A research study by Brazilian Business Council for Sustainable Development (CEBDS) shows that companies with operations in Brazil reported in 2018 opportunities representing positive financial impacts of US$ 123.7 billion, with an investment needed to materialize them of US$ 17.5 billion
MADRID, Spain (December 10, 2019) – Climate change is today one of the main vectors of business risks and opportunities. Most large companies operating in Brazil already understand this and are working to address the problem. This is the main conclusion of the research study ‘How companies have been contributing to the Paris Agreement’, which will be released today by the Brazilian Business Council for Sustainable Development (CEBDS) at the United Nations Climate Change Conference (COP25), in Madrid, Spain.
The research study, supported by WWF-Brazil and Carbon Disclosure Program (CDP) Latin America, is based on the responses of 61 Brazilian and multinational companies with operations in the country, which represent about 90% of the capital traded on the stock exchange in Brazil. In its second edition, the research showed that the climate impacts understanding by financial point of view has contributed to companies realizing the associated opportunities. Although estimated in 2018, they reported opportunities representing positive financial impacts of US$ 123.7 billion, with an investment needed to materialize them of US$ 17.5 billion. While the risks had negative impacts of US$ 45 billion.
“There is a clear business justification for investing in solutions that contribute to the decarbonisation of the economy,” said Marina Grossi, President of CEBDS. Many companies have realized this and are directing investments in research and development of low carbon solutions, with the total amount bound for this purpose in 2018 was US$ 7.7 billion.
“The research study also shows companies’ growing understanding that the climate crisis threatens the financial stability of their businesses,” noted Alexandre Prado, Director of Green Economy of WWF-Brazil. According to the World Economic Forum (WEF) Global Risk Report 2019, climate change appears directly or indirectly associated with three of the five most likely global risks and four of the five most negative impacting global risks. In this case, global risk is defined as an uncertain event or condition that, if it occurs, could negatively impact various industries and countries over the next 10 years.
“Since efficient management necessarily depends on measurement capability, by establishing a financial metric for climate risks, companies are able to take strategic steps toward the new economy and gain competitiveness”, said Lauro Marins, Executive Director of CDP Latin America. The research study shows that 32% of Brazilian companies adopt science-based targets and 33% do internal carbon pricing. They are voluntarily pricing their emissions as a way of managing climate-related risks and opportunities. Another 21% intend to do internal pricing in the next two years.
“The results of the companies revealed in this study show that facing climate change represents more opportunities than risks for Brazil. In summary, it is financially more beneficial to make investments to materialize these opportunities than to manage the negative impacts of climate change”, explained Marina Grossi. This learning from companies can help in the construction of suitable policies aiming at greater resilience of the Brazilian economy in face of the impacts generated by climate change. “This topic could be incorporated as one of the critical variables in the reform proposals under discussion in the country. Thus, economic, tax and environmental policies and others would no longer compete with each other but could converge to strengthen Brazil’s competitiveness in this new economy”, said the Director of Green Economy of WWF-Brazil.
The integration of climate issues into policymaking can even provide solutions to address the current budget deficit through innovative financial instruments such as green bonds and incentive debentures. The research study highlights that there is a growing appetite for investors for these financial products. The global market of the impact investment, which considers Environmental, Social and Governance (ESG) criteria, already has a turnover of US$ 502 billion, considering the assets of 1,300 impact investors from around the world. Only in Latin America, US$ 521 billion was raised via green bonds in the world and $ 7 billion.
MAIN RESULTS OF THE RESEARCH STUDY
The Brazilian Business Council for Sustainable Development (CEBDS) is a non-profit civil association that promotes sustainable development through articulation with governments and civil society, as well as disseminating the most current concepts and practices on the subject. Founded in 1997, it brings together about 60 of the largest business groups in the country, accounting for over 1 million direct jobs. It represents in Brazil the World Business Council for Sustainable Development (WBCSD) network, which has nearly 60 national and regional councils in 36 countries and 22 industrial sectors, as well as 200 business groups operating on all continents. More information: https://cebds.org/
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