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Board scorecard: the performance of the boards facing the climate impacts and the net zero strategy

10 October 2022

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Board scorecard: the performance of the boards facing the climate impacts and the net zero strategy São Paulo | 2022 pesquisa Board of directors Chairperson Gabriela Baumgart Deputy Board Chairs Leonardo Pereira Leonardo Wengrover Board members Alberto Messano Cristina Lucia Duarte Pinho Deborah Patricia Wright Eduardo Shakir Carone João Laudo de Camargo Sergio Ephim Mindlin Executive Board Pedro Melo Adriane de Almeida Márcia Aguiar Reginaldo Ricioli Valeria Café Founded on November 27, 1995, the Brazilian Institute of Corporate Governance (IBGC), a civil organization, is the Brazilian reference and one among the main reference organizations for corporate governance worldwide. Its purpose is to generate and disseminate knowledge on the best corporate governance practices and influence the most diverse agents in its adoption, contributing to the sustainable development of organizations and, consequently, to a better society. Credits This Survey was developed by Camila Cristina da Silva and Luiz Fernando da Costa Dalla Martha. Production Writing: Camila Cristina da Silva; Spelling and grammar review: Juliana Caldas; Proofreading: Camila Cristina da Silva; Translator: Marcos dos Santos; Supervision of virtual identity: Diogo Siqueira; Graphic design, layout and cover: Kato Editorial; Cover image: Shutterstock. I59b Instituto Brasileiro de Governança Corporativa – IBGC Board scorecard: the performance of the boards facing the climate impacts and the net zero strategy / Instituto Brasileiro de Governança Corporativa – IBGC ; translated by Marcos dos Santos. - São Paulo, SP : Instituto Brasileiro de Governança Corporativa - IBGC, 2022. 46 p. ; 18cm x 25,5cm. – (IBGC Pesquisa) Includes bibliography and index. ISBN: 978-65-86366-81-5 1. Corporate Governance. 2. Board Scorecard. 3. Climate impacts. I. Santos, Marcos dos. II. Title. III. Series. CDD 658.4 2022-3362 CDU 658.114 Prepared by Odilio Hilario Moreira Junior – CRB-8/9949 Index for systematic catalog: 1. Governança Corporativa 658.4 2. Governança Corporativa 658.114 International Cataloging Data in Publication (CIP) according ISBD Summary Introduction . . . . . . . . . . . . . . . . . . . . . 6 1. Main results . . . . . . . . . . . . . . . . . . . . 7 2.  Profile of the respondents . . . . . 10 3. Analysis of the answers considering the position occupied by the respondents . . . . . . . . 13 3.1. Block I - Leadership. . . . . . . . . . . . . . . . . 14 3.2. Block II - Ownership. . . . . . . . . . . . . . . . 16 3.3. Block III - Strategy. . . . . . . . . . . . . . . . . . 18 3.4. Block IV - Measurement. . . . . . . . . . . . 20 4. Analysis of responses considering the organizations' billing range . . . . . . . . . . . . . . . . . . 22 4.1. Block I – Leadership. . . . . . . . . . . . . . . . 23 4.2. Block II – Ownership. . . . . . . . . . . . . . . . 25 4.3. Block III – Strategy. . . . . . . . . . . . . . . . . . 27 4.4. Block IV – Mesuarement. . . . . . . . . . . . 30 5. Analysis of responses considering the corporate type of organizations . . . . . . . . . . . . . . 32 5.1. Block I – Leadership. . . . . . . . . . . . . . . . 33 5.2. Block II – Ownership. . . . . . . . . . . . . . . . 36 5.3. Block III – Strategy. . . . . . . . . . . . . . . . . . 39 5.4 Block IV – Measurement. . . . . . . . . . . . 42 6. Methodology . . . . . . . . . . . . . . . . . 45 References . . . . . . . . . . . . . . . . . . . . . . 46 6 Instituto Brasileiro de Governança Corporativa The Board Scorecard Survey: the performance of boards facing the climate impacts and the net zero strategy emerged from the need to understand how boards, both of directors and advisory, have dealt with the issue of climate changes and the commitment to transition to the net zero strategy. The Survey questionnaire is based on the Board Scorecard1 , a tool of Chapter Zero in the UK, composed of twenty questions that aim to indicate how well boards of directors are responding to the challenges of climate change. After making some adaptations to the questions and expanding the focus to the performance of the advisory boards, in addition to the boards of directors, the Survey was structured in four thematic areas: leadership, ownership, strategy and measurement. Board members, advisory board members, fiscal board members and executive management (c-level) were invited to reflect on the organization in which they work and, thus, assess how well prepared their organizations' boards are regarding the issue of climate change and transition to net zero strategy. It should be noted that the present study was developed by the IBGC in partnership with Chapter Zero Brazil. Chapter Zero Brazil – the IBGC Climate Forum is the Brazilian chapter of the Climate Governance Initiative (CGI), Chapter Zero Brasil was launched by IBGC in 2021 with the aim of mobilizing boards of directors around the world to address climate change in their businesses. Enjoy your reading! 1. To learn more, access: https://chapterzero.org.uk/board-scorecard-introduction/. Introduction Board scorecard: the performance of the boards facing the climate impacts and the net zero strategy 7 The survey sample included the participation of 104 respondents (n = 104) who work in organizations with a board of directors or advisory board. Among the respondents are board of director members (41.3%); advisory board members (19.2%); fiscal council members (8.7%) and executive management (30.8%). The results highlighted as follow, consolidate the answers "agree" and "strongly agree" as agreement and "disagree" and "strongly disagree" as disagreement. The answer "neither agree nor disagree (neutral)" is presented as a position of neutrality, which may indicates unawareness of the topic, non-applicability to the organization or even noncompliance with the practice stated by the organization. When analyzing the Leadership thematic block, whose objective is to ensure that the board is informed, prepared and ready to drive changes and take responsibility for establishing a net zero strategy, it became clear that there is still a lot to advance in terms of the board's agenda, because, only 35.6% of the respondents indicated that it is a practice to put the theme at least four times a year on the board's agenda, having clear objectives for the discussion, in addition to robust data and information. There are also flaws in communication and disclosure of the importance of meeting the climate goal established for the organization in the view of 49% of respondents. Still in the Leadership block, only 28.9% of the respondents indicated that the advisory committees consider climate change in their discussions. It is also worth noting the fact that for 40.4% of the respondents there is no clarity about the responsibility of the board and the senior management team for decisions to reduce greenhouse gas emissions, whereas 19.2% of the respondents 1. Main results 8 Instituto Brasileiro de Governança Corporativa indicated a position of neutrality in relation to this issue. The Ownership thematic block aims to ensure that the board is accountable for engagement, governance and driving change to achieve established climate goals. The results of