The need for social and environmental sustainability in Brazil presents a unique opportunity for the private sector to support bilateral cooperation and national goals. The Brazil-U.S. Business Council, through its dialogues and collective thinking with the Brazilian Government, international companies, and global stakeholders, offers the following set of recommendations for establishing an enabling framework that will attract sustainable investments consistent with international standards and obligations of institutional investors. By addressing these critical issues, Brazil can increase investor confidence and enhance incentives and opportunities for sustainable and inclusive growth.
1.) Take a global leadership role in advancing sustainability metrics and standards applicable to Brazil’s competitive sectors of regenerative agriculture, clean energy, sustainable aviation fuel, and forestry. As a G20 member, and soon to take over its presidency, Brazilian government and business community have an opportunity to shape global environmental sustainability criteria and ensure that they are consistent with the country’s unique ecological endowment and development strategy.
Food security is a global priority. Brazil’s strong capacity in the agriculture sector should allow it to shape global markets for all sustainable nutrition products including plant-based and other proteins. Brazil should promote its fair-trade practices and certification systems globally to address concerns regarding deforestation and the soy moratorium.
Action: Define sustainability indicators, their definitions and targets for primary sectors of agriculture, energy, aviation and forestry and discuss in upcoming global forums.
2.) Pursue a government-wide approach for the implementation of Brazil’s climate commitments under the Paris Agreement. Brazil’s goals of reducing greenhouse gas emissions, increasing the use of biofuels and renewable energy sources, and curbing deforestation in the Amazon biome will require long-term strategies, expertise, technological development, and financing. The private sector can be helpful and should be involved in the development and implementation of such roadmaps, which should be aligned with a national development plan. A knowledge sharing engagement process can lead to clear, sound and coordinated policy development and implementation and forward-looking approaches toward Brazil’s development goals.
Action: Engage the business community for the development and implementation of a national plan that incorporates sectoral roadmaps with clear long-term strategies to achieve climate targets.
3.) Commit to fostering the green economy by stimulating and enabling the circular economy, incentivizing the efficiency and effectiveness of the investments, reuse in supply chains, addressing market access restrictions on remanufactured products, and a market for recycled materials. Implement regulatory impact analyses and consultations before publication of new regulations that consider the direct and indirect environmental benefits and costs associated with regulations. Brazil’s trade policy should be reviewed in line with its goals to promote innovation and advance sustainable use of its resources including access to enabling technologies, products and services. In energy, embrace and further establish the regulatory framework for renewable energy sources and energy storage. In government procurement, include incentives for sustainable goods and incorporate criteria, standards and technical specifications that promote most resource friendly and sustainable technologies. In technology, leverage Brazil’s existing leadership in agriculture, energy, aviation and forestry to scale up commercial production of sustainable fuels in these sectors.
4.) Accelerate the energy transition to foster energy security both domestically and globally. Brazil is poised to ramp up the production of clean energy from solar and wind to hydrogen and sustainable aviation fuel. Brazil and U.S. can exchange ideas on effective policies, regulatory frameworks, environmental licensing, and innovative financing schemes for the deployment of technology and financing. These are investment priorities for the U.S. business community to forge innovative solutions. U.S. companies can be very helpful partners for Brazil’s efforts at the forefront of this new energy frontier. The U.S.-Brazil Clean Energy Industry Dialogue, launched in 2022 with the avid participation of the private sectors from both nations, should be re-energized with ambitious goals for each of these areas of clean energy.
5.) Develop a long-term development plan for the Amazon region that is supported by all stakeholders and promotes nature-based solutions, preserves biodiversity, addresses reforestation, regularization of land, and the strengthening of national and local institutions responsible for deforestation enforcement. Opportunities for building a bioeconomy exist in sectors such as horticulture (native fruit and nut value chains), pharmaceuticals, renewable energy, and consumer goods. Such development plan should consider streamlining the process of doing business at the national and state levels, ensuring a predictable and transparent legal environment, promoting the rule of law, and implementing measures to increase sustainable trade.
There are opportunities to expand existing initiatives such as the Amazon Fund in partnership with the governments of Norway and Germany, and bilateral cooperation involving the private sector, such as the Biodiversity Impact Investment Fund established in 2019 by the Ministry of Environment and USAID, aimed at raising $100 million in investments to promote access to credit, innovation, and sustainable value chains.
Action: Include the business community in the development of a viable long-term Amazon plan to ensure the appropriate conditions for building a bioeconomy and leveraging green investment.
6.) Strengthen institutional capacity and governance structures to enforce environmental laws, including the National Forest Code and environmental licensing process. To combat illegal deforestation in the Amazon biome, additional resources should be allocated for monitoring and surveillance efforts. Strengthen the framework and capacity to protect indigenous communities and preserve indigenous lands in the Amazon biome.
Action: Advocate before Brazilian Congress and Administration for clarity and transparency in building institutional capacity and strengthening governance for enforcement of environmental laws.
7.) Establish a roadmap for the standardization and implementation of environmental, social, and governance (ESG) criteria, aligned with global standards, to provide clarity for international financial institutions and asset managers. Investors are increasingly considering how material ESG risks impact their portfolio and how their investments are impacting societies and the environment. This effort will facilitate the establishment and scaling up of a framework for attracting sustainable financing and investments across sectors and industries. Disseminate and communicate Brazil’s sustainability development plan and ESG roadmap widely and globally with key stakeholders and the business community. Furthermore, with Brazil assuming the leadership of the G20, both nations should work together for the reforms of the multilateral institutions to adapt to the current realities and find innovative ways to de-risk and leverage investments for the energy transition in emerging markets.
