For growth and increased market share, Brazil needs to be green
President of UBS Brazil believes environmental assets and agribusiness are the best bet for Brazil to have prominence in the globalized world
Sylvia Coutinho, the president of the Swiss bank UBS in Brazil, believes that environmental assets and agribusiness comprise some of Brazil’s biggest competitive advantages in the globalized world and should be considered in unison. A graduate of the Luiz de Queiroz College of Agriculture at the University of São Paulo, she believes that Brazil can lead in both agendas and attract foreign capital. But Brazil should not do to agriculture what China did with industry: becoming an industrial power but now seeing the life expectancy of its population falling because of the environmental destruction caused on the path to prosperity. “Brazil needs to create a brand and be recognized as green. We have been handed an inheritance, but we must decide what to do with it. Shall we simply consume it or increase and improve what we have received?”, she contests.
Escolhas – What would be a vision of Brazil’s future, taking into account the environmental agenda?
Sylvia Coutinho – When we consider a globalized world, we observe that corporations and countries both need to think about competitive advantages. Those of Brazil start with having the largest area of land in the world with the most precious environmental assets. The country has 15 percent of the world’s native forests and 12 percent of freshwater; an incredible biodiversity that includes the world’s greatest diversity of trees, which we need to preserve. It is a vast territory that can boast up to three harvests per year in some regions. Brazil has become an agribusiness superpower, concentrating 7% of global production, which is expected to reach 10% in the coming years. We have the potential to attain 30% of the world’s agricultural production and without having to clear forests. There are about 90 million hectares of degraded pastures that could be intensified and given over to planting grain and forests for paper and cellulose, without destroying the environment. We will only grow and gain market share for agribusiness if we are green, because the international consumer will want to buy Brazilian products. The environmental agenda and agribusiness go together.
Escolhas – Is there also potential for other areas of the Brazilian economy?
Coutinho – Brazil also has a large population, which has enormous market potential for consumer services. The fact that this population is very homogeneous, with a single language, for example, facilitates this. There is a huge lag in the area of infrastructure, which also offers potential related to the issue of sustainability, such as mobility issues, for example. We are endeavoring to attract foreign investment and our green potential attracts capital that is interested in this aspect.
Escolhas – Returning to agribusiness, is it possible to create mechanisms that will enable the growth of the sector through more efficient and sustainable use of the soil?
Coutinho – Agribusiness is the fastest growing sector in Brazil and the only area that has increased in terms of productivity. Without much protection, it has managed to grow and can go even further. Mechanisms should be geared towards increased productivity, as well as reclaiming degraded areas and planting forests, as provided for in our NDC [Brazil’s commitment to reduce emissions at the Climate Convention].
Escolhas – Is it possible and feasible to create market mechanisms on a large scale to finance an agenda for environmental protection?
Coutinho – The question is how to create the right incentives and this matter requires further studies. We are trying to understand the socioeconomic issues in order to monetize and attract foreign capital that will drive growth in a sustainable way, anticipating the zero-deforestation agenda to the fullest.
Escolhas – What is the role of the financial system in the adoption of incentives for the implementation of sustainability standards by the productive sectors?
Escolhas – Do you believe in the viability of creating revenue through actions that promote the sustainable use of natural resources?
Coutinho – In the future, when we understand more about environmental services, we should ask ourselves how we ever allowed such environmental destruction, since production depends on it. Today, there is a new generation that wants to see investments having a positive impact, and there are consumers who are willing to pay more for these products. The same will happen with agricultural products.
Escolhas – In this world with new investments, what role will Brazil play? Besides agribusiness, will there be room to compete with China for heavy industry? Shall we compete with India in the IT market? Are we going to create a Silicon Valley here? What niches will there be to secure jobs for young people in the future?
Coutinho – First, we need to think about not doing to Brazilian agriculture what China has done with industry. In that country, life expectancy has decreased due to the destruction of the environment caused by industrialization. We can be the breadbasket of the world, ensuring global food security. There is existing technology for that. Embrapa has studies showing the feasibility, for example, of crop-livestock-forest integration. Moreover, when we can price carbon globally, our industry can be competitive again, Brazilian steel can compete with China’s, which uses energy based on fossil fuels. In the field of technology, we also have potential, Brazilians are quite creative in more specialized technological development and we could compete with India, but we need to solve problems such as labor costs. In Brazil, a person is hired for R$ 1, but R$ 2 is spent. In other countries, this cost is a maximum of 30% more. We need a long-term vision.
Escolhas – Incorporating carbon pricing into the economy could be achieved through taxation of greenhouse gas emissions. Is there scope for this in Brazil?
Coutinho – Yes, a carbon tax can be levied to encourage some sectors and to discourage those that are polluting, that is, things can be done without raising the tax burden, which cannot be increased. Brazil needs to spend better and stop thinking only in the short term. If agribusiness is the differential, we need to invest in the rail network and inland waterways.
Escolhas – Is the decarbonization of the economy happening globally?
Coutinho – In some countries more than in others, even driven by the private sector, due to consumer pressure. This process should accelerate significantly because climate problems are also accelerating. It is an agenda that is here to stay and will be compelled by the new generation, since the current one is not doing enough. The issue is how to create the financial mechanisms to make it viable.
Escolhas – And in Brazil, what’s lacking the most?
Coutinho – Brazil needs to create a brand and be recognized as green. We have been handed an inheritance, but we must decide what to do with it. Shall we simply consume it all or increase and improve what we have received? I am an environmentalist at heart, a bank executive and agronomist, trying to have a pragmatic vision. I believe that Brazil needs to take the lead in the environmental agenda with actions and results. It would be a global effort.