REPORT ON CLIMATE CHANGE RUMO S.A. 2023
TASKFORCE ON CLIMATE-
RELATED FINANCIAL
DISCLOSURES (TCFD)
REPORT ON CLIMATE | EXECUTIVE | MANAGEMENT OF | METRICS | FINAL | APPENDIX A: TCFD | 2 | ||||
INTRODUCTION | GOVERNANCE | CLIMATE-RELATED RISKS | STRATEGY | REFERENCES | ||||||
CHANGE 2023 | SUMMARY | AND GOALS | CONSIDERATIONS | SUMMARY TABLE | ||||||
AND OPPORTUNITIES | ||||||||||
CONTENTS
1. | INTRODUCTION | 05 | APPENDIX A: TCFD SUMMARY TABLE | 31 | ||||||||||||||||||
1.1. About the report | 05 | Governance | 31 | |||||||||||||||||||
Table 1 | ||||||||||||||||||||||
Management of climate-related risks | ||||||||||||||||||||||
Table 2 | ||||||||||||||||||||||
2. | EXECUTIVE SUMMARY | 07 | and opportunities | 32 | ||||||||||||||||||
Strategy | 33 | |||||||||||||||||||||
3. | GOVERNANCE | 09 | Table 3 | |||||||||||||||||||
Metrics and goals | 35 | |||||||||||||||||||||
Table 4 | ||||||||||||||||||||||
4. MANAGEMENT OF CLIMATE-RELATED
RISKS AND OPPORTUNITIES | 13 | LIST OF TABLES | ||||||||||||||||||||||||||||||||||
Rumo's climate-related physical risks | 18 | |||||||||||||||||||||||||||||||||||
5. | STRATEGY | 21 | Table 1 | |||||||||||||||||||||||||||||||||
Rumo's climate-related transition risks | 19 | |||||||||||||||||||||||||||||||||||
Table 2 | ||||||||||||||||||||||||||||||||||||
6. | METRICS AND GOALS | 27 | LIST OF FIGURES | |||||||||||||||||||||||||||||||||
7. | FINAL CONSIDERATIONS | 29 | Rumo's governance structure | |||||||||||||||||||||||||||||||||
Figure 1 | ||||||||||||||||||||||||||||||||||||
8. | REFERENCES | 30 | for climate change | 09 | ||||||||||||||||||||||||||||||||
Mechanisms of Rumo's corporate | ||||||||||||||||||||||||||||||||||||
Figure 2 | ||||||||||||||||||||||||||||||||||||
strategy management | 12 | |||||||||||||||||||||||||||||||||||
Climate-related corporate risks | 13 | |||||||||||||||||||||||||||||||||||
Figure 3 | ||||||||||||||||||||||||||||||||||||
Overview of the process for identifying and | ||||||||||||||||||||||||||||||||||||
Figure 4 | ||||||||||||||||||||||||||||||||||||
assessing climate-related risks at Rumo | 14 | |||||||||||||||||||||||||||||||||||
Types of climate-related risks based on | ||||||||||||||||||||||||||||||||||||
Figure 5 | ||||||||||||||||||||||||||||||||||||
TCFD classification | 14 | |||||||||||||||||||||||||||||||||||
Geographic scope for the assessment | ||||||||||||||||||||||||||||||||||||
Figure 6 | ||||||||||||||||||||||||||||||||||||
of climate-related physical risks | 15 | |||||||||||||||||||||||||||||||||||
REPORT ON CLIMATE | EXECUTIVE | MANAGEMENT OF | METRICS | FINAL | APPENDIX A: TCFD | 3 | ||||
INTRODUCTION | GOVERNANCE | CLIMATE-RELATED RISKS | STRATEGY | REFERENCES | ||||||
CHANGE 2023 | SUMMARY | AND GOALS | CONSIDERATIONS | SUMMARY TABLE | ||||||
AND OPPORTUNITIES | ||||||||||
ACRONYMS AND ABBREVIATIONS
Acronyms | Description | |||||
APS | Announced Pledge Scenario | |||||
Scenario of Announced Pledges from the World Energy Outlook of the International | ||||||
Energy Agency | ||||||
BAU | Business as Usual | |||||
Usual business activities | ||||||
CBI | Climate Bonds Initiative | |||||
CEO | Chief Executive Officer | |||||
DJSI | Dow Jones Sustainability Indexes | |||||
Corporate sustainability Index of New York Stock Exchange | ||||||
ESG | Environmental, Social, and Governance | |||||
GHG | Greenhouse Gases | |||||
IEA | International Energy Agency | |||||
ISE | Corporate Sustainability Index of São Paulo Stock Exchange | |||||
IPCC | Intergovernmental Panel on Climate Change | |||||
KPI | Key Performance Indicator | |||||
Acronyms | Description | |||
LTIF | Lost Time Injury Frequence | |||
NDC | National Determined Contributions | |||
NZE | Net Zero Emissions | |||
Scenario of Net Zero Emissions from the World Energy Outlook of the International | ||||
Energy Agency | ||||
SDG | Sustainable Development Goals | |||
