Meet the C-Suite
Daniela Varas, Manager of Corporate Affairs and Sustainability at Principal-Cuprum
“We are proud to have been the first AFP to adhere to the principles of responsible investment.”
This young professional had quite a challenge ahead of her when she assumed her position at the global investment firm in October 2020. One that she also associates with the high expectations in public affairs that society presents to companies, which must know how to respond in a proactive and agile way. In this, the third interview of the second Meet the C-Suite cycle, we embark on a journey to learn more about sustainability in finance.
BY SIMALCO BRANDLINK
The world of sustainability and strategic communications is what attracted Daniela Varas, a journalist from Finis Terrae University and current Corporate Affairs and Sustainability Manager at Principal, from the very beginning. Before assuming the management position in October 2020, Daniela had been advising the same institution for nearly ten years on relationship and communications issues.
– Have corporate and sustainability always been your areas of interest?
Exactly, that’s my world. In fact, sustainability is part of this position because I have two major responsibilities: to manage corporate issues and to be the mobilizer of sustainability in the company.
– Both aspects are closely related, because society is interested in the performance of large companies, so you always have to be thinking about communicating what you are doing.
Yes, I believe that companies have become more aware of several aspects in recent years, such as communications, crisis management and sustainability. In the case of Principal, this management has been in place for more than 7 years, precisely because it is aware of the difficulty of advancing and growing without being really linked outward and inward, and in accordance with everything you do.
– What has this time in management been like, dealing with a subject that is very rewarding for you?
Taking on this position was a challenge. Especially because I also assumed it in pandemic, which meant an additional challenge because, although it is a company that I already knew, the incorporation and the work during the first 6 months was totally virtual and the presence came later. I would say that leading it has been intense, as it has been for all of us during this last period.
– It has also been an intense period in terms of news, since Principal is the controller of AFP Cuprum.
Yes, the pension world in regulatory and constitutional terms has clearly been part of the challenges we have had as a company and which I have had to lead personally. From Principal, one of our focuses within sustainability is precisely to be a proactive public actor, and I believe that we are exercising this role at a crucial moment of decision making for the country.
– In fact, since the pandemic began, there has been talk of a VUCA environment, which stands for volatile, uncertain, complex and ambiguous. How was this addressed in the company’s sustainability actions?
In terms of sustainability, it was also a time of review, especially because we had to look for alternatives to continue carrying out the actions that we had set as a priority. For example, in the case of community engagement, we had to transform our initiatives to adapt to this more digital context, generating volunteer activities online.
VISION OF SUSTAINABILITY
According to the Burtland Commission, sustainability is defined as current development that satisfies present actions without affecting future actions or new generations and their future scenario. The firm takes elements of this definition by understanding it as being consistent and integral in its actions and relationships, investing responsibly to create a business that adds value and is sustainable in the long term.
– You have already incorporated this concept in your management
Yes, it is in the DNA of our work. Today you do not see sustainability as an element separate from what is done in other areas of Principal. Sustainability is part of the strategy and is part of decision making in general, including investments. In that sense, the pandemic also challenged us to review that and other issues. For example, in terms of linking with customers or knowing what the new needs of other stakeholders were.
I think the pandemic prompted us – and not only us, but all the companies – to review where to focus our attention, charting a new path. For example, in our case, we are moving towards a hybrid model with our clients, thinking of face-to-face and digital as two complementary elements that will be present from now on.
– In general, companies now see their relationship with the environment through the acronym ESG or ASG in Spanish, for the concepts of Environment, Social and Governance, how is this experienced at Principal?
When we started with our vision of working strongly on sustainability, we established our priority pillars. Among them was to be a propositional actor in terms of the changes that Chile requires in terms of savings and pensions, to advance in sustainable investment and to contribute to people’s financial security. This last point is something that today is closely linked to our mission.
Regarding sustainable investment, what we did was to start working on what we called -at the time- responsible investment. We define this as a strategy or practice where ESG factors are incorporated into investment processes and analysis. Sometimes people confuse it thinking that it is the so-called “green investments”, but it goes far beyond that, since it is the incorporation of these different elements within the investment decision making process.
– How does this vision differ from the so-called ‘ethical investments’?
