It was designed to prove Brazil’s commitment to protecting the Amazon, to highlight how much virgin rainforest remains and to underline the effectiveness of thousands of troops in combating illegal forest fires.

“What I wanted to show them is that we don’t have our arms crossed, we are trying to do the best that we can,” vice-president Hamilton Mourão says of the Amazon tour he hosted for 12 ambassadors last month. “They had freedom to ask whatever they wanted. It was a chance for them to see with their own eyes what they read [about] in the newspapers, books, so they can make a better analysis of what is really happening here in Brazil.”

But days before the plane carrying Mr Mourão and the diplomats took off, fresh data was published showing Amazon forest fires had more than doubled in October from the same month last year. A week after their trip, new figures showed deforestation had shot up 50 per cent in October. The government found itself on the back foot again.

The episode demonstrated one of the difficulties facing global investors as environmental, social and governance (ESG) considerations come to the fore: Brazil generates some of the world’s best and worst numbers, with much of the analysis dominated by an increasingly fierce confrontation over the Amazon.

Satellite monitoring shows a surge in illegal deforestation since hard-right president Jair Bolsonaro took power in 2018, but Brazil still has more preserved rainforest than any other nation. Its energy mix is one of the world’s cleanest, with more than 80 per cent of electricity generated by renewable energy. Its biodiversity exceeds that of any other country. Its Forest Code is one of the world’s most advanced pieces of environmental legislation. Its carbon reduction targets under the Paris Agreement on climate change are among the most ambitious of any large developing economy.

Special report: Brazil and its biomes

Yet all the world sees, government officials complain, are images of burning trees in the Amazon.

“We are a kind people,” insisted finance minister Paulo Guedes to an audience of US investors in October. “All this story about killing Indians and burning forests is an exaggeration. We have a year and a half [in power]. I don’t believe that the Amazon was burnt in a year and a half. If something is wrong, it was wrong for the last 30 years.”

The controversy over Brazil’s failure to protect the Amazon is indeeddecades-old, though it has intensified under Mr Bolsonaro because of his rhetoric against environmentalists and the cutbacks his government has made to enforcement. Jaws dropped when he made a speech in September to a remote session of the UN General Assembly claiming that indigenous people were mainly responsible for the forest fires and insisting that Brazil was the victim of a “brutal disinformation campaign”.

This has distracted attention from what financiers in Brazil say is an important new trend: a far greater awareness among local companies of the need to adhere to ESG criteria.

Cassio Gouveia, managing director for investment banking at corporate and investment bank Itaú BBA, says attitudes have changed “dramatically”. Fulfilling ESG criteria, he says, “is a must for any company considering raising equity or debt locally or internationally”.

Brazilian asset managers are also starting to focus on ESG. Fabio Alperowitch, portfolio manager at FAMA Investimentos, an asset management firm, started ethically investing in 1993, the year after Brazil hosted the UN’s Earth Summit in Rio de Janeiro — a groundbreaking event at which countries agreed to tackle climate change.

“For nearly 30 years, practically nothing happened in Brazil in ESG,” Mr Alperowitch says. “Its main topics, human rights and the environment, were seen as topics of the left and as financial markets tend to be conservative, they were repulsed by these topics.

“Now there is suddenly a big demand from investors to talk about ESG.”

But he warns that it may have shallow roots. “Many people are waking up to ESG but doing so without any depth, in a very superficial way. Others simply have a commercial interest in fulfilling a demand for ESG products . . . but are really just greenwashing.”

External investor pressure has been growing. More than two dozen global financial institutions managing over $3.7tn in assets demanded in June that the government curb deforestation, which had created “uncertainty about the conditions for investing in or providing financial services to Brazil”.

Mr Mourão’s tour for ambassadors was partly a response to that pressure. Other arms of the Brazilian government have also reacted. The central bank has issued guidance on green finance and the agriculture ministry has drawn up a “green investment roadmap” with $163bn of sustainable projects. “I’ve been very impressed with how the central bank has been in the forefront of trying to support sustainable finance in Brazil,” says Paloma Anós Casero, World Bank country director for Brazil.

“Since June we have seen a change of tone in the government,” says one ambassador in Brazil who went on the trip with Mr Mourão. “Criticisms by investors and the private sector have had an economic impact. They did not expect that. They ignore what NGOs say but when private business says there is a problem, they go quiet and listen.”

Listening to investor concerns is one thing; producing results in the war on illegal deforestation across the vast Amazon basin is another.

“We have not yet seen much progress on the [deforestation] numbers,” says Graham Stock, head of emerging markets sovereign research at BlueBay, one of the authors of the June investor initiative. “The fire season was pretty bad this year in Brazil. We need to see progress.”

Last week Inpe, Brazil’s space agency, reported that 11,088 sq km of forest were destroyed between August 2019 and July 2020 — the biggest loss since 2008, and a 9.5 per cent increase on the same period the previous year.

With the inauguration of Joe Biden as US president next year, the pressure will only increase. Mr Biden has promised a $20bn global fund to save the Amazon and warned of “economic consequences” if Brazil does not join — a ploy that drew a typically combative response from Mr Bolsonaro.

Special report: Brazil deforestation chart

One thing business people and investors agree on is that unless Amazon deforestation numbers go down and stay down, and Mr Bolsonaro takes a more pro-conservation line, Brazil risks scaring away more investment money.

“I’m impressed by the companies . . . by the way we are all thinking in Brazil in the private sector,” says Ilan Goldfajn, the former head of Brazil’s central bank. “But the main challenge has to do with having a macro framework and we cannot avoid having the government involved in that. The government has to embrace sustainability.”

Or, as German ambassador Heiko Thoms puts it when referring to the Amazon: “Only action will matter. We now need to see a clear long-term action plan with clearly defined objectives and numbers.” Additional reporting by Bryan Harris in Brasília

Letter in response to this article:

Deforestation policies are an important step / From Niki Mardas, Executive Director, Global Canopy, Oxford, Oxfordshire, UK