this block indicate the need for greater mobilization on the part of boards on the subject, as 65.4% of respondents indicated that climate-related goals are not incorporated into incentives and executive remuneration in a significant and measurable way. In addition, 43.3% of the respondents stated that the climate issue is not incorporated in the assessment of risks and opportunities and in the core business strategy, added to the fact that 14.4% of the respondents showed a neutral position in relation to this question. The answers also showed that responsibility for data and information on climate changes and targets is not shared by all areas of the organization, sometimes limited to the area of sustainability or a specific area, according to 48.1% of respondents. Still in this issue 17.3% of the respondents showed a neutral position in relation to the topic. Still in the Ownership block, attention is drawn to the fact that organizations do not guarantee that the necessary skills and resources are available to fulfill their climate ambition in the view of 45.2% of respondents against 33.6% of those who indicated that organizations have ensured the availability of these skills and resources. Finally, for 50% of the respondents, there is no comprehensive work plan that involves the entire workforce in the vision on the topic and the necessary changes in organizations. Added to this is the fact that 17.3% of the respondents showed a neutral stance in relation to the topic. The Strategy block aims to develop and assess strategy, plans and resources in place to reduce carbon emissions and adapt to climate changes, as well as incorporate them into the organization's overall business strategy and purpose. Again, the results presented are critical and show that the topic has not been prioritized by the boards. When asked if the board analyzed the business strategy considering at least two climate changes scenarios, 58.6% of the respondents indicated that they did not, when they disagreed with the proposition. In the same line, 58.6% of the respondents indicated that the board did not establish a net zero target for the emission of greenhouse gases, nor is it aligned with the commitment to reach the goal of limiting the increase in global temperature to 1.5ºC. Board scorecard: the performance of the boards facing the climate impacts and the net zero strategy 9 Still in the Strategy block, 57.7% of respondents pointed out that ambition in relation to climate changes does not translate into short-term goals or a five-year action plan. Physical impacts resulting from climate change are also not considered by the boards in the view of 53.8% of respondents. The block ends with 60.6% of respondents declaring that the board in which they work does not consider the climate issue in all investment decisions, nor does it make use of a quantification tool, such as carbon pricing. In this question, 16.3% of the respondents showed a neutral stance. The fourth and final thematic block Measurement seeks to understand and assess the organization's carbon emissions, reducing the carbon footprint, reviewing and communicating progress and impacts. The tendency of this block in terms of results is similar to the others, showing that both companies and boards have not been dedicated to the commitment to transition to the net zero strategy nor to the climate impacts resulting from climate changes. For 30.7% of respondents, the company they work for assesses the impacts of the net zero transition in all its operations and investment decisions in accordance with scopes 1 and 2 established by the GHG Protocol. However, 51.9% of respondents disagreed with this statement. Still in relation to the GHG Protocol, the topic seems to be unknown to companies and their boards, as 59.6% of the respondents indicated that the organization in which they work does not have its emissions framed in scope 3 of the GHG Protocol and does not have a specific approach that covers all products and services. Short- and long-term measures aligned with greenhouse gas emission reduction plans and the regular review of these plans are not monitored by the board in the view of 57.7% of respondents. Disclosure of climate ambition, action plans and the progress of these actions based on scientific methods and metrics is not a business practice in the view of 55.8% of respondents. In this question, 14.4% of the respondents showed a neutral position in relation to the theme. 10 Instituto Brasileiro de Governança Corporativa 3.8% Chairperson Board members (41.3%), advisory board members (19.2%), fiscal council members (8.7%) and executive management (30.8%) participated in this study. Graph 1 Position that the respondent occupies in the organization in which he works n = 104 2. Profile of the respondents 5.8% CEO 37.5% Board member 25.0% Executive management 16.3% Advisory board member 2.9% Advisory board chair 8.7% Fiscal council member Board scorecard: the performance of the boards facing the climate impacts and the net zero strategy 11 Graph 2 Type of board existing in the organization where the respondent works n = 104 Graph 3 Range of annual billing of the organization in which the respondent works 0 5 10 15 20 25 30 35 40 n = 104 71.2% Yes, a Board of Directors 28.8% Yes, an Advisory Board Over R$ 1 Billion Over 300 million up to 1Billion Over 100 million up to 300 million From 20 million to a 100 million Up to 20 millions 39.4% 25.0% 11.5% 12.5% 11.5% 12 Instituto Brasileiro de Governança Corporativa Graph 4 Corporate type of the organization in which the respondent operates n = 104 Table 1 Sector of operation of the organization in which the respondent works Sector of activity % of respondents Financial (banks, insurance companies, investment funds, etc.) 16.3% Industry 14.4% Health or hospital 6.7% Food and beverages 5.8% Infrastructure 5.8% Logistics and/or distribution 5.8% Consumption or retail 4.8% Agriculture and livestock 4.8% Auditing and/or consulting 3.8% Services in general 2.9% Technology 2.9% Third sector 2.9% Pharmaceutical 2.9% Education 2.9% Construction 2.9% Advocacy 1.9% Petroleum, oil, gas or biofuel 1.9% Business 1.0% Others 9.6% Total 100.0% n = 104 Association Co-Operative Foundation Publicly traded companies Privately held company Limited Liability Company (LLC) Others 4,8% 5,8% 1,9% 28,8% 33,7% 23,1% 1,9% Board scorecard: the performance of the boards facing the climate impacts and the net zero strategy 13 This section presents the answers stratified according to the position occupied by the respondents. The Advisory Council position includes respondents who have indicated that they are Chair of the Advisory Board or Advisory Board Member. The position of board member directors covers respondents who indicated that they are board chair or board member. The executive management/c-level position includes respondents who declared to hold the position of CEO/managing director or executive management /c-level in the organizations in which they work. The position of the respondents is presented in alphabetical order, not indicating or having any relation with hierarchy or degree of importance. For each of the twenty statements presented, the respondents selected a single answer among the following options: agree; strongly agree; disagree; strongly disagree; and neither agree nor disagree (neutral). The results are presented by thematic blocks: leadership, ownership, strategy, and measurement. Each block contains five questions and one specific objective. 