In ethical or impact investing, as it is known to some, environmental or social investments are basically prioritized. In the case of incorporating ESG criteria, which is the path we are on, you include them in any type of investment strategy, forming part of a more holistic approach. By the same token, you don’t systematically rule out investments in a particular sector or company, but you supplement the process to ensure that it takes into account all the factors that affect risk and return, both financial and otherwise. All this in order to protect our clients’ savings and maximize their financial security.
– How did you advance in the area of responsible investment and what goals do you think you achieved?
It was a super important challenge, since when we started (in 2016) there were few companies that had advanced in this. But we wanted to challenge ourselves and we set out to sign up to be part of PRI, a global network that promotes responsible investment principles around the world. To do so, you must commit to promoting its six key principles. One of them, for example, is the incorporation of ESG criteria.
To get to that we did a whole internal review and we took some time, because in 2016 this was something very premature and really a challenge, because other companies didn’t have it.
– How did you go about implementing it?
What we did was to review all our processes and, only in 2019, Cuprum adhered to the principles of this organization. With this, and having incorporated the six points, we were the first AFP in the system to adhere to these principles, committing ourselves to incorporate ESG factors in investments. And we have been advancing in the same way with Principal.
So today you can see that, in our company, when the investment areas analyze any asset class, there is a comprehensive evaluation process that also incorporates environmental, social and governance components.
– What are your goals in terms of ESG criteria?
We have various goals, of course, and they depend on the stage we are at. It is important to note that this is a long process, because when companies incorporate ESG components into their investment analysis, it is not something that happens immediately, nor is it something that is finalized or completed. For example, there is a first stage where you incorporate ESG analysis into the assets and investments you are already making. But the next step, for example, is engagement, which is the path we are already on in the AFP, where you also become a promoter and make sure that the companies in which you invest incorporate these criteria into their own processes.
In this sense, one of our goals today is to consolidate our position in this area, not only by incorporating it into our own investment theme, but also by being an actor that promotes the analysis and incorporation of ESG factors in other companies.
ENGAGEMENT AND INNOVATION
Daniela emphasizes that the entire sustainability strategy is the result of a joint and dynamic work, which is revised and adapted more and more quickly.
– How do you approach, design and make decisions regarding ESG principles?
It is a work we have been doing on a daily basis, which is already incorporated in the decisions we make regarding investments. We have a responsible investment committee, which reviews how this issue is being incorporated and the progress made in the different areas. In addition, the Board of Directors is permanently informed and instances of review of the strategy are defined from time to time, as in the case of the sustainability strategy.
This review period is important to highlight, because the environment is so dynamic that it used to be thought that the sustainability strategy could be reviewed every five years. Now that space has been shrinking, and we review our strategy after three years, because in the end all long-term plans must be revalidated. This way, we verify that the proposed objectives continue to be met and that the needs of the different stakeholders are taken into account.
– What is the challenge for Principal today in terms of sustainability?
Today much of our attention is focused on leading actions regarding a future change in the pension system, an area in which we have been a proactive player: for more than fifteen years we have been generating and promoting improvements to the pension system and that is and will continue to be an important focus within our sustainability strategy.
But this does not mean that we are neglecting other pillars such as transparency, sustainable investments, transformational talent and everything related to the incorporation of omnichannel or hybrid work. The scenario today is different and therefore what we deliver to our clients has to incorporate these spaces, just as we must innovate and move forward so that our clients can have the best possible financial security, incorporating, of course, all the lessons learned from the last time and everything that the pandemic left us.
– What recent achievement would you like to highlight?
One of the things we are proud of is that we were the first AFP to adhere to the principles of responsible investment and we think it is very good that other institutions have also adopted them. In addition, today we are working with other actors in the financial market on engagement and I think it is very important for this to be known: that from the AFP we have been promoters of the incorporation of ESG factors in the financial market.
But there are also other achievements that I believe are important, such as the generation of seminars on pension issues, which have been relevant for decision making. We have also been recognized for our work with the internal team, where we have sought to generate inclusive environments based on respect. Today, I would say that more women than men work in the company, and that is also something that makes us stand out from the rest. On the other hand, we have 40-hour workdays, and this is something that we have been gradually incorporating and today it is already a fact for the whole company.
What has distinguished us as a company and should make us proud as a Principal is that we have been innovators in many areas that today are demanded by all companies. We have been able to go one step ahead and I believe that this will continue to be what distinguishes us in the future.