The new rules for disclosing information on sustainable work and governance actions by publicly-held companies with shares traded on the Stock Exchange, the B3, came into force.
According to the Securities and Exchange Commission (CVM) resolution, “A” category companies with securities admitted to trading on the stock exchange by an organized market management entity; and holder of shares or certificates of deposit of shares in circulation, must include in the reference form information related to environmental, social and governance (ESG) issues, meeting the requirements of transparency, disclosure and access to the data provided.
Agribusiness companies, the main sector of the Brazilian economy, can be heavily impacted by change, whether from the governance aspect, the social aspect, related to the impact of their activities on the community, or the environmental issues and the implications for climate change due to greenhouse gases. emissions that contribute to the formation of the greenhouse effect, causing global warming.
According to Clarissa Nepomuceno Caetano Soares, a lawyer at the Nepomuceno Soares Office and Master in Environmental Taxation, Economic and Social Relations, the new rules of the reference form help to establish standards for measuring and evaluating the socio-environmental impact of economic activities: “The requirements established by CVM make it possible for companies that say they comply with environmental, social and governance actions to prove the means by which these actions were established and how this process of controlling socio-environmental actions works”.
According to the lawyer, agribusiness companies can use the need to adapt to CVM standards to implement corporate sustainability actions that also meet international regulations: “This moment of adaptation to ESG standards at the national level also underlies the transformation of Brazilian companies as required by international regulations. As Brazil is the largest exporter of beef in the world and one of the largest producers of grains, it is recommended that Brazilian companies ‘prepare the ground’ and be prepared to deal with even more severe future rules, such as those practiced in Europe”, complete.
Adjustments reflect climate implications caused by Agribusiness
Deforestation in the Cerrado increased by 25% in 2022. This is what the survey by the National Institute for Space Research (Inpe) released last month points out. Deforestation in the Amazon was reduced by 11% last year. The destruction of part of the biome is due to livestock. According to Clarissa Nepomuceno, “this is one of the examples of adjustments to be made, since the rules laid down in the European continent prohibit livestock activity in deforested areas”.
At COP27, held at the end of last year, in Egypt, the emission of methane gas into the atmosphere was also discussed. The gas is emitted through enteric fermentation (cattle gases), rice cultivation and manure handling. According to the lawyer, the impact of agribusiness on the increase in the greenhouse effect is 40%.
According to Clarissa Nepomuceno, the international trend points towards toughening the rules for marketing agribusiness products that do not meet the requirements of the UN’s 2030 Agenda, including suppliers and partners. “It is advisable that companies in the field, even if not contemplated by the new CVM rules, adopt solutions that comply with the rules, in a qualitative and quantitative way, including the reduction of emissions or methane compensation per production unit, as a way of risk of breaking commercial relations with a strategic sector responsible for contributing a large part of the Brazilian GDP”, he explains.
According to the specialist, the adjustments made by the CVM should not be viewed negatively by companies, as they encourage the quality of corporate sustainability actions in Brazilian companies. “The incorporation of ESG into the core of the business has the potential to strengthen the brand, improve the corporate reputation and also create a competitive advantage in the market and enable the identification of business opportunities for organizations, generating value for the entire chain, society, and for shareholders and investors, strengthening the so-called stakeholders”, he completes.
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