Brazil to highlight climate success, struggles by hosting 2025 COP in the Amazon

Background

Brazil will host the 2025 UN Conference of Parties (COP) climate summit in the Amazon rainforest and focus on “challenges” and “success stories.” Analysts can find both in actions by the country and JBS SA, one of the largest meat processing companies in the world.

Brazil leads BRICS economies in curbing CO2 emissions but still lags behind projections needed to avoid global warming. It committed to reducing emissions by 59% to 67% by 2035 and is one of the first nations to provide an updated Nationally Determined Contribution to the Paris Agreement.

The nation is currently a global leader in renewable energy but will need to invest significantly more to achieve 2025 net-zero goal s. Hydropower accounts for 110 GW of its total 236 GW in installed capacity, while solar has reached 48 GW and wind 28 GW.

Brazil’s reduction targets were increased at the COP29 summit in Azerbaijan in late November. This came as part of a climate finance deal calling on developed nations to provide $300 billion per year in climate financing to the developing world. Brazil’s biodiversity and broader aims to fight deforestation make it a top global funding priority.

The issue

Brazil’s 2024 ESG Impact Report and its sustainable bond highlight many biodiversity and climate goals and can help investors assess performance on industry emissions and protecting natural environments.

Bloomberg’s Government Climate Scores functions provide assessments based on carbon transition, power sector transition and overall climate strategy. While Brazil’s overall score is 5.57, the country has a 6.56 in CO2 reduction, putting it ahead of other BRICS. It also leads peers in power transition scoring, set at 7.42, because 77% of its power comes from renewable sources.

Investors should take note of the historical risks of ignoring biodiversity. Deforestation lawsuits delayed JBS SA’s 2023 plans to list in New York. Current analysis shows it has 9% of its assets in pristine areas. It is making progress in reducing emissions but is falling short of some net-zero commitments. In October, JBS was among those fined $64 million by Brazil’s environmental protection agency, IBAMA.

“With more than half of the Amazon rainforest and the planet’s greatest concentration of biodiversity within its borders, Brazil has an outsized role to play in global carbon and environmental markets,” Vinicius Nunes, BloombergNEF climate solutions associate, wrote.

Tracking

Run GOVS to review Brazil’s climate score and check ESG metrics. Use NEFW to review the country’s environmental policies including its energy mix.

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