On October 30th of 2022, Luiz Inácio Lula da Silva, or “Lula” da Silva of the worker’s party, was reelected as president of Brazil after his first presidency, which lasted from 2003 until 2011. Unlike his predecessor, Jair Bolsonaro, Lula is known for his liberal policies focused on preserving the environment and promoting social equality. Many have therefore suspected some changes in Brazil’s position of dealing with those issues. Meeting these expectations, Lula participated in the 2022 United Nations Climate Change Conference (COP 27) shortly after he was elected. At the meeting, he delivered a speech emphasizing the importance of preserving the Amazon Forest while declaring that Brazil will play a more significant role in tackling global climate change.

Apart from the comeback of Lula & Brazil, COP 27 alone has also succeeded in drawing out several meaningful agreements to qualify climate change. Unlike past COP meetings, which were only limited to formal agreements on setting climate goals, COP 27 was influential in the term that it reached a consensus on the actual financial support, which resulted in the launching of the new global shielding fund and the reassurance on the execution of past agreements that included rich country’s financial aid of 100 billion U.S.D on the developing countries to support them in achieving an eco-friendly development.

These events of Lula’s reelection and COP 27 reflect the current worldwide concern about the environment, and this trend of eco-friendliness is no exception in the business field. Although investment in eco-friendly businesses has slightly shrunk this year due to the Russian-Ukrainian war and the global economic recession, it is evident that with the increasing demands from society and customers, more businesses are heading toward a goal of developing sustainable and environmentally favorable business models. Microsoft has started the Carbon Negative project and has worked with local farms to find a way to absorb more carbon dioxide into the soil. Amazon has declared that they will convert 10,000 delivery vehicles to electric vehicles by 2022, and even ExxonMobil, one of the classic fossil-fuel companies, has decided to invest 15 billion U.S.D in lower-carbon technology. Different sovereign wealth funds and Asset management companies are also contributing to the development of this trend in the Business sector. Bank of America and Citigroup launched an ESG fund, and groups like Norway Government Pension Fund Global (GPFG) and Blackrock are even considering only investing in groups that could ensure environmental sustainability, giving further benefits to ‘Green’ companies.

One prediction that we could make based on this phenomenon amongst businesses is the worldwide increase in cooperation between the companies that pursue environmental values. The collaboration of well-known corporations and innovative social ventures is not an unprecedented event and, instead, has been noticeably increasing since the public acknowledged the concept of a sustainable and eco-friendly business model. Parley’s collaboration with American Express and Adidas could be one example. Parley is a company that upcycles marine debris, and through its collaboration with Amex and Adidas, creating a credit card and running shoes made out of marine debris, Parley got more people’s attention on ocean pollution. At the same time, Amex Card and Adidas succeeded in leaving positive impressions on customers. Jenga is another company you might have heard of that collaborated with the social venture. In 2017, Jenga released a new addition to the Jenga series named “Jenga Ocean.” This product resulted from the collaboration with another plastic upcycling company called Bureo, and the entire plastic pieces included in Jenga Ocean were made out of abandoned fishing nets.

As we can see from Lula and COP 27, sustainability and eco-friendliness will become more and more central to the public’s focus as this trend continues, and more businesses will look for a way to appeal to the customers by associating themselves positively with the overarching theme of the environment. As a way, collaborations between companies will be further stimulated, and these kinds of interactions could be a possible direction that leads to a goal that all companies should aim for: a path towards productive cooperation between different businesses and the co-existence of the pursuit of profit with the environment.

Lula Da Silva, the former president of Brazil who had served 8 years from 2003 to 2011, was recently re-elected as the next president of Brazil following the end of Jair Bolsonaro’s regime in January. Lula was an environmental candidate who vowed to save the world’s largest rainforest, the Amazon. His promises are focused on the rainforest in that it contains a quarter of the world’s terrestrial biodiversity, stores billions of tons of carbon as well as releases billions of tons of water annually. Climate activists, world leaders, and environmental investors cheered the victory of Lula’s election due to the environmentally friendly promises he has made. He pledged to enact policies to inhibit illegal activities such as logging, mining, and land grabbing so that he can effectively stop the ongoing deforestation and climate change.

Given Lula’s win and Brazil’s new policies, there are several expected financial benefits.

Many investors have viewed the election as an opportunity to lift bans on Brazilian sovereign bonds, which were banned by multiple asset management companies in 2019 due to the last regime’s ineffective environmental policies and the proliferation of illegal activities in the rainforest.

After the confirmation of Lula’s victory, the management immediately lifted bans, expecting new environmental policies. For instance, the two giant managements, Nordea Asset Management and Robeco with 237 billion euros and 200 billion euros in assets respectively, withdrew their holdings in the bonds. Therefore, Brazil will be able to sell its bonds to a large portion of people and bring more cash into the country for the sake of the country's financial development and stability.

With Lula’s transition team, the new government of Brazil is expected to show their willingness to protect the environment and the Amazon during the upcoming COP 27 in order to be comfortable with the international community whose main concern is climate change. With the considerable relation with the international community, the government will discuss resuming financial aid for protecting the Amazon as it was suspended after the last regime’s ineffective environmental policies, which Norway is already signaling its willingness to discuss.

Politics

When climate scientists raise concerns over the “tipping point” of climate change that could force higher temperatures and more frequent natural disasters, the destruction of the Amazon rainforest is one of their chief worries scientists hold.

As Brazil controls the largest portion of the Amazon region, the government of Brazil can decide the fate of the rate of climate change. With that said, on October 30th, 2022, Brazillians voted in a runoff election for their president. The election was won by Luiz ‘Lula’ Ignacio Da Silva, with the narrowest margins. And the result has some crucial ramifications as to how Brazil–once with its notorious green reputation set by the previous incumbent party–can refurbish its reputation in global climate politics.

Lula, defeating the right-wing presidential candidate Jair Bolsonaro who presided over the destruction of Amazon, brought optimism to the global conversation of preserving Amazon. Lula, with his “Brazil is back” speech at the COP27 in Egypt, promised to act as a leader who confronts climate change. With Lula in the leadership of Brazil, various new policies to “ramp up environmental law enforcement and create green jobs” were announced.

Following his promises, Lula–at his speech in Egypt–also reminded the leaders of the developed nations of a 2009 pledge to aid $100 billion every year, saying, “I don’t know how many representatives of rich countries are here; I want to say that my return here is also to collect on what was promised.”

Now, it is perhaps too early to tell whether Lula’s renewed policies and various meetings with the UN and governments would bring tangible change in the climate. Besides, cooperation with developed nations to retrieve the pledged $100 billion remains a challenge. Regardless, it is most definite that with the new president elected for Brazil, there is a new spark of hope for the climate.