UN | United Nations | |||
RCP | Representative Concentration Pathway | |||
GHG concentration estimate | ||||
SSP | Shared Socioeconomic Pathways | |||
STEPS | Stated Policies Scenario | |||
Scenario of Stated Policies from the World Energy Outlook of the International | ||||
Energy Agency | ||||
TCFD | Taskforce on Climate-related Financial Disclosure | |||
RTK | Revenue per ton kilometer | |||
WEO | World Energy Outlook | |||
REPORT ON CLIMATE | EXECUTIVE | MANAGEMENT OF | METRICS | FINAL | APPENDIX A: TCFD | 4 | ||||
INTRODUCTION | GOVERNANCE | CLIMATE-RELATED RISKS | STRATEGY | REFERENCES | ||||||
CHANGE 2023 | SUMMARY | AND GOALS | CONSIDERATIONS | SUMMARY TABLE | ||||||
AND OPPORTUNITIES | ||||||||||
DEFINITIONS
Term | Definitions |
Net Zero Emissions | The Net Zero Emissions by 2050 Scenario sets out a pathway to the |
Scenario (NZE) | stabilization of average global temperatures at 1.5 ºC above pre- |
industrial levels. It was updated in 2022 based on a higher level of | |
demand for fossil fuels and emissions in comparison to the previous year | |
and on one year less to achieve its ambitions. This scenario meets the | |
key sustainable development goals of the UN, such as universal access | |
to energy and improvements in air quality. | |
Announced Pledges | The Announced Pledges Scenario assumes that governments will |
Scenario (APS) | implement in full and on time all climate-related targets that they |
announced, including Net Zero emissions goals, NDC-related pledges, | |
specific areas (such as energy), those assumed in international forums | |
and other efforts that might contribute to achieving these ambitions. | |
This scenario is based on the analysis disclosed during COP26 in Glasgow | |
(considering the implementation of all assumed pledges, Net Zero and | |
Methane), supplemented by the outlook of those countries that have not | |
yet assumed long-term ambitious pledges, but which will benefit from | |
this accelerated scenario of transition to clean energy technologies. | |
Stated Policies Scenario | The Stated Policies Scenario does not take into account assumed |
(STEPS) | pledges, but considers exiting public policies and actions that are in |
place for achieving their goals and targets. Therefore, this scenario is | |
based on a detailed sector-by-sector assessment of relevant aspects, | |
such as regulation, market, infrastructure, and finances. This scenario | |
provides a guideline on the direction that the energy system might | |
take in the absence of new efforts and policies. As with the APS, and | |
differently from the NZE, this scenario is not designed to achievement | |
a certain outcome. | |
Term | Definitions |
Climate-Related | [TCFD] Potential positive impacts related to climate change on an |
Opportunity | organization Efforts to mitigate and adapt to climate change can |
produce opportunities for organizations, such as through resource | |
efficiency and cost savings, the adoption and utilization of low-emission | |
energy sources, the development of new products and services, and | |
building resilience along the supply chain. Climate-related opportunities | |
will vary depending on the region, market, and industry in which an | |
organization operates. | |
Climate-Related Risk | [TCFD] Potential negative impacts of climate change on an |
organization. Physical risks emanating from climate change can be | |
event-driven (acute) such as increased severity of extreme weather | |
events (e.g., cyclones, droughts, floods, and fires). They can also | |
relate to longer-term shifts (chronic) in precipitation and temperature | |
and increased variability in weather patterns (e.g., sea level rise). | |
Climate-related risks can also be associated with the transition to a | |
lower-carbon global economy, the most common of which relate to | |
