Neutralizing the Ibovespa’s carbon costs R$ 141 billion.  Who would gain from this?

Neutralizing the Ibovespa’s carbon costs R$ 141 billion. Who would gain from this?

Some companies would lose up to 20% of their operating income if they were forced to go to zero carbon emissions today. Others earn by selling credits

Reach net zero, or carbon zero, is a dream of an increasing number of companies. Much of this demand comes from large investors, who, concerned about the future of their investments in the long term, seek answers from companies for the climate emergency. After all, climate change can derail a number of businesses.

The controversy surrounding this move ESG it’s not far from the rule of what always happens in structural changes in the markets: ok, but how much does it cost and who will pay the bill? It’s not that money comes first, it’s that transitioning to a low economy carbon it doesn’t come for free and the resources have to come from somewhere.

In this spirit of “ask not what capitalism can do for the company, but what the company can do for capitalism”, the Santander released this Wednesday, 16, a report on how much it would cost for companies in the Ibovespa neutralize their emissions. The study also points out how much of the companies’ operating income would be lost if they had to solve the problem today. As with everything in the financial market, there are winners and losers.

How much does it cost to zero emissions from Ibovespa companies

Considering a price for the carbon between 5 and 20 dollars, to neutralize Scope 1 and 2 emissions, companies in the Ibovespa would spend between 3.6 billion and 14.6 billion reais. Little, but the account tightens when scope 3 is included. In this case, the value rises to a range between 35 billion and 141 billion reais.

The net zero cost on the Ibovespa

Carbon price: US$ 5 / R$ 25 Carbon price: US$ 10 / R$ 50 Carbon price: US$ 20 / R$ 100
Scopes 1, 2 Scopes 1, 2, 3 Scopes 1, 2 Scopes 1, 2, 3 Scopes 1, 2 Scopes 1, 2, 3
Cost in BRL billion 3,648 35,340 7,297 70,680 14,595 141,360
% of adjusted EBITDA 06% 5.4% 1.1% 10.9% 2.2% 21.8%

Scope 3 values ​​mean that companies would need to invest between 5.4% and 21.8% of their operating results in purchasing credits from carbon. This percentage, however, varies greatly from company to company, with Vibra, Azul, Cosan, Vale and CSN being the most affected relatively. In absolute terms, Petrobras and Vale would have to bear 75% of the expenses with carbon of the entire Ibovespa.

If there are losers, there are those who would benefit from this scenario. CPFL, Dexco, Klabin and Suzano, according to Santander, are able to withdraw more carbon of the atmosphere than they produce. With that, they could earn from the sale of credits from carbon. This is true for most companies focusing on renewable energy. The technology, telecommunications, real estate and education sectors are in a comfortable situation, as they produce low levels of greenhouse gases.

reduce the carbon emissions it’s better than making up

The emission levels used in the study are those for 2020, the year in which companies in the Ibovespa directly emitted (scopes 1 and 2) 146 million tons of carbon. When indirect emissions are included (scope 3), the number rises to 1.4 billion tons, equivalent to 65% of the total emitted by Brazil in the period.

According to Santander, there are limitations in this survey. These emissions may be underestimated, for example, as some companies are just starting to measure their carbon footprint. carbon. There may also be duplication if the scope 1 and 2 emissions of one company are part of the scope 3 of another. Even so, the survey presents a realistic scenario of what would happen if there were a carbon mandatory in the country. But perhaps the most important conclusion of the study is that reducing emissions is cheaper than offsetting it.

THE Santander analyzed how much the operating results of the companies would have to rise for the expenses with credits of carbon do not exceed 3% of operating profit. If companies had to pay to offset all emissions by 2030, the increase would need to reach between 8.4% and 25% per year. In the 2050 scenario, the values ​​fall to 2.7% and 7.7% per year.

Now, if these same companies reduce emissions by 40%, the need to increase operating income would drop to 3% and 18.8%, in the 2030 scenario, and to 1% and 5.9% per year, in the 2050 scenario. Between doing for pain, or for love, keep the second.

Source: Exam

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