel now that we’re facing this global crisis, post-COVID, you know, there is a real opportunity for companies to make a real, tangible difference if they link what they’re working towards from an environmental or a social point of view with a challenge in another country or their country or whatever it might be.

00:33:35:14 – 00:33:50:16
Philippa White
But we’re talking a lot in this in the Sustainable Development Goals. There’s a lot of talk around diversity, inclusion, human rights, the environment, and that’s what the SDGs are talking about as well. And I just would love to know what are your thoughts on this?

00:33:50:16 – 00:34:16:21
Claudio Fernandes
I have two words for ESG, because ESG is extremely important and I’m very glad that it’s being discussed in the biggest corporations of the world. We know that the big corporations of the world, they have so much wealth. And not only I’m not talking about financial wealth, but also intellectual wealth. And that needs to be explored in a very good way.

00:34:17:03 – 00:34:35:03
Claudio Fernandes
Because if the the globe, the planet collapses, it doesn’t matter if you have money and if you don’t have money, like what’s happening. Sao Paolo, you know, the elite of Sao Paolo. Now it doesn’t matter. They do. They have money. They’re still in line to get an ICU bed but don’t.

00:34:35:03 – 00:34:35:21
Philippa White
Have oxygen.

00:34:35:22 – 00:35:06:24
Claudio Fernandes
Or don’t have oxygen. Exactly. So ESG, ESG is all about responsibility and accountability. Okay. So we have to face the music and the companies need to face the music. The climate emergency is a fact. And that fact is affecting everybody, every country, every company and pretty much the whole economy of the world. And that needs to be mitigated and that needs to be dealt with.

00:35:07:09 – 00:35:44:13
Claudio Fernandes
So the environmental pillar of the ESG is extremely important. A corporation with large financial muscle cannot keep on investing on certain production chain that is employing kids. Child labor cannot be accepted for any type of corporation. I remember that three or four years ago there was a major scandal involving Zeta, which is a major corporation coming out of Spain, the same type of scandal also before involved Nike and involved Gap.

00:35:45:15 – 00:36:17:11
Claudio Fernandes
We’re talking here about big brands right. So they had to fix that part. No more child labor making sneakers for Nike. Okay. But how about sweatshops? How about the labor conditions in some of the countries that do have that aspect of becoming and being the manufacturing plants of the world like Bangladesh or Indonesia or Malaysia, or allows, for instance, so extremely important on the as part of the ESG.

00:36:17:22 – 00:36:52:14
Claudio Fernandes
So environment as social, extremely important that the employees there are making the products and providing the services are healthy, are educated and are happy because you’re going to get a better product in the end anyway. And the governance is all about accountability on the processes themselves that the companies develop. So it’s very hard to admit the fact that if you have a man and a woman performing the same job, a man would still get a higher wage than the woman.

00:36:53:02 – 00:37:19:13
Claudio Fernandes
It’s extremely sad that we still have to deal with such a situation. Now in 2021 is extremely sad to do in this situation. In a company where you have the same type of day of job being performed by a white male and then performed by a black male and performed by a Latino male, and the white male is going to get a higher pay than the others.

00:37:20:03 – 00:37:54:01
Claudio Fernandes
So that’s what the governance aspect of of ESG is about. So I go back it’s about responsibility. It’s about really being serious about what you say and about what the companies put in their marketing brochures. And they are very expensive, you know, ads on TV, on TV, on newspapers and magazines and accountability as people say in the UK and the US companies, corporations need to put their money where their mouth is.

00:37:54:10 – 00:38:22:19
Philippa White
And actually, that brings me to tie in actually something that I just wanted to ask you about, because, you know, obviously, we’ve known each other for a long time. We started conversations again about your work recently. But you’ve you’ve worked with Ty before. You know, this is what TIE does. We we bring this world of Brazil and Malawi and Vietnam and Myanmar and, you know, the number of countries in Africa together with the corporate world.

00:38:22:19 – 00:38:32:05
Philippa White
And I believe it’s so important so that we can together start finding these solutions. And I just wonder, do you. Yeah. Why, in your view, is this important?

00:38:32:05 – 00:38:57:23
Claudio Fernandes
Extremely important. And you said the correct word bubble. So you get out of the bubble and actually you get to the picture of real life. So, for instance, you just to go back a little bit about the child labor and slavery in Texas. Texas is the second biggest state of the United States, extremely rich state. It’s an oil state, but there is slavery in Texas.

00:38:58:11 – 00:39:27:18
Claudio Fernandes
And we’re not talking about Latino migrants slavery. We are talking about white Americans working as slaves in Texas. There’s an Oxfam report about that that I participated in a meeting three years, three or four years ago, and that report was presented. So there is child labor in the UK as well. It’s just that nobody knows. You cannot localize and laws are not enough.

00:39:27:24 – 00:40:01:24
Claudio Fernandes
In Brazil, for instance, they’re the laws. The rule of law on child labor is excellent, but the practice is something else. And there are many kinds of child labor in slavery. In a country like Brazil, in the richest city of the country, in Sao Paolo. So in Sao Paulo you have child labor and you have slavery. That is part of the supply chain of the textile industry, because I don’t know if people know, but the textile industry, not only in Brazil, because some of that also is exported.

00:40:02:03 – 00:40:33:07
Claudio Fernandes
It’s supply chain depends on small shops. And small shops are usually family owned shops. And the family employs everybody in the family the father, the wife, the kids. And they’re all working to make t shirts for a big brand. So the big brand needs to be aware of that and needs to cut that part of the supply chain or to put pressure for the supply chain to get changed.

