The Brazilian Institute of Corporate Governance (IBGC), in partnership with Chapter Zero Brazil, conducted the survey “Board Scorecard: The Role of Boards in Climate Action and a Net Zero Strategy”. Among other important diagnoses, 58.6% of respondents reported that organizations did not set goals to reduce carbon emissions.
The aim of the study was to understand how the councils, both administrative and advisory, deal with this issue. Brazilian chapter of Climate Management Initiative (CGI), Chapter Zero Brazil was launched by the IBGC in 2021, specifically with the aim of catalysing and contributing to the climate agenda approach in business.
The search was based on Board scorecardChapter Zero in the UK. There are 20 questions, the goal of which is to determine the degree of response of business councils to the challenges of climate change and the transition to a net-zero strategy, which aims to eliminate greenhouse gas emissions by the middle of the century.
The questionnaire was organized into four thematic areas: ‘Leadership’, ‘Ownership’, ‘Strategy’ and ‘Measurement’. The board of directors, advisors and tax advisors, as well as (C-level) executives, were heard. The research sample included 104 respondents. Among those interviewed were board members (41.3%), advisory members (19.2%), finance members (8.7%) and executive directors (30.8%).
command block – The goal was to ensure that the Board is informed, prepared, and willing to lead changes and take responsibility for creating the net zero strategy. It was clear that there was still a lot to be done in this regard. The results showed that addressing the topic at least four times a year is not a practice adopted by councils/organisations, as indicated by 52.9% of the respondents. There are also shortcomings in communicating and disseminating the importance of achieving the organisation’s set climate goal, in the view of 49% of respondents.
Also in the leadership cluster, 50.9% of respondents indicated that advisory committees do not take climate change into account in their discussions. In addition, it should be noted that for 40.4% of the respondents, there is no clarity about the responsibility of the board of directors and the executive team for decisions to reduce greenhouse gas emissions, while 19.2% indicated a neutral position on this issue.
property block Here, the purpose was to assess how responsible the board is for engagement, governance and driving change to achieve climate goals. The results indicated the need for greater mobilization on the part of the councils with regard to the issue, as 65.4% of the respondents reported that these goals were not incorporated into incentives and executive wages in a significant and measurable manner.
In addition, 43.3% of respondents reported that the climate issue is not included in the assessment of risks and opportunities and in the basic business strategy. Added to this is the fact that 14.4% of the respondents were neutral on the subject. The responses also showed that responsibility for data and information on climate changes and goals does not lie with all departments and segments of the organization, and is sometimes limited to the field of sustainability or a specific region, according to 48.1% of the respondents. Also in this regard, 17.3% were neutral.
Also in the Property Block, attention is drawn to the fact that companies do not guarantee the availability of the skills and resources necessary to achieve their climate ambition, according to the point of view of 45.2% of the respondents, against 33.6% who indicated that the organizations have guaranteed the availability of these skills and resources.
Finally, for 50% of respondents, there is no comprehensive action plan that includes the entire workforce in vision on the topic and needed changes in organizations. Added to this was the fact that 17.3% were neutral on the subject.
Strategy Block Aims to develop and evaluate existing strategy, plans and resources to reduce carbon emissions and enhance adaptation to climate change, as well as to integrate them into the overall business strategy and purpose of the organization. Again, the results presented are conclusive and show that the issue has not been prioritized by the boards.
When asked if the board analyzed the business strategy considering at least two climate change scenarios, 58.6% of the respondents indicated “no”, when they disagreed with the proposal. In the same vein, 58.6% reported that the council has not set a net zero target for greenhouse gas emissions, nor is it in line with the commitment to reach the target of limiting the increase in global temperature to 1.5 degrees.
In strategy, 57.7% of respondents indicated that ambition on this topic does not translate into short-term goals or a five-year action plan. Councils also do not consider the physical effects of climate change, according to 53.8% of respondents.
The block ends with 60.6% of respondents declaring that the board they work for does not consider the climate issue in all investment decisions, nor does it use a quantitative measurement tool, such as carbon pricing. In this regard, 16.3% were neutral.
measurement block – Strive to understand and assess the organization’s carbon footprint, reduce footprint, and review and communicate progress and impacts. The trend in terms of results was similar for other blocks, showing that both companies and boards of directors were not committed to the transition to a net zero strategy, nor to the impacts arising from climate change.
For 30.7% of respondents, the company they work for assesses the effects of a net-zero shift on all of its operations and investment decisions, according to Scopes 1 and 2 defined by the Greenhouse Gas Protocol.
Regarding the Greenhouse Gas Protocol (a package of standards, guidelines, tools and training for companies and governments to measure and manage emissions responsible for global warming, created through a partnership between the World Resources Institute and the World Business Council for Sustainability), the topic seems to be little known by companies and their boards. : 59.6% of respondents indicated that the organization they work for does not contain its emissions in Scope 3 of the GHG Protocol and does not have a defined approach that covers all products and services.
It was also noted that short and long-term measures in line with plans to reduce greenhouse gas emissions and their regular review are not monitored by the Council, in the opinion of 57.7% of the respondents. Disclosing climate ambition, action plans and progress in these actions based on scientific methods and measures is not a business practice, in the opinion of 55.8% of respondents. In this issue, 14.4% were neutral.
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