3. Analysis of the answers considering the position occupied by the respondents 14 Instituto Brasileiro de Governança Corporativa 3.1. Block I – Leadership Objective: Ensure the board is informed, prepared and ready to drive changes and be responsible for establishing a net zero strategy. Table 2 All board members understand the implications of climate change and there are board members who have the most latent climate competence. Position Agree Strongly agree Disagree Strongly disagree Neither agree nor disagree (neutral) Advisory board member 35.0% 5.0% 25.0% 0.0% 35.0% Board member 39.5% 11.6% 14.0% 9.3% 25.6% Fiscal council member 44.4% 11.1% 11.1% 0.0% 33.3% Executive management/c-level 37.5% 6.3% 25.0% 6.3% 25.0% Grand total 38.5% 8.7% 19.2% 5.8% 27.9% n = 104 Table 3 The topic is included in the board's agenda at least four times a year, with clear objectives for the discussion, in addition to robust data and information to inform it. Position Agree Strongly agree Disagree Strongly disagree Neither agree nor disagree (neutral) Advisory board member 25.0% 5.0% 50.0% 10.0% 10.0% Board member 20.9% 14.0% 39.5% 11.6% 14.0% Fiscal council member 11.1% 11.1% 55.6% 0.0% 22.2% Executive management/c-level 37.5% 6.3% 37.5% 12.5% 6.3% Grand total 26.0% 9.6% 42.3% 10.6% 11.5% n = 104 Board scorecard: the performance of the boards facing the climate impacts and the net zero strategy 15 Table 4 All advisory committees to the board take climate changes into account in their discussions. Position Agree Strongly agree Disagree Strongly disagree Neither agree nor disagree (neutral) Advisory board member 20.0% 0.0% 50.0% 15.0% 15.0% Board member 30.2% 4.7% 30.2% 11.6% 23.3% Fiscal council member 22.2% 0.0% 55.6% 0.0% 22.2% Executive management/c-level 25.0% 3.1% 40.6% 12.5% 18.8% Grand total 26.0% 2.9% 39.4% 11.5% 20.2% n = 104 Table 5 Responsibility for decisions to reduce greenhouse gas emissions is clear for both the board and the executive team. Position Agree Strongly agree Disagree Strongly disagree Neither agree nor disagree (neutral) Advisory board member 20.0% 10.0% 20.0% 25.0% 25.0% Board member 27.9% 9.3% 18.6% 16.3% 27.9% Fiscal council member 33.3% 11.1% 44.4% 0.0% 11.1% Executive management/c-level 43.8% 6.3% 31.3% 12.5% 6.3% Grand total 31.7% 8.7% 25.0% 15.4% 19.2% n = 104 Table 6 The CEO, the chairperson and the members of the board of directors or advisory board communicate and disclose to employees and executives, through the organization's official communication channels, the importance of meeting the climate goal established for the organization. Position Agree Strongly agree Disagree Strongly disagree Neither agree nor disagree (neutral) Advisory board member 20.0% 5.0% 45.0% 15.0% 15.0% Board member 27.9% 11.6% 30.2% 18.6% 11.6% Fiscal council member 22.2% 11.1% 22.2% 0.0% 44.4% Executive management/c-level 37.5% 6.3% 21.9% 28.1% 6.3% Grand total 28.8% 8.7% 29.8% 19.2% 13.5% n = 104 16 Instituto Brasileiro de Governança Corporativa 3.2. Block II - Ownership Objective: Ensure the board is accountable for engagement, governance and driving change to achieve established climate goals. Table 7 Climate-related targets are incorporated into incentives and executive remuneration in a significant and measurable manner. Position Agree Strongly agree Disagree Strongly disagree Neither agree nor disagree (neutral) Advisory board member 15.0% 0.0% 50.0% 30.0% 5.0% Board member 18.6% 11.6% 18.6% 32.6% 18.6% Fiscal council member 22.2% 0.0% 44.4% 22.2% 11.1% Executive management/c-level 15.6% 0.0% 31.3% 43.8% 9.4% Grand total 17.3% 4.8% 30.8% 34.6% 12.5% n = 104 Table 8 The climate issue is incorporated in the assessment of risks and opportunities and in the core business strategy. Position Agree Strongly agree Disagree Strongly disagree Neither agree nor disagree (neutral) Advisory board member 35.0% 5.0% 45.0% 5.0% 10.0% Board member 34.9% 20.9% 18.6% 14.0% 11.6% Fiscal council member 11.1% 11.1% 22.2% 0.0% 55.6% Executive management/c-level 31.3% 0.0% 37.5% 21.9% 9.4% Grand total 31.7% 10.6% 29.8% 13.5% 14.4% n = 104 Board scorecard: the performance of the boards facing the climate impacts and the net zero strategy 17 Table 9 Responsibility for data and information on climate changes and goals belongs to all areas of the organization, not limited to the area of sustainability or a specific area, but also permeating areas such as finance and all organizational management. Position Agree Strongly agree Disagree Strongly disagree Neither agree nor disagree (neutral) Advisory board member 20.0% 0.0% 40.0% 25.0% 15.0% Board member 32.6% 11.6% 18.6% 14.0% 23.3% Fiscal council member 22.2% 11.1% 44.4% 11.1% 11.1% Executive management/c-level 31.3% 0.0% 37.5% 18.8% 12.5% Grand total 28.8% 5.8% 30.8% 17.3% 17.3% n = 104 Table 10 There is a comprehensive work plan to involve the entire workforce in the vision on the topic and the necessary changes. Position Agree Strongly agree Disagree Strongly disagree Neither agree nor disagree (neutral) Advisory board member 10.0% 5.0% 40.0% 20.0% 25.0% Board member 34.9% 14.0% 27.9% 14.0% 9.3% Fiscal council member 33.3% 0.0% 33.3% 0.0% 33.3% Executive management/c-level 21.9% 0.0% 40.6% 18.8% 18.8% Grand total 26.0% 6.7% 34.6% 15.4% 17.3% n = 104 Table 11 The organization is ensuring that the necessary skills and resources are available to accomplish its climate ambition. Position Agree Strongly agree Disagree Strongly disagree Neither agree nor disagree (neutral) Advisory board member 20.0% 5.0% 40.0% 20.0% 15.0% Board member 34.9% 14.0% 25.6% 7.0% 18.6% Fiscal council member 33.3% 0.0% 55.6% 0.0% 11.1% Executive management/c-level 18.8% 0.0% 34.4% 15.6% 31.3% Grand total 26.9% 6.7% 33.7% 11.5% 21.2% n = 104 18 Instituto Brasileiro de Governança Corporativa 3.3. Block III - Strategy Objective: Develop and assess strategy, plans and resources in place to reduce carbon emissions and adapt to climate changes, as well as incorporate them into the organization's overall business strategy and purpose. Table 12 The board analyzed the business strategy considering at least two climate changes scenarios. Position Agree Strongly agree Disagree Strongly disagree Neither agree nor disagree (neutral) Advisory board member 25.0% 0.0% 45.0% 5.0% 25.0% Board member 23.3% 7.0% 39.5% 16.3% 14.0% Fiscal council member 11.1% 11.1% 44.4% 0.0% 33.3% Executive management/c-level 15.6% 0.0% 43.8% 28.1% 12.5% Grand total 20.2% 3.8% 42.3% 16.3% 17.3% n = 104 Table 13 The board has set a net zero target for the emission of greenhouse gases and is aligned with the commitment to achieve the target of limiting global temperature rise to 1.5°C. Position Agree Strongly agree Disagree Strongly disagree Neither agree nor disagree (neutral) Advisory board member 15.0% 0.0% 55.0% 10.0% 20.0% Board member 16.3% 14.0% 23.3% 25.6% 20.9% Fiscal council member 22.2% 0.0% 33.3% 11.1% 33.3% Executive management/c-level 15.6% 0.0% 37.5% 34.4% 12.5% Grand total 16.3% 5.8% 34.6% 24.0% 19.2% n = 104 Board scorecard: the performance of the boards facing the climate impacts and the net zero strategy 19 Table 14 Ambition was translated into short-term goals and a five-year action plan. Position Agree Strongly agree Disagree Strongly disagree Neither agree nor disagree (neutral) Advisory board