10 August 2015
Climate change is increasingly informing policy and practice. Governments around the world are testing out different mitigation measures, while climate change issues are now having a significant impact on other aspects of commercial life, such as accountancy, taxation, corporate social responsibility, transactions, litigation and real estate.
How have national policies in your jurisdiction evolved to take account of the threat posed by climate change?
Since 2007 Congress has intensified its monitoring of the issues surrounding climate change and increased the number of debates surrounding these issues. Congress first established the Special Joint Committee on Climate Change. On December 30 2008 it issued Resolution 4, which created the Permanent Joint Committee on Climate Change. This committee conducts important debates on climate change and monitors the performance of the executive branch in order to address the causes and effects of climate change.
Published on December 29 2009, Federal Law 12.187 introduced the National Policy on Climate Change and the concepts of adaptation and mitigation in relation to climate change. These concepts consider the technological changes and substitutions needed to reduce the use of resources and greenhouse gas emissions. Article 12 sets out a key goal of the National Policy on Climate Change – that is, a voluntary commitment to reduce greenhouse gas emissions from 38.9% to 36.1% by 2020, based on emission values in 2005.
What practical impact are climate change issues now having on corporate life for companies in your jurisdiction? What are the main concerns of which they must be aware?
Brazil is facing a historical water crisis, caused by factors such as climate change. The problem will likely continue to expand, as hydropower is Brazil's main energy source. The southeast has been significantly affected by the water crisis.
In order to save energy, some companies have adopted reduced working hours or allowed employees to work remotely. The population in general should be aware of the need to adopt measures that help to minimise water consumption.
How are environmental issues reflected in corporate social responsibility programmes in your jurisdiction? What are best practices in this regard?
Companies have promoted social and environmental action by encouraging social responsibility and introducing voluntary commitments to develop society, to benefit of the community at large.
With regard to environmental best practices, some companies are seeking to reduce their greenhouse gas emissions by using vehicles that run on ethanol, replacing in-person meetings with videoconferences and encouraging employees to carpool.
As investors are being asked to disinvest in fossil fuel stocks, what obligation do companies have to report on the possibility of "buried assets" as part of their risk management strategies? What are the legal consequences of hiding this information from shareholders?
The right to information is one of the most important rights granted to shareholders. Under Section 1(e) of Federal Law 6.404/1976, administrators must report all relevant acts and facts to shareholders. Any company decisions or acts which may influence investors' decisions to buy, sell or hold transferable securities are considered relevant.
A failure to fulfil this duty may result in administrative penalties imposed by the Securities and Exchange Commission. Moreover, administrators who fail to fulfil their duty to inform may be subject to prison terms of between one and four and fines, as set out in Article 177 of the Penal Code:
"To promote the establishment of a corporation doing, prospectus or communication to the public or to the assembly, false statement on the formation of the company, or hiding fraudulently fact relating thereto: Penalty - imprisonment of one to four years and fine, if the fact does not constitute crime against the economy."
Are there grounds for individuals or groups to sue the government for damage that results from climate change? Have any such cases been brought to date? What is the main focus of other climate-related litigation in your jurisdiction?
Article 225 of the Constitution establishes environmental protection as a main objective for Brazilian states. Thus, if a state neglects its duty to protect the environment or where protection is insufficient, federal entities may be held liable for repairing the damage caused to individuals or social groups affected by the negative effects of climate change.
For example, the Sao Paulo Higher Court recently ruled(1) that Fernandopolis was liable for damage caused by rainwater entering residents' houses. In this case, the court found that Fernandopolis was negligent, as it had failed to install a drainage system in the flooded region.
In Brazil, most climate change related litigation involves floods and landslides.
For further information on this topic please contact Maria Alice Doria at Doria, Jacobina e Gondinho Advogados by telephone (+55 21 3523 9090) or email (firstname.lastname@example.org). The Doria, Jacobina e Gondinho Advogados website can be accessed at www.djga.com.br.
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