Credit: Palácio do Planalto from Brasilia, Brasil, CC BY 2.0, via Wikimedia Commons
At the upcoming COP30 summit in Belém, Brazil, the hosting country is set to challenge the traditional view of sustainable investing. Brazil will propose that Diversity, Equity, and Inclusion (DEI) be recognized as a key principle for sustainable investments. If adopted, it would result in a totally different way of thinking about sustainability.
ESGs: Corporate Guidance for a Better Tomorrow
Sustainable investments generally refer to financial strategies that incorporate Environmental, Social, and Governance (ESG) criteria. Currently, 29 countries maintain some degree of mandatory ESG disclosure regulation. These factors guide corporate decisions to ensure investments have a positive impact (or at least not a negative one) on people and the planet, while remaining financially sound. Currently, ESG investments are surging. By 2026, ESG-driven institutional assets are expected to reach $33.9 trillion globally, reflecting the growing demand for ethical investment strategies.
Historically, the “E” in ESG has overshadowed the “S.” 89% of investors in 2022 reported incorporating ESG considerations into their strategies, with most of their investments going to the environmental aspect. Climate concerns in particular received a lot of support, with many companies focusing on cutting emissions, going green, and reducing waste. Social metrics, like workforce diversity or community engagement, have remained secondary priorities. This is especially true for issues that have to do with DEI. The discrepancy can partially be explained by social factors being harder to quantify and varying by region and culture, and that companies tend not to fully integrate all the ESG factors in their reports. However, that does not mean that they can be disregarded.
Credit: Globalesgawards0, CC BY-SA 4.0, via Wikimedia Commons
Bettering the Planet and Our Communities
Cristina Reis, Brazil’s Deputy Secretary for Sustainable Economic Development, has underscored the importance of embedding social diversity into sustainability frameworks and highlighted Brazil’s already existing policies for gender equality and anti-discrimination criteria. This aligns with Brazil’s broader commitment to ethical and inclusive climate action, as expressed in the official Letter from the Brazilian Presidency. The incoming presidency will launch a “Global Ethical Stocktake,” bringing together thinkers, scientists, artists, Indigenous leaders, and others to shape new commitments. Echoing Rabelais’s warning that “science without conscience is but the ruin of the soul,” Brazil emphasizes that sustainability must be both evidence-based and morally grounded.
The goal is to ensure that companies benefiting from ESG labels also reflect inclusive practices, not just eco-conscious ones. If adopted, this would push investors to consider the social fabric of the businesses they support.
However there are challenges, especially with countries like the US and Argentina rolling back DEI policies. Creating universal standards for social diversity is complicated in one country, so trying to develop one standard to apply globally across countries with widely different cultures and histories is a formidable task. Trying to do this may also provoke negative backlash from groups who oppose diversity efforts, and some investors are wary of possibly inciting reduced returns.
Don’t Just Hope for the Future. Actively Prevent Harm Today
Since the S in ESG encompasses how a company handles its responsibility to the community and its impact on people and society, Brazil’s proposal seems very on track. Incorporation of DEI into policy not only means further inclusion and movement towards more diverse companies, but also understanding how it can aid its community and avoid causing harm.
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