Investing with a long-term approach has always been part of our DNA. Since our foundation in 1918, we have pioneered practices and adopted an entrepreneurial mindset that has guided our way of doing business for the last century. Historically, Votorantim has a solid industrial background, with high-carbon-emitting operations (hard-to-abate) and energy-intensive sectors, such as building materials, metals and mining, and agriculture. Over the years, these companies have evolved. While joining the global effort to adapt to climate change, we have transformed our business model to encourage our portfolio companies to do the same.  

STRONG GOVERNANCE, ROBUST STRATEGY  

Today, each portfolio company must manage its business strategies in-line with a long-term strategy articulated with Votorantim. Votorantim helps maintain this alignment in three ways: by influencing, monitoring, and reporting. We influence the portfolio companies to adopt best practices, contributing to the long-term viability of the business. We follow the incorporation of ESG criteria into investment decisions and company evaluations while monitoring risks. And we do this while communicating transparently about initiatives undertaken by Votorantim and the portfolio companies.  

Following this method, our companies are encouraged to adopt goals aligned with the Science Based Targets Initiative (SBTi) and report data based on GRI standards. The portfolio companies are members of the United Nations Global Compact, serving as ambassadors for multiple Sustainable Development Goals and related initiatives. Votorantim Cimentos, CBA, and Citrosuco are also part of the Net Zero Ambition Movement, which aims to reach net zero operations by 2050, and have adopted cutting-edge practices in their business sectors to achieve this goal.  

MOVING TOWARDS CARBON NEUTRAL-CONCRETE  

At Votorantim Cimentos, our building materials business, the goal is to produce carbon-neutral concrete by 2050. Like other large-scale industrial assets, the cement industry is considered hard-to-abate primarily due to the nature of its production process, but there is much room to improve. Votorantim Cimentos is leading this change by committing to limit its net emissions to 475kg of carbon per ton of cementitious product by 2030, representing a reduction of almost 25 percent in emissions compared to the base year (2018). The moving parts to fulfill this goal are centered around co-processing. We start with substituting fossil fuels for alternative fuels, such as biomass and different kinds of waste. We opt for by-products from other industries, strengthening our circular economy. We prioritize energy efficiency by optimizing the use of renewable sources. And we fund the creation of new technologies, by investing in innovative processes and partnerships to improve operational efficiency. Through this robust plan of action and as an example, the company has recently raised $150 million with the International Financial Corporation (IFC) to invest in emissions-reducing initiatives.  

LOW-CARBON ALUMINUM  

CBA is one of the largest producers of low-carbon aluminum in the world. While the global average emissions are around 12.6 tons of carbon per ton of aluminum produced, CBA’s levels are about 3 tons CO2/ton – more than 4x lower than global peers (according to data provided by CRU). As the only fully vertically integrated aluminum company in Brazil, CBA’s goal is to reduce emissions by 40 percent until 2030 (on average for cast products, cradle-to-gate) compared to the base year (2019). As the aluminum operation is energy-intensive, the company invests in renewable self-production, counting on 23 hydroelectric plants to supply energy for their production process. CBA also supports circularity through a business unit focused on recycling aluminum scrap, which requires only five percent of the electricity needed to produce primary aluminum, improving energy efficiency. Today, CBA has an A leadership level score from CDP (Disclosure Insight Action) and follows the recommendations of TCFD (Task Force on Climate-Related Financial Disclosures). This is the first Brazilian company to join the First Movers Coalition – a World Economic Forum initiative to promote innovative clean technologies across eight hard to abate sectors, including aluminum.  

PRODUCTION CHAIN ADVANCEMENT FOR A LOW-CARBON ECONOMY  

As one of the largest orange juice producers in the world, Citrosuco has prioritized making its production chain sustainable. To do so by 2030, the company aims to reduce carbon emissions (scopes 1 and 2) by 28 percent compared to the base year (2019). The plan is to pursue biodiversity conservation projects for 100 percent of the land owned while reducing greater social vulnerability by 100 percent in selected territories where it operates. 68 percent of Citrosuco’s production comprises certified sustainable fruit, with 100 percent of owned farms certified by the Sustainable Agriculture Initiative Platform. The company has an A- grade from CDP and is recognized with a gold-level rating from EcoVadis, a rating agency that establishes best practices in corporate sustainability. To diversify its portfolio, Citrosuco launched a new business unit, Evera, specialized in developing natural ingredients. Evera’s ability to fully utilize the fruits and offer unique solutions to the market broadens the horizons for innovation in the citrus industry.  

NEW BUSINESS OPPORTUNITIES FOR THE GREEN ECONOMY  

Nature-based solutions have significantly impacted our portfolio. Through Reservas Votorantim, we introduced a new PES (Payment for Environmental Services) methodology, which will be implemented at Legado das Águas, the largest private Atlantic Forest reserve in Brazil. Project PES Carbonflor accounts not only for avoided deforestation but also for the impact of climate change and carbon credit generation from forest conservation efforts. In a partnership between Reservas Votorantim and CBA, we have issued the first carbon credits from the Cerrado biome in Latin America. This issuance was part of a REDD+ project that represented a milestone in the Brazilian carbon market and was first applied at Legado Verdes do Cerrado, a 79,000-acre private reserve owned by CBA and managed by Reservas Votorantim. 

BUSINESS TRANSFORMATION IN HARD-TO-ABATE ASSETS  

Votorantim is in many ways proof that hard-to-abate operations can transform themselves. Simply divesting from these assets altogether squanders the opportunity to utilize companies’ pre-existing networks, capabilities, and industry expertise to create long-term value at scale going forward. As an engaged investor, we own our role in fostering this transformation in our portfolio companies and see the climate transition as an opportunity for diversification and growth in a changing world.