member 10.0% 0.0% 55.0% 20.0% 15.0% Board member 32.6% 7.0% 18.6% 23.3% 18.6% Fiscal council member 11.1% 0.0% 66.7% 0.0% 22.2% Executive management/c-level 15.6% 3.1% 37.5% 28.1% 15.6% Grand total 21.2% 3.8% 35.6% 22.1% 17.3% n = 104 Table 15 The board considers the likely physical impacts of climate changes on the organization and has an adaptation plan to deal with them. Position Agree Strongly agree Disagree Strongly disagree Neither agree nor disagree (neutral) Advisory board member 30.0% 0.0% 30.0% 15.0% 25.0% Board member 23.3% 9.3% 25.6% 18.6% 23.3% Fiscal council member 11.1% 11.1% 66.7% 0.0% 11.1% Executive management/c-level 15.6% 0.0% 40.6% 28.1% 15.6% Grand total 21.2% 4.8% 34.6% 19.2% 20.2% n = 104 Table 16 The council considers the climate issue in all investment decisions and makes use of a quantification tool, such as carbon pricing. Position Agree Strongly agree Disagree Strongly disagree Neither agree nor disagree (neutral) Advisory board member 15.0% 0.0% 30.0% 20.0% 35.0% Board member 16.3% 9.3% 32.6% 30.2% 11.6% Fiscal council member 33.3% 0.0% 44.4% 11.1% 11.1% Executive management/c-level 18.8% 3.1% 31.3% 34.4% 12.5% Grand total 18.3% 4.8% 32.7% 27.9% 16.3% n = 104 20 Instituto Brasileiro de Governança Corporativa 3.4. Block IV - Measurement Objective: Understand and assess the organization's carbon emissions, reducing the carbon footprint, reviewing and communicating progress and impacts. Table 17 The company assesses the impacts of the net zero transition on all its operations and investment decisions according to scopes 12 and 23 established by the GHG Protocol. Position Agree Strongly agree Disagree Strongly disagree Neither agree nor disagree (neutral) Advisory board member 15.0% 0.0% 45.0% 30.0% 10.0% Board member 25.6% 14.0% 18.6% 25.6% 16.3% Fiscal council member 22.2% 0.0% 44.4% 0.0% 33.3% Executive management/c-level 28.1% 3.1% 15.6% 34.4% 18.8% Grand total 24.0% 6.7% 25.0% 26.9% 17.3% n = 104 Table 18 The company understands its emissions fall under scope 34 of the GHG Protocol and has a specific approach that covers all its products and services. Position Agree Strongly agree Disagree Strongly disagree Neither agree nor disagree (neutral) Advisory board member 15.0% 0.0% 55.0% 25.0% 5.0% Board member 18.6% 7.0% 23.3% 27.9% 23.3% Fiscal council member 11.1% 0.0% 55.6% 0.0% 33.3% Executive management/c-level 18.8% 3.1% 21.9% 37.5% 18.8% Grand total 17.3% 3.8% 31.7% 27.9% 19.2% n = 104 2. Scope 1 of the GHG Protocol: eliminate emissions for which the organization is responsible. 3. Scope 2 of the GHG Protocol: eliminate emissions generated by purchasing electricity, heat and steam. 4. Scope 3 of the GHG Protocol: includes the elimination of gases generated by goods and services purchased, third-party distributors, products sold, production chain. Board scorecard: the performance of the boards facing the climate impacts and the net zero strategy 21 Table 19 The board agreed on a set of short-term and long-term measures aligned with greenhouse gas emission reduction plans and reviews the performance of these plans regularly. Position Agree Strongly agree Disagree Strongly disagree Neither agree nor disagree (neutral) Advisory board member 10.0% 0.0% 50.0% 20.0% 20.0% Board member 27.9% 7.0% 23.3% 27.9% 14.0% Fiscal council member 33.3% 0.0% 44.4% 0.0% 22.2% Executive management/c-level 28.1% 3.1% 31.3% 31.3% 6.3% Grand total 25.0% 3.8% 32.7% 25.0% 13.5% n = 104 Table 20 The board fully understands the requirements of investors related to climate and climate change and how they will assess the issue and its progress over time. Position Agree Strongly agree Disagree Strongly disagree Neither agree nor disagree (neutral) Advisory board member 30.0% 10.0% 35.0% 5.0% 20.0% Board member 25.6% 14.0% 18.6% 20.9% 20.9% Fiscal council member 11.1% 11.1% 22.2% 22.2% 33.3% Executive management/c-level 31.3% 6.3% 28.1% 18.8% 15.6% Grand total 26.9% 10.6% 25.0% 17.3% 20.2% n = 104 Table 21 The company discloses its climate ambition, action plans and the progress of its actions based on scientific methods and metrics. Position Agree Strongly agree Disagree Strongly disagree Neither agree nor disagree (neutral) Advisory board member 10.0% 0.0% 60.0% 15.0% 15.0% Board member 30.2% 11.6% 20.9% 23.3% 14.0% Fiscal council member 22.2% 11.1% 33.3% 11.1% 22.2% Executive management/c-level 21.9% 3.1% 31.3% 31.3% 12.5% Grand total 23.1% 6.7% 32.7% 23.1% 14.4% n = 104 22 Instituto Brasileiro de Governança Corporativa In this section, the Survey results are presented, considering the billing range of the organizations in which the respondents declared to work. For each of the twenty statements presented, the respondents selected a single answer among the following options: agree; fully agree; disagree; totally disagree; and neither agree nor disagree (neutral). The results are presented by thematic blocks: leadership, ownership, strategy and measurement. Each block contains five questions and one specific objective. 4. Analysis of answers considering the organizations' billing range Board scorecard: the performance of the boards facing the climate impacts and the net zero strategy 23 4.1. Block I – Leadership Objective: Ensure the board is informed, prepared and ready to drive change and be responsible for establishing a net zero strategy. Table 22 All board members understand the implications of climate changes and there are board members who have the most latent climate competence. Billing range Agree Strongly Agree Disagree Strongly Disagree Neither agree nor disagree (neutral) Over R$ 1 billion 43.9% 12.2% 17.1% 2.4% 24.4% Over R$ 300 million up to R$ 1 billion 30.8% 7.7% 11.5% 11.5% 38.5% Over R$ 100 million up to R$ 300 million 41.7% 0.0% 33.3% 0.0% 25.0% From R$20 million to R$ 100 million 23.1% 7.7% 38.5% 7.7% 23.1% Up to R$ 20 million 50.0% 8.3% 8.3% 8.3% 25.0% Grand total 38.5% 8.7% 19.2% 5.8% 27.9% n = 104 Table 23 The topic is included in the board's agenda at least four times a year, with clear objectives for the discussion, in addition to robust data and information to inform it. Billing range Agree Strongly Agree Disagree Strongly Disagree Neither agree nor disagree (neutral) Over R$ 1 billion 34.1% 9.8% 36.6% 9.8% 9.8% Over R$ 300 million up to R$ 1 billion 15.4% 3.8% 50.0% 11.5% 19.2% Over R$ 100 million up to R$ 300 million 8.3% 16.7% 75.0% 0.0% 0.0% From R$20 million to R$ 100 million 38.5% 0.0% 23.1% 23.1% 15.4% Up to R$ 20 million 25.0% 25.0% 33.3% 8.3% 8.3% Grand total 26.0% 9.6% 42.3% 10.6% 11.5% n = 104 24 Instituto Brasileiro de Governança Corporativa Table 24 All board advisory committees take climate change into account in their discussions. Billing range Agree Strongly Agree Disagree Strongly Disagree Neither agree nor disagree (neutral) Over R$ 1 billion 34.1% 2.4% 24.4% 12.2% 26.8% Over R$ 300 million up to R$ 1 billion 15.4% 0.0% 53.8% 11.5% 19.2% Over R$ 100 million up to R$ 300 million 25.0% 0.0% 66.7% 0.0% 8.3% From R$20 million to R$ 100 million 23.1% 0.0% 30.8% 30.8% 15.4% Up to R$ 20 million 25.0% 16.7% 41.7% 0.0% 16.7% Grand total 26.0% 2.9% 39.4% 11.5% 20.2% n = 104 Table 25 The Responsibility for decisions to reduce greenhouse gas emissions is clear to both the board and the executive team. Billing range Agree Strongly Agree Disagree Strongly Disagree Neither agree nor disagree (neutral) Over R$ 1 billion 31.7% 14.6% 14.6% 9.8% 29.3% Over R$ 300 million