00:40:33:10 – 00:41:02:11
Claudio Fernandes
Solution that TIE brings is exactly the fact that it gives a real picture of how things are actually done in the world and the interaction between people, between institutions, between government people and companies that want to invest in their countries, between licit and illicit dealings for that to happen. So all of this needs to be taken in consideration.

00:41:02:18 – 00:41:32:10
Claudio Fernandes
It’s not like it’s a law was written and the law is great and it was enforced for a few months or a few years. And now everything is rosy. No, it’s not like because the forces against that is extremely powerful and extremely insistent. Powerful, not because they are of of, you know, big power thing, but it’s powerful because it’s part of the human condition and how society evolved or not evolved in those settings.

00:41:32:10 – 00:42:10:17
Claudio Fernandes
In industry, tourism. We don’t have a complete control over those things unless that gets practiced through strict regulations. Okay. So we’re talking about good accountable governments and we talk about compliance because that’s a big word that actually I think misses on the ESG. It should be ESG, see, because compliance is extremely important as well to make sure that everything that you’re doing and if you’re doing everything correctly, it still complies to what is supposed to be a sustainable development pathway.

00:42:11:03 – 00:42:51:03
Claudio Fernandes
And that’s what the SDGs talk about. That’s what the 2030 Agenda for Sustainable Development talk about. It’s things are not separated, they’re not isolated. It needs to be incorporated as a. You know, it’s like that old say that says the hole is bigger than the sum of its parts. And that’s extremely important. And to put a kind of a concluding or synthetic way is that especially for corporations, for the financial sector, these actors need to think very seriously about circular economy because things just don’t get they don’t disappear.

00:42:51:03 – 00:43:23:19
Claudio Fernandes
It’s like the plastic. It does not disappear from the ocean, the packaging, it does not disappear from the landfills. Needs something needs to be done with that and somebody needs to be responsible for it. So this kind of responsibility of, of of the individuals to be incorporated needs a very good regulatory process and a very good, responsible, accountable process, regulatory coming from governments, responsible, accountable process coming from the private sector.

00:43:24:01 – 00:44:05:18
Claudio Fernandes
And they need to marry to become something that is really, you know, again, changer for the economy and for the planet. Because if that doesn’t happen, if, for instance, a furniture company still buys wood from the rainforest in Brazil, the rainforest in Brazil is going to be burnt until until the end. And if a company is buying soy from Mato Grosso, from the biggest soy producer in the world supply to Margie, who used to even be the Minister of Agriculture during the impeachment government of Michel Temer, that soy in the supply chain is also responsible for the burning of the forest.

00:44:06:05 – 00:44:11:02
Claudio Fernandes
So companies and financiers and investors needs to be aware of all of that.

00:44:11:09 – 00:44:23:04
Philippa White
Now, I’m aware of your time, and I’m aware that we’re coming to the end of this podcast. So I just in the last couple of minutes that we have, what haven’t I asked you that you’d like to tell our listeners? Claudio.

00:44:23:14 – 00:45:01:21
Claudio Fernandes
You have not asked what determines all of these problems? What are the financial and trade determinants of the burning of the forest as the pollution of the rivers, as the pollution of the oceans? That’s what you have not asked. And the answer for that is going back to ESG, which I would add ESG sea plus compliance is responsibility and accountability in every action, in every pound, in every dollar that somebody invests, they should know where that money’s going.

00:45:02:21 – 00:45:40:02
Claudio Fernandes
If they are just in the financial markets, you can have a notion of where that money’s going. You know, you’re investing on British American Tobacco, the biggest corporation that produces cigarets in the world. Or if you’re investing on the body shop, you know, that produces non non-animal testing cosmetics, you know what I mean? So there’s a big difference for consistent between a body shop and another company that produces cosmetics with animal testing using lots of chemicals and things like that.

00:45:40:11 – 00:46:13:12
Claudio Fernandes
So corporate responsibility also depends on corporate information and knowledge, and investors need to know where that money, where that capital is going and then start deciding not to put the capital in certain areas, in certain sectors, even though and here is the point, even though you have a short term return that is satisfactory in your mid to long term return, it’s going to be damaging.

00:46:14:06 – 00:46:43:13
Claudio Fernandes
So people need to be aware of that. It’s not only a question of government regulated everything. That’s not what I’m advocating at all, but advocating is actually a complete overhaul of the responsibility and accountability process for both governments, private sector and the private citizens as well. But private citizens only change when there’s something changing with them. It’s very rare when individuals just decide to change.

00:46:43:13 – 00:47:06:15
Claudio Fernandes
Yeah, I’m going to start practicing yoga every morning and I’m going to do this and I’m going to, you know, it’s not that easy, but if something happens to them, then they start changing. And the same thing for the financial markets, because the financial markets are the financial determinant of a lot of these problems, but they are also the financial markets is also a big part of the solution.

00:47:07:19 – 00:47:09:23
Claudio Fernandes
They just need to be aware.

00:47:09:23 – 00:47:32:20
Philippa White
I agree. Oh, Claudio, it has been such a pleasure to talk to you. I really appreciate your time and your information and I’m looking forward to continuing these conversations as things evolve here in Brazil and among our conversations around ESG, etc.. So thank you. Thank you. Thank you. I really appreciate just your time.

00:47:33:09 – 00:47:38:13
Claudio Fernandes
Thank you very much for inviting me and it’s been a pleasure to talk to you.

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