CLOSE

We permit the publication of our auditors’ report, provided the report is published in full only and is accompanied by the full financial statements to which our auditors’ report relates, and is only published on an access-controlled page on your website https://www.hermes-investment.com, to enable users to verify that an auditors’ report by independent accountants has been commissioned by the directors and issued. Such permission to publish is given by us without accepting or assuming any responsibility or liability to any third party users save where we have agreed terms with them in writing.

Our consent is given on condition that before any third party accesses our auditors’ report via the webpage they first document their agreement to the following terms of access to our report via a click-through webpage with an 'I accept' button. The terms to be included on your website are as follows:

I accept and agree for and on behalf of myself and the Trust I represent (each a "recipient") that:

  1. PricewaterhouseCoopers LLP (“PwC”) accepts no liability (including liability for negligence) to each recipient in relation to PwC’s report. The report is provided to each recipient for information purposes only. If a recipient relies on PwC’s report, it does so entirely at its own risk;
  2. No recipient will bring a claim against PwC which relates to the access to the report by a recipient;
  3. Neither PwC’s report, nor information obtained from it, may be made available to anyone else without PwC’s prior written consent, except where required by law or regulation; and
  4. PwC’s report was prepared with Hermes Property Unit Trust's interests in mind. It was not prepared with any recipient's interests in mind or for its use. PwC’s report is not a substitute for any enquiries that a recipient should make. The financial statements are as at 25 March 2016, and thus PwC’s auditors’ report is based on historical information. Any projection of such information or PwC’s opinion thereon to future periods is subject to the risk that changes may occur after the reports are issued and the description of controls may no longer accurately portray the system of internal control. For these reasons, such projection of information to future periods would be inappropriate.
  5. PwC will be entitled to the benefit of and to enforce these terms.
I accept
CLOSE

1. Select your country

  • United Kingdom
  • Austria
  • Australia
  • Belgium
  • Denmark
  • Finland
  • France
  • Germany
  • Iceland
  • Ireland
  • Italy
  • Luxembourg
  • Netherlands
  • Norway
  • Singapore
  • Spain
  • Sweden
  • Switzerland
  • USA
  • Other

2. Select your investor type

  • Financial Advisor
  • Discretionary Investment Manager
  • Wealth Manager
  • Family Office
  • Institutional Investor
  • Investment Consultant
  • Charity, Foundation & Endowment Investor
  • Retail Investor
  • Press
  • None of the above

3. Accept our terms and conditions

Proceed

The Hermes Investment Management website uses cookies to remember your preferences and help us improve the site.
By proceeding, you agree to cookies being placed on your computer.
Read our privacy and cookie policy.

Corporate governance in Brazil’s perfect storm

Home / Hermes EOS Blog / Corporate governance in Brazil’s perfect storm

A combination of a severe slowdown in its economy, a deterioration in public sector accounts, persistent high inflation and political uncertainty due to the ongoing investigation into the corruption scandal at its state-controlled oil company have created the perfect storm in Brazil.

In this environment, companies, with few exceptions, are cutting jobs, delaying or downsizing capital projects and going into survival mode. It would therefore be easy to assume that corporate governance is taking a back seat for the moment.

Corporate governance journey
Brazilian companies are not raising capital in the equity markets under those current circumstances. Instead, some controlling shareholders are taking advantage of the low valuations to buy out the minority shareholders and de-list their shares. One may therefore argue that investors and regulators have less bargaining power to press for better corporate governance at the moment.

The journey towards better corporate governance in Brazil, which reached its milestone when the Novo Mercado was set up by the stock exchange in 2000, also seems to have stalled. The Novo Mercado is the special listing segment of the BM&F Bovespa stock exchange for companies with high corporate governance standards. It has been a benchmark for other emerging markets, but now shows signs of wear.

Developments
In our view and that of the long-term investment community, however, companies with high corporate governance standards and strong fundamentals may be better equipped to deal with political uncertainty and volatility. Initiatives such as the corporate governance programme for state-controlled companies, which will award a seal of quality for companies that comply with a number of best practices in corporate governance, are encouraging. Equally positive is the work underway on the introduction of a Brazilian Stewardship Code, a set of principles aimed primarily at institutional investors who hold shares and thus voting rights in companies, in which we are heavily involved. The review of the Novo Mercado listing rules and the new Brazilian Corporate Governance Code, which will be enforced by the market regulator, add to this positive wind of change.

Opportunity
Reflecting on the timing of these improvements, we believe there is growing momentum in corporate governance and an economic downturn may well be an opportunity for a step change in Brazil. As such, we are continuing to engage with companies on issues such as board composition and effectiveness, compliance and culture change, as well as the quality of their reporting, to introduce best practices in corporate governance to the Brazilian market.

Share this post:
Jaime Gornsztejn Jaime Gornsztejn is responsible for corporate engagements in Latin America and Russia and focuses on the mining, oil and gas, technology and utilities sectors. Prior to joining Hermes EOS, he worked for the Brazilian Development Bank (BNDES), where he held executive positions in Brazil and the UK as banker in its Telecommunications Department, as portfolio manager in its Venture Capital Division and as a project finance manager at the Renewable Energy Department. More recently, as managing director of BNDES UK, he was responsible for setting up the bank's subsidiary in London. Jaime has also held executive positions as portfolio manager at Nortel Networks UK and as an adviser to private finance initiative projects at KPMG Corporate Finance UK. Jaime holds a BSc in Electronics Engineering from IME, the Military Institute of Engineering in Rio de Janeiro, an MSc in Telecommunications Engineering from PUC-Rio, the Catholic University of Rio de Janeiro and an MSc in Finance from Cass Business School in London. He is also chair of the board of the Brazilian Chamber of Commerce in Great Britain and serves on the Senior Advisory Council of the Brazil Institute at King’s College London.
Read all articles by Jaime Gornsztejn

Find posts by author

  • Bill Mackenzie
  • Bruce Duguid
  • Christine Chow
  • Colin Melvin – Global Head of Stewardship
  • Darren Brady
  • Dominic Burke
  • Emma Hunt
  • Freddie Woolfe
  • Hans-Christoph Hirt
  • Jaime Gornsztejn
  • Jennifer Walmsley
  • Jon Brager
  • Justine Lutterodt
  • Karin Ri
  • Leon Kamhi – Head of Responsibility at Hermes investment Management
  • Louise Dudley
  • Lui Goldie
  • Mais Hayek
  • Manuel Isaza
  • Mark Sherlock, CFA
  • Martina Macpherson
  • Matthew Doyle
  • Maxine Wille
  • Michael Viehs
  • Naheeda Rashid
  • Natacha Dimitrijevic
  • Nina Rehrbein
  • Nina Röhrbein
  • Rochelle Giugni
  • Roland Bosch
  • Sachi Suzuki
  • Saker Nusseibeh
  • Tatiana Bosteels
  • Tim Goodman
  • Victoria Barron

Find posts by category

  • Select category
  • governance
  • strategy