up to R$ 1 billion 26.9% 3.8% 53.8% 11.5% 3.8% Over R$ 100 million up to R$ 300 million 25.0% 8.3% 33.3% 0.0% 33.3% From R$20 million to R$ 100 million 38.5% 0.0% 7.7% 53.8% 0.0% Up to R$ 20 million 41.7% 8.3% 8.3% 16.7% 25.0% Grand total 31.7% 8.7% 25.0% 15.4% 19.2% n = 104 Table 26 The CEO, the chairperson and the members of the board of directors or advisory board communicate and disclose to employees and executives, through the organization's official communication channels, the importance of meeting the climate goal established for the organization. Billing range Agree Strongly Agree Disagree Strongly Disagree Neither agree nor disagree (neutral) Over R$ 1 billion 29.3% 14.6% 31.7% 12.2% 12.2% Over R$ 300 million up to R$ 1 billion 34.6% 0.0% 19.2% 30.8% 15.4% Over R$ 100 million up to R$ 300 million 25.0% 8.3% 50.0% 0.0% 16.7% From R$20 million to R$ 100 million 30.8% 0.0% 15.4% 46.2% 7.7% Up to R$ 20 million 16.7% 16.7% 41.7% 8.3% 16.7% Grand total 28.8% 8.7% 29.8% 19.2% 13.5% n = 104 Board scorecard: the performance of the boards facing the climate impacts and the net zero strategy 25 4.2. Block II – Ownership Objective: Ensure the board is accountable for engagement, governance and driving change to achieve established climate goals. Table 27 Climate-related targets are incorporated into incentives and executive remuneration in a significant and measurable manner. Billing range Agree Strongly Agree Disagree Strongly Disagree Neither agree nor disagree (neutral) Over R$ 1 billion 26.8% 7.3% 22.0% 29.3% 14.6% Over R$ 300 million up to R$ 1 billion 3.8% 0.0% 42.3% 46.2% 7.7% Over R$ 100 million up to R$ 300 million 33.3% 0.0% 41.7% 25.0% 0.0% From R$20 million to R$ 100 million 0.0% 0.0% 23.1% 53.8% 23.1% Up to R$ 20 million 16.7% 16.7% 33.3% 16.7% 16.7% Grand total 17.3% 4.8% 30.8% 34.6% 12.5% n = 104 Table 28 The climate issue is incorporated in the assessment of risks and opportunities and in the core business strategy. Billing range Agree Strongly Agree Disagree Strongly Disagree Neither agree nor disagree (neutral) Over R$ 1 billion 41.5% 12.2% 22.0% 9.8% 14.6% Over R$ 300 million up to R$ 1 billion 15.4% 7.7% 38.5% 19.2% 19.2% Over R$ 100 million up to R$ 300 million 41.7% 8.3% 41.7% 8.3% 0.0% From R$20 million to R$ 100 million 30.8% 0.0% 30.8% 23.1% 15.4% Up to R$ 20 million 25.0% 25.0% 25.0% 8.3% 16.7% Grand total 31.7% 10.6% 29.8% 13.5% 14.4% n = 104 26 Instituto Brasileiro de Governança Corporativa Table 29 The responsibility for data and information on climate change and goals belongs to all areas of the organization, not limited only to the area of sustainability or a specific area, also permeating areas such as finance and all organizational management. Billing range Agree Strongly Agree Disagree Strongly Disagree Neither agree nor disagree (neutral) Over R$ 1 billion 39.0% 7.3% 26.8% 7.3% 19.5% Over R$ 300 million up to R$ 1 billion 19.2% 3.8% 38.5% 26.9% 11.5% Over R$ 100 million up to R$ 300 million 25.0% 0.0% 50.0% 0.0% 25.0% From R$20 million to R$ 100 million 30.8% 0.0% 7.7% 46.2% 15.4% Up to R$ 20 million 16.7% 16.7% 33.3% 16.7% 16.7% Grand total 28.8% 5.8% 30.8% 17.3% 17.3% n = 104 Table 30 There is a comprehensive work plan to involve the entire workforce in the vision on the topic and the necessary changes. Billing range Agree Strongly Agree Disagree Strongly Disagree Neither agree nor disagree (neutral) Over R$ 1 billion 43.9% 7.3% 26.8% 7.3% 14.6% Over R$ 300 million up to R$ 1 billion 19.2% 3.8% 38.5% 23.1% 15.4% Over R$ 100 million up to R$ 300 million 0.0% 8.3% 75.0% 0.0% 16.7% From R$20 million to R$ 100 million 15.4% 0.0% 15.4% 46.2% 23.1% Up to R$ 20 million 16.7% 16.7% 33.3% 8.3% 25.0% Grand total 26.0% 6.7% 34.6% 15.4% 17.3% n = 104 Table 31 The organization is ensuring that the necessary skills and resources are available to accomplish its climate ambition. Billing range Agree Strongly Agree Disagree Strongly Disagree Neither agree nor disagree (neutral) Over R$ 1 billion 36.6% 12.2% 22.0% 4.9% 24.4% Over R$ 300 million up to R$ 1 billion 23.1% 0.0% 53.8% 7.7% 15.4% Over R$ 100 million up to R$ 300 million 16.7% 0.0% 50.0% 16.7% 16.7% From R$20 million to R$ 100 million 15.4% 0.0% 15.4% 46.2% 23.1% Up to R$ 20 million 25.0% 16.7% 33.3% 0.0% 25.0% Grand total 26.9% 6.7% 33.7% 11.5% 21.2% n = 104 Board scorecard: the performance of the boards facing the climate impacts and the net zero strategy 27 4.3. Block III – Strategy Objective: Develop and assess strategy, plans and resources in place to reduce carbon emissions and adapt to climate change, as well as incorporate them into the organization's overall business strategy and purpose. Table 32 The board analyzed the business strategy considering at least two climate changes scenarios. Billing range Agree Strongly Agree Disagree Strongly Disagree Neither agree nor disagree (neutral) Over R$ 1 billion 29.3% 2.4% 34.1% 12.2% 22.0% Over R$ 300 million up to R$ 1 billion 7.7% 0.0% 61.5% 15.4% 15.4% Over R$ 100 million up to R$ 300 million 8.3% 8.3% 50.0% 16.7% 16.7% From R$20 million to R$ 100 million 23.1% 0.0% 23.1% 38.5% 15.4% Up to R$ 20 million 25.0% 16.7% 41.7% 8.3% 8.3% Grand total 20.2% 3.8% 42.3% 16.3% 17.3% n = 104 Table 33 The board established a net zero target for the emission of greenhouse gases and is aligned with the commitment to reach the target of limiting the increase in global temperature to 1.5ºC. Billing range Agree Strongly Agree Disagree Strongly Disagree Neither agree nor disagree (neutral) Over R$ 1 billion 24.4% 7.3% 29.3% 24.4% 14.6% Over R$ 300 million up to R$ 1 billion 11.5% 3.8% 46.2% 26.9% 11.5% Over R$ 100 million up to R$ 300 million 0.0% 8.3% 50.0% 16.7% 25.0% From R$20 million to R$ 100 million 0.0% 0.0% 30.8% 30.8% 38.5% Up to R$ 20 million 33.3% 8.3% 16.7% 16.7% 25.0% Grand total 16.3% 5.8% 34.6% 24.0% 19.2% n = 104 28 Instituto Brasileiro de Governança Corporativa Table 34 Ambition was translated into short-term goals and a five-year action plan. Billing range Agree Strongly Agree Disagree Strongly Disagree Neither agree nor disagree (neutral) Over R$ 1 billion 26.8% 7.3% 22.0% 24.4% 19.5% Over R$ 300 million up to R$ 1 billion 15.4% 0.0% 53.8% 19.2% 11.5% Over R$ 100 million up to R$ 300 million 8.3% 0.0% 58.3% 8.3% 25.0% From R$20 million to R$ 100 million 7.7% 0.0% 23.1% 46.2% 23.1% Up to R$ 20 million 41.7% 8.3% 33.3% 8.3% 8.3% Grand total 21.2% 3.8% 35.6% 22.1% 17.3% n = 104 Table 35 The board considers the likely physical impacts5 of climate changes on the organization and has an adaptation plan to deal with them. Billing range Agree Strongly Agree Disagree Strongly Disagree Neither agree nor disagree (neutral) Over R$ 1 billion 26.8% 7.3% 24.4% 19.5% 22.0% Over R$ 300 million up to R$ 1 billion 15.4% 0.0% 53.8% 15.4% 15.4% Over R$ 100 million up to R$ 300 million 16.7% 0.0% 58.3% 16.7% 8.3% From R$20 million to R$ 100 million 15.4% 0.0% 15.4% 38.5% 30.8% Up to R$ 20 million 25.0% 16.7% 25.0% 8.3% 25.0% Grand total 21.2% 4.8% 34.6% 19.2% 20.2% n = 104 5. Physical risks arising from climate change can be caused by (acute) events, such as increasing severity of extreme weather events (egg cyclones, droughts, floods and fires). They may also be related to long-term (chronic) changes in precipitation and temperature and increased variability in weather patterns (e.g., sea level rise). To learn more, access: https://www.openriskmanual.org/wiki/Climate_Change_Physical_Risk. Board