Petrobras is a major state-owned oil and gas producer in Brazil that has one of the largest corporate carbon footprints in Latin America. AB is an investor participant in the Petrobras CA100+ investor cohort and has held a series of engagements on the company’s climate strategy since joining the initiative.
During AB’s tenure on this engagement, Petrobras has continued to progress its climate strategy, despite persistent changes in top leadership and operating in the context of a dynamic political environment. In particular, in line with guidance provided by AB and the CA100+ investor cohort, Petrobras has recently made decisive new commitments around its climate activities. The company has now pledged to achieve net zero greenhouse gas (GHG) emissions by 2050.
In the most recent Petrobras engagement, the Environmental Defense Fund (EDF) joined AB and the investor cohort to provide perspective and expertise on managing risks related to methane emissions, which are major contributors to climate change, given that methane’s warming potential is much greater than that of CO2.
AB and the other investors encouraged Petrobras to join the Oil and Gas Methane Partnership 2.0 (OGMP). The OGMP is a multi-stakeholder initiative launched by the United Nations Environment Programme and the Climate and Clean Air Coalition, which works with major oil and gas companies to help tackle methane emissions, which pose financially material risks and opportunities to issuers that we seek to manage on behalf of our clients.
By joining OGMP, members commit to disclosing according to the OGMP reporting framework, which works to improve the transparency and accuracy of methane emissions reporting. In previous dialogues, Petrobras expressed concerns over the technical feasibility of adhering to this reporting framework, attributing this concern to particular features of the company’s offshore drilling operations. However, AB and the investors were able to leverage the expertise of EDF to help address some of these concerns. Petrobras has since indicated that the prospect of joining OGMP membership is currently progressing through its internal approval processes.
AB and the CA100+ investor cohort are encouraged by the progress made on evolving the company’s climate strategy, as well as efforts to take investor priorities seriously.