Argentina Perspective
Question 1. What are the legal implications (if any) of requesting impact in your financial
portfolio? Are there any limitations within the rules and regulations that govern the activities of
fund managers that would prevent a focus on and/or consideration of impact, when requested to
do so by an asset owner (or even if it is not requested, if it is in their long-term interest)?
Currently in Argentina there is no specific legal framework regulating the impact of investments,
or any legal provision that encourages or restricts management of impact. If an asset owner
wished, and therefore requested (or at least within his or her interests), to focus on or to consider
impact in his or her investments, no legal rule would be a deterrent for this purpose, but at the
same time no rule would be against an investment that does not consider impact.
The lack of regulation on impact is mainly because it is still a contemporary topic that is developing in Argentina. Society is increasingly aware of international recognition of environmental, social and corporate governance (ESG) factors in investments, in the investors’ responsibilities for their clients and beneficiaries in relation to these, and in the relationship between social and environmental performance and long-term investment performance.
There is also awareness of the growing number of countries that adopt relevant regulations on impact, mostly in developed economies. That Argentina has no regulation in this regard does not mean that the local administrators are not exposed to international regulations. For instance, in Argentina, there are investors who operate while being based in a country with these regulations.
It is expected that the important initiatives outlined in response to Question 4 would ease the dialogue among local fund administrators and their potential international investors, and keep Argentina up-to-speed with current international discussions, so that international private investments coming into the country contribute not only to develop our economy, but also to encourage better environmental and social performance.
Question 2. For businesses, do shareholders consider social and environmental concerns? Can the relevant provisions be interpreted to mean that the best interests of all stakeholders should be considered? According to applicable legislation, may a company focus only on financial returns, without considering the impacts of its decisions?
Currently it is possible for investors to focus only on financial returns without considering the impact of their investments. However, certain investors are differentiating themselves from others by offering investments that consider ESG factors. If we do find provisions that consider effects of social and environmental performance on shareholders’ best interests, it would be difficult to extend that to consider the best interests of all stakeholders.
Question 3. On what basis would you be able to evaluate or dispute a claim of impact? For example, if your fund manager says they have achieved social impact and you as an investor do not think they have, is this just a contractual dispute, or are there statutory frameworks you can rely on? If there are no applicable laws or regulations, do you see the Impact Management Project convention as providing a starting point for such statutory frameworks? Is there a way of managing expectations to prevent disputes? Are there any court precedents that could be useful, such as a lawsuit brought by an investor against fund managers, claiming that the fund’s investment policies or by-laws were not observed?
As a natural consequence of the above, if investors or stockholders specifically included impact concerns in their investments in Argentina, they would have to resort to ordinary contractual claims for any dispute related to impact claims. There is no precedent on investors’ claims regarding the impact of investments.
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