policy and legal actions, technology changes, market responses, and | |
reputational considerations. | |
Physical Risk | [TCFD] Risks resulting from climate change that can be driven by extreme |
events (acute) or longer-term shifts (chronic) in climate patterns. Physical | |
risks may have financial implications for organizations, such as direct | |
damage to assets (direct impact) or supply chain disruptions (indirect | |
impact). | |
Transition Risks | [TCFD] Risks resulting from the transition to a lower-carbon global |
economy. Transitioning to a lower-carbon economy may entail | |
extensive policy, legal, technological, and market changes to address | |
mitigation and adaptation requirements related to climate change. | |
Depending on the nature, speed, and focus of these changes, | |
transition risks may pose varying levels of financial and reputational | |
risks to organizations. | |
REPORT ON CLIMATE | EXECUTIVE | MANAGEMENT OF | METRICS | FINAL | APPENDIX A: TCFD | 5 | |||||
INTRODUCTION | GOVERNANCE | CLIMATE-RELATED RISKS | STRATEGY | REFERENCES | |||||||
CHANGE 2023 | SUMMARY | AND GOALS | CONSIDERATIONS | SUMMARY TABLE | |||||||
AND OPPORTUNITIES | |||||||||||
1. INTRODUCTION
1.1 ABOUT THE REPORT
Welcome to the Report on Climate Change of Rumo S.A for 2023, which was prepared based on the recommendations from the Taskforce on Climate-related Financial Disclosures (TCFD), 20171.
This document explains how we are addressing the increasing challenges posed by climate change not only to our activities, but also to our surroundings.
The goal of our effort to advance this agenda based on the recommendations of the Taskforce on Climate- related Financial Disclosures (TCFD), is to explain how we have been working to ensure the resilience of our operations, as well as our commitment to addressing the material themes for the Company sustainability in 20232-which include Climate Change and Emission Management-based on a robust risk management to ensure the safety of our operations and the health and safety of our people and nearby communities, supported by a solid, transparent governance structure.
Likewise, this advancement will support the Ten Principles of the UN Global Compact and the 17 Sustainable Development Goals (SDG), to which we are signatories3 and on which the 10 commitments we made in 2020 are based upon4, as shown below:
- TCFD Recommendation, 2017
- Annual Sustainability Report 2023
- Rumo S.A. | UN Global Compact
- Our commitments with Sustainable Development | Rumo
REPORT ON CLIMATE | EXECUTIVE | MANAGEMENT OF | METRICS | FINAL | APPENDIX A: TCFD | 6 | |||||
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CHANGE 2023 | SUMMARY | AND GOALS | CONSIDERATIONS | SUMMARY TABLE | |||||||
AND OPPORTUNITIES | |||||||||||
Ensure the safety of teams, processes
01 and operations, reflected in our LTIF index, whose average should be 0.15 in the period up to 2025.
Promote and encourage energy
02 efficiency, seeking to mitigate the impacts of climate change and reduce emissions per RTK by 15% by 2023.
Promote gender diversity in selection
03 processes and succession maps, in addition to continually developing people. In this aspect, we are committed to increasing the employee satisfaction rate from 78% in 2019 to 82% by 2025.
04 | Spread ethical values among everyone |
on the team and in the value chain. |
Seek forms of financing linked to
05 sustainability criteria (Green/Social/ Transition/ESG-related).
Contribute | to | the | sustainable | |
06 | ||||
development | of | Brazil, | protecting | |
natural resources with attitudes that | ||||
seek business continuity and generating | ||||
a positive impact on the communities | ||||
surrounding the operations. |
Promote transparency in relation to
07 business management and in alignment with sustainability aspects.