scorecard: the performance of the boards facing the climate impacts and the net zero strategy 29 Table 36 The board considers the climate issue in all investment decisions and makes use of a quantification tool, such as carbon pricing. Billing range Agree Strongly Agree Disagree Strongly Disagree Neither agree nor disagree (neutral) Over R$ 1 billion 26.8% 4.9% 31.7% 24.4% 12.2% Over R$ 300 million up to R$ 1 billion 7.7% 0.0% 42.3% 30.8% 19.2% Over R$ 100 million up to R$ 300 million 16.7% 0.0% 50.0% 8.3% 25.0% From R$20 million to R$ 100 million 7.7% 7.7% 23.1% 46.2% 15.4% Up to R$ 20 million 25.0% 16.7% 8.3% 33.3% 16.7% Grand total 18.3% 4.8% 32.7% 27.9% 16.3% n = 104 30 Instituto Brasileiro de Governança Corporativa 4.4. Block IV – Measurement Objective: Understand and assess the organization's carbon emissions, reducing the carbon footprint, reviewing and communicating progress and impacts. Table 37 The company assesses the impacts of the net zero transition on all its operations and investment decisions according to scopes 16 and 27 established by the GHG Protocol. Billing range Agree Strongly Agree Disagree Strongly Disagree Neither agree nor disagree (neutral) Over R$ 1 billion 29.3% 7.3% 17.1% 17.1% 29.3% Over R$ 300 million up to R$ 1 billion 15.4% 3.8% 34.6% 34.6% 11.5% Over R$ 100 million up to R$ 300 million 25.0% 0.0% 50.0% 8.3% 16.7% From R$20 million to R$ 100 million 15.4% 7.7% 15.4% 53.8% 7.7% Up to R$ 20 million 33.3% 16.7% 16.7% 33.3% 0.0% Grand total 24.0% 6.7% 25.0% 26.9% 17.3% n = 104 Table 38 The company understands its emissions fall under scope 38 of the GHG Protocol and has a specific approach that covers all its products and services. Billing range Agree Strongly Agree Disagree Strongly Disagree Neither agree nor disagree (neutral) Over R$ 1 billion 26.8% 2.4% 22.0% 22.0% 26.8% Over R$ 300 million up to R$ 1 billion 3.8% 3.8% 42.3% 34.6% 15.4% Over R$ 100 million up to R$ 300 million 16.7% 0.0% 58.3% 8.3% 16.7% From R$20 million to R$ 100 million 7.7% 7.7% 30.8% 46.2% 7.7% Up to R$ 20 million 25.0% 8.3% 16.7% 33.3% 16.7% Grand total 17.3% 3.8% 31.7% 27.9% 19.2% n = 104 6. Scope 1 of the GHG Protocol: eliminate emissions for which the organization is responsible. 7. Scope 2 of the GHG Protocol: eliminate emissions generated by purchasing electricity, heat and steam. 8. Scope 3 of the GHG Protocol: includes the elimination of gases generated by goods and services purchased, third-party distributors, products sold, production chain. Board scorecard: the performance of the boards facing the climate impacts and the net zero strategy 31 Table 39 The board agreed on a set of short-term and long-term measures aligned with greenhouse gas emission reduction plans and reviews the performance of these plans regularly. Billing range Agree Strongly Agree Disagree Strongly Disagree Neither agree nor disagree (neutral) Over R$ 1 billion 41.5% 2.4% 22.0% 19.5% 14.6% Over R$ 300 million up to R$ 1 billion 11.5% 0.0% 50.0% 26.9% 11.5% Over R$ 100 million up to R$ 300 million 16.7% 0.0% 58.3% 8.3% 16.7% From R$20 million to R$ 100 million 15.4% 7.7% 15.4% 53.8% 7.7% Up to R$ 20 million 16.7% 16.7% 25.0% 25.0% 16.7% Grand total 25.0% 3.8% 32.7% 25.0% 13.5% n = 104 Table 40 The board fully understands the requirements of investors related to climate and climate changes and how they will assess the issue and its progress over time. Billing range Agree Strongly Agree Disagree Strongly Disagree Neither agree nor disagree (neutral) Over R$ 1 billion 46.3% 12.2% 7.3% 14.6% 19.5% Over R$ 300 million up to R$ 1 billion 11.5% 0.0% 46.2% 19.2% 23.1% Over R$ 100 million up to R$ 300 million 16.7% 8.3% 50.0% 0.0% 25.0% From R$20 million to R$ 100 million 15.4% 15.4% 23.1% 23.1% 23.1% Up to R$ 20 million 16.7% 25.0% 16.7% 33.3% 8.3% Grand total 26.9% 10.6% 25.0% 17.3% 20.2% n = 104 Table 41 The company discloses its climate ambition, action plans and the progress of its actions based on scientific methods and metrics. Billing range Agree Strongly Agree Disagree Strongly Disagree Neither agree nor disagree (neutral) Over R$ 1 billion 36.6% 12.2% 26.8% 12.2% 12.2% Over R$ 300 million up to R$ 1 billion 3.8% 3.8% 38.5% 38.5% 15.4% Over R$ 100 million up to R$ 300 million 16.7% 0.0% 66.7% 8.3% 8.3% From R$20 million to R$ 100 million 23.1% 0.0% 23.1% 38.5% 15.4% Up to R$ 20 million 25.0% 8.3% 16.7% 25.0% 25.0% Grand total 23.1% 6.7% 32.7% 23.1% 14.4% n = 104 32 Instituto Brasileiro de Governança Corporativa In this section, the results of the survey are presented, considering the corporate type of the organizations in which the respondents declared to work. For each of the twenty statements presented, the respondents selected a single answer among the following options: agree; fully agree; disagree; totally disagree; and neither agree nor disagree (neutral). The results are presented by thematic blocks: leadership, ownership, strategy and measurement. Each block contains 5 questions and 1 specific objective. 5. Analysis of answers considering the corporate type of organizations Board scorecard: the performance of the boards facing the climate impacts and the net zero strategy 33 5.1. Block I – Leadership Objective: Ensure the board is informed, prepared and ready to drive changes and be responsible for establishing a net zero strategy. Table 42 All board members understand the implications of climate changes and there are board members who have the most latent climate competence. Corporate type Agree Strongly Agree Disagree Strongly Disagree Neither agree nor disagree (neutral) Association 0.0% 0.0% 80.0% 0.0% 20.0% Co-Operative 16.7% 16.7% 33.3% 0.0% 33.3% Foundation 50.0% 0.0% 50.0% 0.0% 0.0% Publicly traded company 43.3% 13.3% 20.0% 3.3% 20.0% Privately held company 40.0% 8.6% 11.4% 8.6% 31.4% Limited liability company (LLC) 45.8% 4.2% 12.5% 8.3% 29.2% Others 0.0% 0.0% 0.0% 0.0% 100.0% Grand total 38.5% 8.7% 19.2% 5.8% 27.9% n = 104 Table 43 The topic is included in the board’s agenda at least four times a year, with clear objectives for the discussion, in addition to robust data and information to inform it. Corporate type Agree Strongly Agree Disagree Strongly Disagree Neither agree nor disagree (neutral) Association 0.0% 0.0% 60.0% 40.0% 0.0% Co-Operative 16.7% 16.7% 50.0% 0.0% 16.7% Foundation 0.0% 50.0% 50.0% 0.0% 0.0% Publicly traded company 36.7% 10.0% 30.0% 6.7% 16.7% Privately held company 25.7% 5.7% 48.6% 11.4% 8.6% Limited liability company (LLC) 25.0% 12.5% 37.5% 12.5% 12.5% Others 0.0% 0.0% 100.0% 0.0% 0.0% Grand total 26.0% 9.6% 42.3% 10.6% 11.5% n = 104 34 Instituto Brasileiro de Governança Corporativa Table 44 All board advisory committees take climate change into account in their discussions. Corporate type Agree Strongly Agree Disagree Strongly Disagree Neither agree nor disagree (neutral) Association 0.0% 0.0% 60.0% 40.0% 0.0% Co-Operative 16.7% 0.0% 33.3% 16.7% 33.3% Foundation 50.0% 0.0% 50.0% 0.0% 0.0% Publicly traded company 40.0% 3.3% 26.7% 3.3% 26.7% Privately held company 22.9% 2.9% 45.7% 11.4% 17.1% Limited liability company (LLC) 16.7% 4.2% 45.8% 12.5% 20.8% Others 50.0% 0.0% 0.0% 50.0% 0.0% Grand total 26.0% 2.9% 39.4% 11.5% 20.2% n = 104 Table 45 Responsibility for decisions to reduce greenhouse gas emissions is clear to both the board and the executive team. Corporate type Agree Strongly Agree Disagree Strongly Disagree Neither agree nor disagree (neutral) Association 