Brazilian investor group uses CA100+ benchmark methodology

Hope is that companies can be directly compared on performance against sector peers.

A Brazilian climate initiative has assessed five local firms against Climate Action 100+’s net zero company benchmark to facilitate comparison with their international sector peers. 

The work was carried out by the Investors for Climate (IPC) initiative, which works with investors to reduce the carbon footprint of their portfolios and increase their resilience.

IPC was set up in 2019 by Latin American sustainable finance consultancy NINT, which was acquired by ERM in March, and is supported by Brazilian nonprofit the Institute for Climate and Society (iCS).

As part of its strategic activities, IPC conducts periodic engagement cycles on the climate agenda with Brazilian companies. 

Tatiana Assali and Marina Briant of ERM NINT’s ESG programmes division told Responsible Investor that the aim of this cycle was to expand the reach of CA100+ and to engage the highest-emitting Brazilian firms that are not covered by the global initiative. 

Suzano, Vale, Petrobras and JBS are the only Brazilian corporates on the CA100+ engagement list.

The five firms selected for engagement by IPC are Eletrobras, Petrobras, Vale, Gerdau and PetroRio (PRIO). 

To get this cohort, IPC came up with a list of the “most emitting Brazilian firms in terms of GHG emissions” and then filtered them on whether they had climate targets and whether IPC had already engaged the firm.  

This left a shortlist of 15 firms that IPC thought would be relevant for advancing the climate agenda in Brazil. Members then voted for five to be engaged.  

Vale and Petrobras are already being engaged and assessed by CA100+. Assali and Briant said they were still included as they are “extremely relevant to Brazil’s economy decarbonisation process, accounting for a large share of total companies’ emissions, so promoting additional and local dialogues about their climate practices is relevant to drive improvements“. 

The pair added: “Collective engagement from multiple initiatives only strengthens our main objective: fostering companies’ improvement in their climate practices.” 

Comparison with CA100+

Once the firms were selected, IPC assessed them based on publicly available data against version 2.0 of CA100+’s benchmark.

This was adopted “for strictly analytical purposes – with no institutional involvement of the Climate Action 100+ initiative in the process, its founding investor networks, nor of the research partners involved in the disclosure framework or the alignment assessments”, according to IPC. 

The results – which have been published as a dashboard – show that none of the companies “fully meets the criteria for ambition to achieve zero emissions by 2050, engagement with climate policies and just transition”, IPC said.

Oil and gas company PRIO only meets one criterion – on historical GHG emissions reductions out of the 52 evaluated. 

At the other end of the scale, steel producer Gerdau meets all criteria regarding reduction targets in the medium term and state-controlled energy giant Petrobras is aligned with all TCFD reporting criteria.  

The results of CA100+’s second benchmark assessment, published in October, showed progress on the proportion of companies committed to net zero across Scope 1 and 2 emissions, the proportion of firms disclosing medium-term targets and the proportion with board committee oversight of climate risk. 

However, ambition was failing in other areas – for example, no company received a fully aligned assessment on its Just Transition commitment and planning. 

Assali and Briant said there was 99 percent alignment between IPC’s results for Vale and Petrobras, and those from CA100+. 

“IPC adopted the CA100+ methodology but some differences in results can be expected due to various factors. It is possible, for example, that we considered references in Portuguese that may not have been accessed by CA100+, or references that were published after the launch of the CA100+ analysis itself,” they said.

“It is also important to note that we carried out our analysis independently, so some interpretations may differ.”

So far, meetings have occurred with Vale, Petrobas and Gerdau, while one is scheduled to with Electrobras in December. However, Assali and Briant said PetroRio had not responded to IPC’s requests for a meeting to discuss the findings of the assessment and other relevant issues. 

Next steps

Looking ahead, however, the pair are optimistic on the potential to assess other Brazilian companies using the CA100+ methodology as part of future engagements. 

“We have had some feedback from investors about this engagement cycle, and we notice that they are satisfied with the methodological approach,” they said. “CA100+ is very complete and robust, and applying it offered important results. We would be happy to keep using it in future engagement cycles.” 

At the time of publication, CA100+ told RI it had not been contacted by any other regional or national engagement initiatives apart from IPC and Canada’s CEC to use its benchmark.