08 | Encourage innovation in the business |
and stakeholders. |
Encourage the supply chain to promote
09 sustainability.
10 | Promote sustainability actions together |
with customers. |
As the largest independent railway logistics operator in Brazil, operating in the Middle West, South, Southeast, and North regions of the country, serving the three most important export corridors for agricultural commodities, and main ports (Santos (SP), Paranaguá (PR), São Francisco do Sul (SC), and Rio Grande (RS)), we conducted a comprehensive risk assessment study on climate-related physical impacts, including all ports and regions where we operate.
Since the transport sector still relies heavily on the intensive use of fossil fuels, our approach to risks related to the transition to a low-carb economy aligns with the company's growth strategy and with the development of new technologies to enhance energy efficiency.
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INTRODUCTION | GOVERNANCE | CLIMATE-RELATED RISKS | STRATEGY | REFERENCES | ||||||||
CHANGE 2023 | SUMMARY | AND GOALS | CONSIDERATIONS | SUMMARY TABLE | ||||||||
AND OPPORTUNITIES | ||||||||||||
2. EXECUTIVE SUMMARY
We are the largest railway operator in the country, with a network of more than 13.5 thousand kilometers extending across regions Middle-West, South, Southeast, and North, serving the most important export corridors for agricultural commodities. Responding to the increasing challenges posed by climate change has become critical to ensure the resilience of our operations and the sectors where we serve. Additionally, the railroad transport mode is a safest and efficient logistic solution that can significantly contribute to the decarbonization of the transport sector, addressing challenges posed by the transition to a low-carb economy.
Therefore, the recommendations of the Taskforce on Climate-related Financial Disclosures (TCFD) relate to the material themes for the Company sustainability in 20231 -which include Climate Change and Emissions Management-as well as to our commitments that are aligned to the Ten Principles of the UN Global Compact and the 17 Sustainable Development Goals (SDG).
These commitments are based on leveraging investments to expand the benefits of the railway for the value chain way while gradually reducing carbon emissions in our operations. They are reflected in our strategy, which is focused on aligning the business growth to the addressal of climate changes to meet the needs of our clients and market expectations, through which we can expand our operations.
For that purpose, we rely on a climate-change governance structure that strategically addresses the theme. This structure is led by the Board of Directors, which, with the support of the Strategic and Sustainability Committee discuss about the strategy and the monitoring of progress against climate- related goals quarterly. This governance structure has driven the interaction across all areas of the company (administrative, technical, and operational), leading to better internal collaboration and building multidisciplinary teams within the Strategic and Sustainability Committee.
12Annual Sustainability Report 2023
REPORT ON CLIMATE | EXECUTIVE | MANAGEMENT OF | METRICS | FINAL | APPENDIX A: TCFD | 8 | ||||||
INTRODUCTION | GOVERNANCE | CLIMATE-RELATED RISKS | STRATEGY | REFERENCES | ||||||||
CHANGE 2023 | SUMMARY | AND GOALS | CONSIDERATIONS | SUMMARY TABLE | ||||||||
AND OPPORTUNITIES | ||||||||||||
The process for identifying, assessing, evaluating, and managing climate-related risks and opportunities that was completed in 2023, allowed us to reinforce the insights on certain risks. The identification of risks and opportunities followed the TCFD recommendations and main climate model references, such as the Intergovernmental Panel on Climate Change (IPCC) and the International Energy Agency (IEA).
To further the business value generation, we have goals linked to our 10 Commitments to Sustainable Development, which address relevant themes for the Company value generation. These goals are based on efforts that aspire to make a difference in Brazilian logistics, people's lives, and our operations. Also, starting in 2021, ESG goals have been set out for all employees, related to the variable compensation of the Company, including the reduction in specific emissions.
After identifying and evaluating the risks and opportunities related to climate change, due to the relevance of the topic, we will continue on our journey by sharing the results with relevant areas to establish prioritized action plans.