0.0% 0.0% 60.0% 40.0% 0.0% Co-Operative 50.0% 0.0% 33.3% 16.7% 0.0% Foundation 0.0% 0.0% 0.0% 50.0% 50.0% Publicly traded company 36.7% 16.7% 20.0% 6.7% 20.0% Privately held company 28.6% 5.7% 31.4% 14.3% 20.0% Limited liability company (LLC) 33.3% 8.3% 16.7% 20.8% 20.8% Others 50.0% 0.0% 0.0% 0.0% 50.0% Grand total 31.7% 8.7% 25.0% 15.4% 19.2% n = 104 Board scorecard: the performance of the boards facing the climate impacts and the net zero strategy 35 Table 46 The CEO, the chairperson and the members of the board of directors or advisory board communicate and disclose to employees and executives, through the organization's official communication channels, the importance of meeting the climate goal established for the organization. Corporate type Agree Strongly Agree Disagree Strongly Disagree Neither agree nor disagree (neutral) Association 0.0% 0.0% 40.0% 60.0% 0.0% Co-Operative 50.0% 0.0% 33.3% 0.0% 16.7% Foundation 0.0% 50.0% 0.0% 50.0% 0.0% Publicly traded company 30.0% 16.7% 36.7% 6.7% 10.0% Privately held company 31.4% 5.7% 20.0% 25.7% 17.1% Limited liability company (LLC) 25.0% 4.2% 33.3% 20.8% 16.7% Others 50.0% 0.0% 50.0% 0.0% 0.0% Grand total 28.8% 8.7% 29.8% 19.2% 13.5% n = 104 36 Instituto Brasileiro de Governança Corporativa 5.2. Block II – Ownership Objective: Ensure the board is accountable for engagement, governance and driving changes to achieve established climate goals. Table 47 Climate-related targets are incorporated into incentives and executive remuneration in a significant and measurable manner. Corporate type Agree Strongly Agree Disagree Strongly Disagree Neither agree nor disagree (neutral) Association 0.0% 0.0% 20.0% 80.0% 0.0% Co-Operative 16.7% 0.0% 66.7% 16.7% 0.0% Foundation 0.0% 0.0% 50.0% 50.0% 0.0% Publicly traded company 23.3% 10.0% 23.3% 20.0% 23.3% Privately held company 17.1% 2.9% 25.7% 42.9% 11.4% Limited liability company (LLC) 16.7% 4.2% 37.5% 33.3% 8.3% Others 0.0% 0.0% 50.0% 50.0% 0.0% Grand total 17.3% 4.8% 30.8% 34.6% 12.5% n = 104 Table 48 The climate issue is incorporated in the assessment of risks and opportunities and in the core business strategy. Corporate type Agree Strongly Agree Disagree Strongly Disagree Neither agree nor disagree (neutral) Association 0.0% 0.0% 40.0% 60.0% 0.0% Co-Operative 16.7% 16.7% 66.7% 0.0% 0.0% Foundation 50.0% 0.0% 0.0% 50.0% 0.0% Publicly traded company 40.0% 16.7% 23.3% 6.7% 13.3% Privately held company 31.4% 8.6% 25.7% 11.4% 22.9% Limited liability company (LLC) 33.3% 8.3% 37.5% 12.5% 8.3% Others 0.0% 0.0% 0.0% 50.0% 50.0% Grand total 31.7% 10.6% 29.8% 13.5% 14.4% n = 104 Board scorecard: the performance of the boards facing the climate impacts and the net zero strategy 37 Table 49 The responsibility for data and information on climate changes and goals belong to all areas of the organization, not limited only to the area of sustainability or a specific area, also permeating areas such as finance and all organizational management. Corporate type Agree Strongly Agree Disagree Strongly Disagree Neither agree nor disagree (neutral) Association 0.0% 0.0% 40.0% 40.0% 20.0% Co-Operative 33.3% 0.0% 33.3% 16.7% 16.7% Foundation 50.0% 0.0% 50.0% 0.0% 0.0% Publicly traded company 46.7% 10.0% 16.7% 13.3% 13.3% Privately held company 22.9% 2.9% 34.3% 14.3% 25.7% Limited liability company (LLC) 20.8% 4.2% 37.5% 25.0% 12.5% Others 0.0% 50.0% 50.0% 0.0% 0.0% Grand total 28.8% 5.8% 30.8% 17.3% 17.3% n = 104 Table 50 There is a comprehensive work plan to involve the entire workforce in the vision on the topic and the necessary changes. Corporate type Agree Strongly Agree Disagree Strongly Disagree Neither agree nor disagree (neutral) Association 0.0% 0.0% 40.0% 60.0% 0.0% Co-Operative 16.7% 16.7% 66.7% 0.0% 0.0% Foundation 0.0% 50.0% 50.0% 0.0% 0.0% Publicly traded company 53.3% 6.7% 23.3% 6.7% 10.0% Privately held company 17.1% 5.7% 45.7% 17.1% 14.3% Limited liability company (LLC) 16.7% 4.2% 25.0% 16.7% 37.5% Others 0.0% 0.0% 0.0% 50.0% 50.0% Grand total 26.0% 6.7% 34.6% 15.4% 17.3% n = 104 38 Instituto Brasileiro de Governança Corporativa Table 51 The organization is ensuring that the necessary skills and resources are available accomplish its climate ambition. Corporate type Agree Strongly Agree Disagree Strongly Disagree Neither agree nor disagree (neutral) Association 0.0% 0.0% 40.0% 60.0% 0.0% Co-Operative 50.0% 0.0% 33.3% 16.7% 0.0% Foundation 50.0% 0.0% 50.0% 0.0% 0.0% Publicly traded company 43.3% 13.3% 10.0% 10.0% 23.3% Privately held company 17.1% 5.7% 48.6% 5.7% 22.9% Limited liability company (LLC) 20.8% 4.2% 33.3% 12.5% 29.2% Others 0.0% 0.0% 100.0% 0.0% 0.0% Grand total 26.9% 6.7% 33.7% 11.5% 21.2% n = 104 Board scorecard: the performance of the boards facing the climate impacts and the net zero strategy 39 5.3. Block III – Strategy Objective: Develop and assess strategy, plans and resources in place to reduce carbon emissions and adapt to climate changes, as well as incorporate them into the organization's overall business strategy and purpose. Table 52 The board analyzed the business strategy considering at least two climate changes scenarios. Corporate type Agree Strongly Agree Disagree Strongly Disagree Neither agree nor disagree (neutral) Association 0.0% 0.0% 20.0% 80.0% 0.0% Co-Operative 16.7% 0.0% 50.0% 0.0% 33.3% Foundation 0.0% 50.0% 0.0% 50.0% 0.0% Publicly traded company 30.0% 3.3% 43.3% 6.7% 16.7% Privately held company 17.1% 2.9% 42.9% 14.3% 22.9% Limited liability company (LLC) 20.8% 4.2% 45.8% 16.7% 12.5% Others 0.0% 0.0% 50.0% 50.0% 0.0% Grand total 20.2% 3.8% 42.3% 16.3% 17.3% n = 104 Table 53 The board established a net zero target for the emission of greenhouse gases and aligned with the commitment to reach the target of limiting the increase in global temperature to 1.5ºC. Corporate type Agree Strongly Agree Disagree Strongly Disagree Neither agree nor disagree (neutral) Association 0.0% 0.0% 40.0% 60.0% 0.0% Co-Operative 0.0% 16.7% 83.3% 0.0% 0.0% Foundation 0.0% 50.0% 0.0% 50.0% 0.0% Publicly traded company 26.7% 10.0% 30.0% 16.7% 16.7% Privately held company 17.1% 0.0% 34.3% 28.6% 20.0% Limited liability company (LLC) 12.5% 4.2% 33.3% 20.8% 29.2% Others 0.0% 0.0% 0.0% 50.0% 50.0% Grand total 16.3% 5.8% 34.6% 24.0% 19.2% n = 104 40 Instituto Brasileiro de Governança Corporativa Table 54 Ambition was translated into short-term goals and a five-year action plan. Corporate type Agree Strongly Agree Disagree Strongly Disagree Neither agree nor disagree (neutral) Association 0.0% 0.0% 40.0% 60.0% 0.0% Co-Operative 16.7% 0.0% 66.7% 16.7% 0.0% Foundation 50.0% 0.0% 0.0% 50.0% 0.0% Publicly traded company 30.0% 10.0% 20.0% 16.7% 23.3% Privately held company 25.7% 0.0% 37.1% 20.0% 17.1% Limited liability company (LLC) 8.3% 4.2% 45.8% 20.8% 20.8% Others 0.0% 0.0% 50.0% 50.0% 0.0% Grand total 21.2% 3.8% 35.6% 22.1% 17.3% n = 104 Table 55 The board considers the likely physical impacts9 ꝰ of climate changes on the organization and has an adaptation plan to deal with them. Corporate type Agree Strongly Agree Disagree Strongly Disagree Neither agree nor disagree (neutral) Association 0.0% 0.0% 20.0% 80.0% 0.0% Co-Operative 16.7% 0.0% 50.0% 16.7% 16.7% Foundation 0.0% 0.0% 50.0% 50.0% 0.0% Publicly traded company 30.0% 10.0% 30.0% 13.3% 16.7% Privately held company 22.9% 2.9% 37.1% 17.1% 20.0% Limited liability company (LLC) 16.7% 4.2% 33.3% 12.5% 33.3% Others 0.0% 0.0% 50.0% 50.0% 0.0% Grand total 