The Brazilian business sector submitted a formal document to the federal government on Thursday (22) in defense of the creation of a carbon market as a necessary tool for reducing greenhouse gas emissions and complying with the Paris Agreement. It contains six guiding principles for the creation of financial mechanisms for carbon trading. (listed at the end of this text), The document was presented by business leaders from different sectors at a breakfast that brought together government authorities from Brazil and Argentina, during the Latin America and Caribbean Climate Week, a UN initiative, which takes place this week in Salvador (BA).
Furthermore, the document was sent by the CEBDS (Brazilian Business Council for Sustainable Development) – main spokesperson for the Brazilian business sector for the sustainability agenda –, for the ministers of Economy (Paulo Guedes), Agriculture (Tereza Cristina), Environment (Ricardo Salles) and Energy (Bento Albuquerque).
“Brazil stands out in the generation of renewable energy and has a strategic role in carbon sequestration in the economy. And we are committed to the energy transition”, said André Araújo, CEO of Shell. “There are no good businesses without sustainability and CEBDS plays a fundamental role in the nation's sustainability agenda”, stated Rogério Zampronha, CEO of Vestas América do Sul. The two CEOs make up the CEBDS Leaders Council, which held the event with the support of WRI Brasil and the initiative TCFD (Task Force on Climate-related Financial Disclosures), led by Michael Bloomberg
The TCFD initiative aims to help companies, investors, financiers, and insurers adequately quantify and assess climate risks and opportunities and their potential financial impacts on their organizations. It is important because it brings greater transparency to climate-related issues, enabling capital allocation in the transition to a low-carbon economy. "It is crucial that companies assess the impacts of climate change on their activities in the short, medium, and long term. They need to keep an eye on this data. In addition to encouraging companies in this regard, we are aligned with CEBDS in the pursuit of a standard carbon price," said Denise Pavarina, TCFD vice chair for Latin America.
Debate on the carbon market in companies
In addition to the TCFD, throughout the week, meetings between CEOs, CFOs, and executives of large companies discussed other financial mechanisms and helped build a private sector position on the necessary points for making the carbon transaction, necessary to drive the reduction of greenhouse gas (GHG) emissions."It is extremely valuable to create space for the private sector to discuss with other sectors how to establish a carbon market with robust and well-structured rules, capable of promoting effective actions without putting environmental integrity at risk," said Carolina Genin, director of the Climate Program at WRI Brasil.
Present at the event, Salvador Mayor Antônio Magalhães Neto expressed confidence in the potential of Brazilian companies. "They are preparing to build this new world with a low-carbon economy. The public and private sectors can work together to strengthen initiatives that prepare companies for the Paris Agreement," stated the mayor of Salvador.
For Marina Grossi, president of CEBDS, companies and organizations want to show that they are part of the solution to climate change. "Their efforts can go beyond simple risk management and become business opportunities for Brazil," she stated, noting that in this context, the federal government's role is to structure, regulate, and establish the necessary governance for the carbon market in Brazil, in addition to defining the official position on the issue that will be presented to negotiations at COP25.
Argentina's Environment Minister, Sergio Bergman, emphasized that the solution requires a paradigm shift. "Not only in the economy, but also in governance. We're used to the private and public sectors moving along vertical, parallel lines, but vertical lines only meet at infinity. We need to act now," Bergman warned.
Brazilian leadership in climate negotiations
The European Union and countries like Chile, Colombia, Mexico, and Canada have already enacted their own regulations. Brazil has comparative advantages—with its clean energy and forestry base—and a leading role in climate negotiations, thus enjoying a favorable environment for advancing the agenda. The country has the potential to deliver real emissions reductions at a cost competitive with most developed countries.
Also participating in the event were executives from Itaú, Unibanco, Neoenergia, Natura, Votorantim Cimentos, Siemens and Schneider Electric; as well as the Secretary of International Relations of the Ministry of the Environment, Roberto Castelo Branco; and the Champions of the Climate Conferences of Poland (COP-24, 2018), Thomasz Chruszczow, and Chile (COP-25), Gonzalo Muñoz.
Guiding principles for the regulation of Article 6 of the Paris Agreement:
Maximize national and international private investments to comply with the Brazilian NDC.
Establish clear and objective rules that do not create unnecessary transaction costs for expanding the emission reduction offer.
Promote acceptance and demand for reduction credits generated by the country in all country markets that are aligned with the ambition of the Paris Agreement goals.
Develop a transparent, simple and efficient accounting structure that avoids double counting and increases the valuation of emissions to be traded in purchasing markets.
Establish non-discriminatory national rules on all Article 6 market instruments.
Guarantee the participation of the productive sector in the development of actions in all market mechanisms.
Allow the transition and legal security of the current reductions that Brazil has already made during the Kyoto Protocol period.
Meet the TCFD measurement and disclosure recommendations – Task Force on Climate-related Financial Disclosure, of the Financial Stability Board – FSB.