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INTRODUCTION | GOVERNANCE | CLIMATE-RELATED RISKS | STRATEGY | REFERENCES | |||||||
CHANGE 2023 | SUMMARY | AND GOALS | CONSIDERATIONS | SUMMARY TABLE | |||||||
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3. GOVERNANCE
FIGURE 1: RUMO'S GOVERNANCE STRUCTURE
General Shareholders' Meeting
Independent Audit | Fiscal Council | Board of Directors |
Executive | Operational | Personnel, Appointment and | Related-Party | |||||||||||||||||||
Board | Committee | Remuneration Committee | Committee | |||||||||||||||||||
Financial and Investor | Ethics | Negotiation and Disclosure | Executive | |||||||||||||||||||
Relations VP | Committee | Committee | Legal Board |
Strategic and
Sustainability Committee
Legal
Compliance
Financial
Committee
Statutory Audit
Committee
Internal | Risk | |||||
Audit | Management | |||||
As a publicly-traded company listed on the Brazilian stock exchange B3 since 2004 and part of the Novo Mercado listing segment since 20141, we are committed to the highest standards of corporate governance, which includes four major bodies: General Shareholders' Meeting, Board of Directors, Audit Committee, and Executive Boards.
Our commitment to promoting sustainability through the development of the Brazilian infrastructure and the continuous pursuit of best practices has resulted in our choices to compose the major sustainability
indexes: inclusion in the Dow Jones Sustainability World and Emerging Markets Indexes of the S&P Global's Corporate Sustainability Assessment on 12/08/20232 and 3rd consecutive year in the Corporate Sustainability Index of São Paulo Exchange (B3 ISE).
As we are aware of the scenario created by climate change in our sector and business, this subject is treated strategically by our top leaders, let by the Board of Directors with the support of the Strategic and Sustainability Committee, which is responsible for addressing sustainability and ESG themes, including
risk management, its actions, objectives, and goals. The committee members meet quarterly to track the progress against what was previously decided and report that to the Board of Directors. Also as part of the Board of Administration attributions, the CEO and the members of the Executive Board support the making of strategic decisions about the sustainability and ESG agenda and help to implement and monitor the steps required to achieve the planned outcomes.
- Listed companies | B3.
- Companies | DJSI World & Emerging Markets Indexes.
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According to the company's internal regulations, the Board of Directors consists of 10 fuul members, with 3 independent members and is supported by 6 Advisory Committees: Operational; People; Appointment and Compensation; Stakeholders; Finance; Statutory Audit; and Strategic and Sustainability. As part of the attributions of the Board of Directors, the climate change agenda was integrated into the corporate governance mechanisms, which include the assessment of and guidance on:
- strategies;
- actions plans;
- risk management policies; and,
- quarterly monitoring and supervision of progress against actions and goals related to climate change.
The CEO periodically monitors the strategies and goals that were set out, including those related to climate change, and, in conjunction with the Executive Board, assesses the impacts of climate-related risks and opportunities;
The Statutory Executive Board consists of 1 (one) Chairman and 4 (four) Vice-presidents (Financial VP and Investor Relationship Director, Operation VP, Commercial VP, and Regulation and Expansion VP), who are responsible for managing operations and implementing the policies and actions required to achieve the goals set out by the Board of Directors;
The Strategic and Sustainability Committee is currently composed of 3 (three) members- one of them independent- with terms concurrent with the Board of Directors. This committee is responsible for addressing matters related to business sustainability and ESG by setting out, implementing, and monitoring strategies, policies, projects, goals, and actions to drive investments, communications, and possible partnerships; and
The Strategic and Sustainability Committee addresses topics related to the 6 material themes listed below, which were identified during the review of our materiality matrix in 2023. These topics were previously addressed in specific forums involving representatives of the subject areas;
MATERIAL THEMES, 2023:
1. Climate Change and Emissions
Management
2. Safety and Operational Risks
3. Governance and Ethics
4. Community Relations
5. Human Rights
6. Diversity, Equity and Inclusion
Theme Climate Change and Emissions Management remained as material and relevant during the review of the materiality matrix (2023), either due to the intensive use of fossil fuels, which is characteristic of this sector, or to the strong link with climate-dependent sectors, such as agribusiness, becoming a core theme in our corporate strategy.
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Rumo SA published this content on 28 June 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 28 June 2024 21:58:32 UTC.