Novel Partnerships: ES the ESG Capital of the World
In August 2023, The Blended Capital Group started a conversation with Governor Renato Casagrande of the Brazilian State of Espirito Santo and his Cabinet team.
ES is a vibrant, economically diverse State of 4.5 million people on the country’s Atlantic Coast, less than an hour’s flight north from both Sao Paolo and Rio de Janeiro. The Governor is the CEO of the country’s 27-State strong climate green alliance launched at the United Nations CoP 27 climate conference convened in Egypt in November 2022.
Oil and gas rich, the state also has strong agricultural, mineral, forestry, steel, cellulose and maritime industries and is the first Brazilian State to have its own sovereign wealth fund based on offshore fossil fuel revenues. The ES SWF, FUNSES, started collecting revenue in 2019 and, unusually, has the goal of funding state sustainable infrastructure as part of its constitution.
Deeply impressed by the State’s commitment to and action towards real sustainable development, Clements-Hunt, the former United Nations official who coined ESG in May 2004, challenged the State to become the “ES the ESG Capital of the World.” The deadline challenge set by Clements-Hunt was June 2032, the 40th anniversary of the game-changing and historic UN Rio Earth Summit.
In October 2024, after 12 trips to Vitoria within a year, Blended Capital signed a Memorandum of Understanding (MoU) with the Government of ES, to explore how this dynamic State could become an example of a Sustainable State Investment ModelTM (SSIMTM). The fundamental idea was to see if ES, as an SSIM, could export the model to other Brazilian States, to countries across Latin America, and then onto other emerging economies as the 2032 deadline gets closer. ES could lead the way in terms of showing how Brazil had delivered on one of the most important multi-lateral agreements of the 20th Century.
To activate the MoU, the State and Blended Capital are working to mobilize local businesses and multinational companies operating in the State to back the vision – “ES the ESG Capital of the World”, now known as Project 2032. The SSIMTM will be an impact focused, data driven, cross sectoral initiative to lock into a well governed state long-term sustainable investment from the world’s largest asset owners, notably the 5500 institutional investors backing the UN Principles for Responsible Investment (UNPRI).
A unique ES business organization, Espirito Santo em Acao (ESiA), has played a pivotal role over two decades working with ES business to emphasise the critical nature of effective public-private governance to build resilient business and attract investment. See Box 1.
The ES-TBCG project will be anchored by the goals of the globally recognized Future-Fit Foundation benchmark and will then build out to forge a state model of national and international standing. Evidence-based data, deployment of Ai/ML, and the use of the latest monitoring, reporting and sustainability verification approaches, will be employed to speed the monetization of both social and environmental uplift across ES.
The intention of the proposal is for ES to set a global example of the monetization of sustainability wins, included but not limited to decarbonization, through the creative use of a new family of ESG aligned financial instruments, including tradable carbon securities, extending, in time, to a diverse range of novel natural capital financial instruments.
Governance: a key to ES Sustainable Success
Over 20 years, Espirito Santo in Action played a pivotal role in re-establishing robust governance in the State and deploying the strengths of a vibrant business community to boost economic, socio-political, including educational, and increasingly positive sustainability impacts. ESiA projects a clear international profile which asserts the critical importance of healthy and well managed business and industry for the State’s success and that of its diverse communities. The ESiA model demonstrates that a forward-thinking business community can provide the critical foundation stones of sustainable development over decades, going well beyond any political term. ESiA grew out of an Espirito Santo crisis and public mismanagement in the early 00’s with a focus on:
- strong, ethical, transparent and accountable governance
- practical, effective initiatives to forge strong public stewardship (Guidelines 2022) as well as the development of leaders, through continual career learning for a sustainable future through training with a focus on effective models of education
- a long-term view encapsulated by ES 2035 and the States 500-year development plan recognizing ES’s foundation in 1535-6.
This platform, amongst other investor focused platforms focused below, will be key targets for developing the ES sustainable development investment thesis and attracting finance to the ES 500 Years State Development plan.
How can TBCG help you build on this success?
A key foundation stone of TBCG’s services are based on the team’s experience of building sustainability models, fully aligned with ESG disciplines, which are investable, scalable and can be replicated globally. TBCG works closely with both public and private finance institutions to drive sustainable investment at the scale which delivers on the vision of different partnerships.