EN 
ES
PTClimate Risks in Brazil: where do companies stand?
How can we build businesses that are more resilient to climate change? This was the central question of the September episode of WayCarbon Talks, featuring Keyvan Macedo, Head of Global Business at WayCarbon, and Daniel Carvalho, Climate Change Coordinator. The discussion was moderated by Lauro Marins, Head of Consulting and Digital Solutions.
Check out the key insights from the conversation below.
Maturity of brazilian companies
The experts estimate that most Brazilian companies are in the early stages of this journey, taking their first steps toward identifying climate risks. “My impression is that many leaders are waiting to see what will happen. This approach ultimately fails, because waiting for a climate event to materialize can lead to unimaginable losses,” says Daniel Carvalho.
At the other extreme, giants in sectors such as finance, energy, and fashion retail have been conducting greenhouse gas inventories and assessing risks associated with climate change for years. A clear sign of maturity comes from companies like Vale and Lojas Renner, which reported in accordance with IFRS S2 (Disclosure Requirements for Climate-related Financial Information) during the voluntary phase.
These leaders are already analyzing climate scenarios for physical and transition risks, measuring potential financial losses and impacts on the value chain: “Renner, for example, monitors the resilience of the cotton supply chain, presenting an integrated approach to risk management that also involves incorporating the issue into corporate governance and risk committees,” says Daniel.
Which sectors are most impacted?
Sectors whose revenue is directly dependent on weather conditions, such as the electricity sector and agribusiness, are the most affected. “If a chronic decline in precipitation is projected across various watersheds, regions with significant hydroelectric generation will likely produce energy below their potential, which impacts not only the company but the entire country. When there is less rainfall, a loss of productivity in agricultural crops, an increase in irrigation costs, and even restrictions on irrigation are also expected.”
However, recent extreme events, such as the floods in Rio Grande do Sul and the wildfires in the Southeast and Midwest — which occurred during El Niño periods — prove that no sector is immune.
How do companies deal with risks in practice?
A common mistake in the market is to rely exclusively on insurance coverage to mitigate losses. Keyvan Macedo warns that the cost of insurance policies tends to rise if the company fails to demonstrate its ability to minimize the recurrence of such events, which could even lead to a denial of coverage.
The challenge for executives is to look beyond their own walls and consider the broader strategic landscape. “In the case of a port facility, it’s essential to understand the infrastructure and the people directly affected by it, and to map out socio-environmental vulnerabilities and dependencies,” the executive explains.
In this scenario, the Brazilian Adaptation Strategy serves as a valuable guide. The plan encourages the establishment of partnerships with government entities to build climate resilience and provides examples of actions, such as:
· Supply Chain Resilience: Diversify suppliers to avoid disruptions caused by weather events and require adaptation plans from critical partners
· Operational Efficiency and Water Reuse: Implement technologies for wastewater reuse and rainwater harvesting to reduce dependence on public water sources during periods of extreme drought.
· Structural Adaptation of Facilities: Applying resilient engineering concepts (e.g., green roofs for thermal comfort, reinforced stormwater drainage, and efficient climate control).
Repeal did not halt requirements
Lauro Marins warns that even with the CVM’s repeal of the mandatory application of IFRS S1 and S2 standards in May — considered a setback for the agenda — climate risk assessment will continue to be required by the capital markets. “It’s important to emphasize that even if a company chooses not to report, the financial sector will continue to conduct this assessment. We speak from experience, because we work with the insurance and financial sectors, and they haven’t taken their foot off the gas. Demand has been growing in these segments,” he says.
The episode’s final message is that prevention is essential for long-term business continuity in a scenario where changes are occurring even sooner than climate models predicted.
Watch the full episode on YouTube (audio in Portugues, enable subtitles).
Is your company prepared for the impacts and opportunities of climate transition? Schedule a conversation with our team.