21.2% 4.8% 34.6% 19.2% 20.2% n = 104 9. Physical risks arising from climate change can be caused by (acute) events, such as increasing severity of extreme weather events (e.g. cyclones, droughts, floods and fires). They may also be related to long-term (chronic) changes in precipitation and temperature and increased variability in weather patterns (e.g. sea level rise). To learn more, access: https://www.openriskmanual.org/wiki/Climate_Change_Physical_Risk. Board scorecard: the performance of the boards facing the climate impacts and the net zero strategy 41 Table 56 The board considers the climate issue in all investment decisions and makes use of a quantification tool, such as carbon pricing. Corporate type Agree Strongly Agree Disagree Strongly Disagree Neither agree nor disagree (neutral) Association 0.0% 0.0% 20.0% 80.0% 0.0% Co-Operative 16.7% 0.0% 66.7% 0.0% 16.7% Foundation 50.0% 0.0% 0.0% 50.0% 0.0% Publicly traded company 33.3% 6.7% 33.3% 20.0% 6.7% Privately held company 5.7% 5.7% 37.1% 28.6% 22.9% Limited liability company (LLC) 16.7% 4.2% 25.0% 29.2% 25.0% Others 50.0% 0.0% 0.0% 50.0% 0.0% Grand total 18.3% 4.8% 32.7% 27.9% 16.3% n = 104 42 Instituto Brasileiro de Governança Corporativa 5.4. Block IV – Measurement Objective: Understand and assess the organization's carbon emissions, reducing the carbon footprint, reviewing and communicating progress and impacts. Table 57 The company assesses the impacts of the net zero transition on all its operations and investment decisions in accordance with scopes 110 and 211 established by the GHG Protocol. Corporate type Agree Strongly Agree Disagree Strongly Disagree Neither agree nor disagree (neutral) Association 0.0% 0.0% 20.0% 80.0% 0.0% Co-Operative 33.3% 16.7% 33.3% 16.7% 0.0% Foundation 50.0% 0.0% 0.0% 50.0% 0.0% Publicly traded company 33.3% 10.0% 20.0% 10.0% 26.7% Privately held company 20.0% 5.7% 34.3% 31.4% 8.6% Limited liability company (LLC) 20.8% 4.2% 20.8% 29.2% 25.0% Others 0.0% 0.0% 0.0% 50.0% 50.0% Grand total 24.0% 6.7% 25.0% 26.9% 17.3% n = 104 Table 58 The company understands that its emissions fall under the scope 312 of the GHG Protocol and has a specific approach that covers all of its products and services. Corporate type Agree Strongly Agree Disagree Strongly Disagree Neither agree nor disagree (neutral) Association 0.0% 0.0% 20.0% 80.0% 0.0% Co-Operative 0.0% 16.7% 66.7% 0.0% 16.7% Foundation 50.0% 0.0% 0.0% 50.0% 0.0% Publicly traded company 33.3% 3.3% 23.3% 13.3% 26.7% Privately held company 11.4% 2.9% 37.1% 31.4% 17.1% Limited liability company (LLC) 12.5% 4.2% 33.3% 33.3% 16.7% Others 0.0% 0.0% 0.0% 50.0% 50.0% Grand total 17.3% 3.8% 31.7% 27.9% 19.2% n = 104 10. Scope 1 of the GHG Protocol: eliminate emissions for which the organization is responsible. 11. Scope 2 of the GHG Protocol: eliminate emissions generated by purchasing electricity, heat and steam. 12. Scope 3 of the GHG Protocol: includes the elimination of gases generated by goods and services purchased, third-party distributors, products sold, production chain. Board scorecard: the performance of the boards facing the climate impacts and the net zero strategy 43 Table 59 The board agreed on a set of short-term and long-term measures aligned with greenhouse gas emission reduction plans and reviews the performance of these plans regularly. Corporate type Agree Strongly Agree Disagree Strongly Disagree Neither agree nor disagree (neutral) Association 0.0% 0.0% 60.0% 40.0% 0.0% Co-Operative 16.7% 0.0% 50.0% 16.7% 16.7% Foundation 50.0% 0.0% 0.0% 50.0% 0.0% Publicly traded company 46.7% 3.3% 26.7% 10.0% 13.3% Privately held company 17.1% 5.7% 28.6% 34.3% 14.3% Limited liability company (LLC) 16.7% 4.2% 41.7% 25.0% 12.5% Others 0.0% 0.0% 0.0% 50.0% 50.0% Grand total 25.0% 3.8% 32.7% 25.0% 13.5% n = 104 Table 60 The board fully understands the requirements of investors related to climate and climate changes and how they will assess the issue and its progress over time. Corporate type Agree Strongly Agree Disagree Strongly Disagree Neither agree nor disagree (neutral) Association 20.0% 0.0% 40.0% 40.0% 0.0% Co-Operative 0.0% 16.7% 33.3% 0.0% 50.0% Foundation 0.0% 50.0% 0.0% 50.0% 0.0% Publicly traded company 46.7% 16.7% 13.3% 6.7% 16.7% Privately held company 25.7% 8.6% 34.3% 14.3% 17.1% Limited liability company (LLC) 16.7% 4.2% 25.0% 29.2% 25.0% Others 0.0% 0.0% 0.0% 50.0% 50.0% Grand total 26.9% 10.6% 25.0% 17.3% 20.2% n = 104 44 Instituto Brasileiro de Governança Corporativa Table 61 The company discloses its climate ambition, action plans and the progress of its actions based on scientific methods and metrics. Corporate type Agree Strongly Agree Disagree Strongly Disagree Neither agree nor disagree (neutral) Association 0.0% 0.0% 40.0% 60.0% 0.0% Co-Operative 16.7% 16.7% 50.0% 0.0% 16.7% Foundation 50.0% 0.0% 50.0% 0.0% 0.0% Publicly traded company 43.3% 16.7% 16.7% 10.0% 13.3% Privately held company 14.3% 0.0% 34.3% 34.3% 17.1% Limited liability company (LLC) 16.7% 4.2% 45.8% 20.8% 12.5% Others 0.0% 0.0% 0.0% 50.0% 50.0% Grand total 23.1% 6.7% 32.7% 23.1% 14.4% n = 104 Board scorecard: the performance of the boards facing the climate impacts and the net zero strategy 45 This survey aimed to understand how the board of directors and advisory boards are dealing with the commitment to transition to the net zero strategy and with climate impacts. The thematic questions were translated and adapted from the Board scorecard – a tool of Chapter Zero in the United Kingdom –, composed of twenty questions whose objective is to indicate how well the boards of directors are responding to the challenges of climate changes. The scope of applied Survey in Brazil was expanded when compared to the Chapter Zero Board scorecard in the United Kingdom, as it covered, in addition to the board of directors, the advisory boards. The target audience of the Survey were board members, advisory board members, fiscal council members and executive management/c-level. The Survey was developed in the form of an electronic questionnaire 6. Methodology (survey) and the data collection phase took place from September 6 to September 30, 2022. For each of the twenty questions that made up the four thematic blocks and also the introductory questions that dealt with the profile of the respondent or the organization in which he/she works, respondents necessarily had to tick only one answer option. A total of 254 respondents participated in the Survey. The sample consisted of 104 respondents (n = 104), as 150 responses were incomplete, having been disregarded in the data tabulation. The data were analyzed and tabulated using the Excel tool, and the stratification of the data was presented taking into account the position occupied by the respondents, the billing ranges and the corporate type of the organizations in which they work, in addition to a section dedicated to the profile of the respondents. 46 Instituto Brasileiro de Governança Corporativa CHAPTER ZERO. “The Chapter Zero Board Scorecard: an introduction”. Available in: https://chapterzero.org.uk/board-scorecard-introduction/. Access in: 26 aug. 2022. References The Board scorecard survey: the performance of boards facing the climate impacts and the net zero strategy strove to capture how the boards, both directors and advisory, have dealt with the issue of climate changes and with the commitment to transition to the net zero strategy.