October 17, 2019 |
In January, a dam suddenly collapsed in Brazil, killing 248 people as a wave of iron ore waste swept the countryside. The disaster came as a surprise to many investors in Vale, the mining company that operated the dam. But not all. “We knew that something could happen,” says Carolina Rocha, COO of Perfin, an investment management company in São Paulo.
Another of Vale’s dams had given way in 2015, a sign that something was not right. In response, Perfin cut the weight of Vale in its fund to 3% (the fund traditionally assigns a weight of 10% to 20% to favorite shares), containing its losses when Vale’s shares tumbled 25% in the two days after the second disaster.
A small but growing number of
Investors develop elaborate tools to identify the most socially responsible companies and avoid the ones that aren’t