Company: Granito Group
Category: ESG Research Report of the Year (shortlisted)
In the spirit of showcasing leadership and raising standards of responsible investment among all our signatories, we are pleased to publish case studies of all the winning and shortlisted entries for the PRI Awards 2019.
Project overview, objectives and why the research breaks new ground
Women are underrepresented at all levels of the global financial system, from depositors and borrowers to bank board members and regulators. They account for less than 2% of financial institutions’ chief executives and less than 20% of executive board members (IMF, 2018).
This situation is particularly acute in Brazil. To address this issue, the Granito Group won a mandate to work with the UK government, under the British Prosperity Fund and the UKBrazil Economic and Financial Dialogue, to structurally address gender inequalities in Brazil. The final reports (Women in Finance: I. Global and Brazilian Reviews; Women in Finance: II. The Charter and Roadmap for Implementation), represent the first attempt to address the chronic low participation of women in financial services in Brazil.
They include a thorough review of current gender inclusivity within financial services bodies in Brazil; an assessment of Brazilian companies’ interest in various strategies, such as the UK Women in Finance Charter, to anticipate volume and level of commitment; and the design of a new strategy and provision of detailed step-by-step support to deliver it.
The reports have been approved by the UK Embassy in Brazil, presented to the Brazilian government, and the strategy and respective guidelines that they contain to address gender inequality in financial services are meant to be implemented in 2019-2020. The British government has earmarked resources from the Prosperity Fund to ensure execution. It was the first time that such an exercise was conducted in Brazil.
The methodology took the form of three phases.
First, a gender review: this included a review of female participation in the finance sector globally, a review of correlations between financial returns and gender inclusion and diversity, and the gathering of data about the situation of women currently working in the finance sector in Brazil. The report also considered gender macro-trends by looking at past data to infer future trends on gender and sustainable finance. To deliver this first phase, the authors of the report developed a gender assessment framework. This included relevant indicators regarding:
- equality of employment and personal development opportunities;
- wage disparity;
- progression of women from junior roles to senior management roles;
- and representation of women in executive teams and board of directors.
The report’s authors also assessed roughly 70 other global studies on the subject, and surveyed some of the largest Brazilian institutional investors, asset owners and financial services firms. These included BNDES, IFC, Bradesco, Banco do Brasil and PREVI.
In the second phase, the report’s authors gathered evidence-based data on Brazilian companies’ interest in various strategies to address gender inequality, such as the UK Women in Finance Charter. This was carried out in two ways: by holding interviews with 16 stakeholders and market leaders (including the president of UBS Brazil Sylvia Coutinho and Ana Lucia Villela, Board member of Itaú); and secondly by submitting a survey to some of the largest Brazilian financial institutions. Both sources gave a clear understanding of how Brazilian financial players see gender inequality in their sector and the best strategies to address it.
In the third phase the report came up with new strategy, built around the Women in Finance Charter. The detailed recommendations and step-by-step guidelines covered:
- commitments and governance;
- an implementation roadmap;
- support, targets and monitoring;
- successful implementation and next steps.
How the findings have been applied and the wider benefits to investors
The design and implementation of the Brazilian Women in Finance Charter needed to factor in various representative elements of the local political, social and financial ecosystem. It made a number of recommendations:
- The Charter should be ‘owned’ by the newly formed Ministry of Economy, working in collaboration with a private body that will implement it. This partner will operate the Charter by enabling reporting, and act as a central point of disclosure.
- The Charter should be launched in early 2020, following a nine-month period of awarenessraising and capacity building. This phase will be used to convene a working group of leading Brazilian financial institutions to review the Charter draft and serve as the founding partners. It will engage with key non-financial stakeholders and create industry champions who can use their position to carry messages supportive of gender balance.
- The Charter should be voluntary to sign, with annual mandatory disclosure requirements.
- The Charter should have KPIs to measure its effectiveness in driving progress towards better gender balance. For instance, annual tracking of the growth signatories will provide an early indication of success, alongside a review of signatories’ submissions at the two-year mark on a number of internal KPIs.
If these recommendations are put into action, then it could pave the way for the gradual increase of women participation in financial services in Brazil. Better gender credentials will bring Brazilian companies in line with national and international responsible investors.