The day Heaven wept
“I owe my wife numerous unforgettable moments.“, says Gerold Permoser, Chief
Investment Officer (CIO) and Chief Sustainable Investment Officer (CSIO) of
Erste Asset Management.
Many of them were planned by her, and most of them we can even tell our grandchildren. The one moment
I am about to tell you now was not only unplanned, but very nearly defied description.
On 8 July 2014 we visited the favela Vidigal, nestled into the mountainside of Morro Dois Irmãos in order to
enjoy a magical moment with the best view of the beaches of Rio: the semi-finale Brazil against Germany. And
magical it was – but not the way we had expected. Prior to the game a thunderstorm came down on us and the
city and created the most beautiful light situation that I had ever seen in Rio. And a few minutes on we all
experienced the “surprise” the football gods held for us – and knew why Heaven had wept.
The location where we experienced this moment was breathtaking in its own way. Vidigal is a large slum
outside Rio and, up to its pacification in 2011, was under the control of a drug gang. Drug dealing, violence,
the absence of enforceable statutory rights and claims, and overall insecurity dominated the daily routine of
the inhabitants. To me it was impressive to gain an insight into this parallel universe of hundreds of thousands
of people for the first time.
Of course you wonder why so many people willingly submit themselves to such a form of dictatorship, because
favelas are no gated living spaces. Nobody forces people to live there. The reason is simple: property. In the
favelas people find houses to live in – and much-needed shelter.
The thing that has stuck with me is the impression that in our analyses of property from a sustainable perspective
we focus too much on the environmental aspect (“E”) of ESG. Property and housing always also come with a
social (“S”) and a governance “G”) component, as echoed by terms like social housing, gentrification, corruption
in the construction industry, black labour, and many more. All of this is tied to the place you live at and
ultimately to property.
The 8 July will remain unforgettable for Brazilians and for me. Along with the memory of the great view and the
incredible game, I have taken home the realisation that housing cannot be devised independently of an ESG
perspective. I therefore hope that as sustainable investors we can soon contribute to a situation where more
capital is funnelled into sustainable property.