Brazilian Entities Fare Best for Corporate Governance

Brazilian companies are in a class of their own when it comes to governance, while Mexican entities are falling behind. As corporate standards get tougher, Brazilian power generator and distributor CPFL distinguishes itself with a firm focus on sustainability, according to the third annual LatinFinance ranking of the corporate governance of the 50 largest public LatAm non-bank corporations, conducted in association with Management & Excellence (M&E). Brazil is helped by being the only LatAm country with a corporate sustainability index, the ISE, launched in 2005 and used as a reference for social responsibility related investments. Companies are required to follow a series of checkpoints in sustainability to be included in the ISE. “The significant growth in the quantity of IPOs in the Sao Paulo Stock Exchange, with a large portion of those following the New Market, enforces tight standards in governance and transparency,” says M&E managing director William Cox. For the second year running, CPFL tops the corporate governance charts. “CPFL found that including sustainability in its management practices was key for its success in the long term and it took the leading edge on that,” says Cox. “They’ve demonstrated good performance in three areas, with simple and efficient projects, with a good communication level of their reports through their website. That makes it easier to understand what is going on inside the company,” Cox adds. In general, Brazil is doing better than the rest of the region. “Laws, stock exchange guidelines and public awareness of sustainability are at a different levels in Brazil than, for example, in Mexico,” says Cox.