Publication presents strategies to guide companies in Brazil on how to manage and report climate risks, according to recommendations from the international organization TCFD
The financial sector’s perspective on how companies incorporate climate risks into their business directly impacts their decision-making process on where and how to invest. At the last Conference of the Parties (COPs) there was a major movement towards increasing transparency on the risks and impacts of climate change. In order to help companies prepare to measure and report consequences in relation to a 1.5 or 2ºC increase in the planet’s temperature, the Brazilian Business Council for Sustainable Development (CEBDS) prepared the study Financial impacts of climate risk: an essential business strategy. In e-book format, the material is now available for free download on the organization's website.
To diagnose how companies are currently measuring and reporting climate risk in their businesses in Brazil, CEBDS analyzed 52 companies, divided into 4 sectors: Agro (agriculture, food and forestry products), Financial, Energy, Materials and Construction and Others. The research confirmed the low adherence of companies in the practice of disclosing climate risks in their financial reports, especially according to the criteria recommended by the Task Force on Climate-related Financial Disclosures (TCFD).
Composed of 32 members from various organizations, selected by the Financial Stability Board (FSB), including large banks, insurance companies, asset managers, pension funds, consultancies and risk rating agencies, the TCFD has the climate risk measurement methodology considered the most complete and consistent by financial institutions, and which is already used by more than 500 companies worldwide.
“The risks associated with climate change include physical changes in the climate, changes in regulation, market dynamics and other factors, which will eventually translate into financial costs. That is why it is important to identify the company’s impacts on the climate, but also to understand the specific risks each business sector is exposed to, and the costs associated with them,” explains Marina Grossi.
To meet the transparency requirements of the financial sector, the TCFD recommends that the organization describe its governance in relation to the management of risks and opportunities related to climate change, expose the real and potential impacts of these risks and opportunities, disclose how it identifies, assesses and manages the risks and present the metrics and targets used for measurement.
In addition to diagnosing how companies are reporting climate risks in Brazil, the CEBDS study provides a map of the main challenges related to implementing what is proposed by the TCFD recommendations and presents the ten main actions necessary for the business sector in Brazil to advance in implementing the TCFD.
Click here to access the full study.
About CEBDS
Founded in 1997 by a group of leading Brazilian businessmen, CEBDS (Brazilian Business Council for Sustainable Development) is a non-profit civil association that promotes sustainable development through articulation with governments and civil society, in addition to disseminating the most current concepts and practices on the subject. The Council brings together around 60 of the largest business groups in the country, with revenue equivalent to 40% of GDP, and responsible for more than 1 million direct jobs. The Council is the representative in Brazil of the World Business Council for Sustainable Development (WBCSD) network.
The Council operates through six Thematic Chambers (forums) that bring together representatives of companies associated with CEBDS to build and develop projects related to Sustainability themes: Water, Biodiversity, Climate, Social Impact and Finance.
