Previ reduces participation on boards of directors
As Previ, the largest pension fund in Brazil, moves to get out of controlling positions in companies to having a more diversified portfolio, it also gets fewer representatives on boards. In the recently ended season of shareholder meetings, the Banco do Brasil pension fund elected 72 representatives, among board directors and members of fiscal committees - three fewer than in 2019.
Even so, Previ continues intent on having a more engaged position when it deems necessary. "It is crucial to reinforce the governance base and be vocal in the points we consider important, such as the ESG [environmental, social and corporate governance] agenda," says the entity's new equity director, Denísio Liberato. In 2018, for example, Previ and Petros, the Petrobras pension fund, acted to change the board of food company BRF, in which they hold a relevant stake. Between 2015 and 2020, the number of directors elected by Previ varied between 101 and 51.
Companies accompanied by Previ's equity department represent R$82 billion in investments. The biggest stakes are in the pension fund's Plan 1, which includes defined-benefit accounts, and include a significant stake in Vale. "It is fundamental for us to think 20 or 30 years ahead," Mr. Liberato says. Based on the stakes, Previ has to sell them gradually. "We are always alert to price and market conditions. We have no short-term pressure to make sudden moves and will follow this pattern."
Mr. Liberato advocates diversity on boards. "The plurality of visions and positions improves the quality of decisions. The more diversity on boards and higher instances, the better the quality of the debate," he says. In 2015, 10% of Previ's nominations were women, after the process of selecting directors. This number rose to 25% in the 2020 season. Previ has no specific target, but the trend is to increase this participation over time. "Previ stimulates for more women and other profiles of diversity participate in the process of director selection," Mr. Liberato says.
Previ is signatory of the Principles for Responsible Investment initiative, which stimulates the insertion of ESG criteria in investment decisions. "By participating of committees and boards we may give our vision, participate in the debate and make the company have correct guiding in terms of ESG practice, and it is what we have been doing at Vale, for example," he says.
The pension fund has...
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