B3 Sustainability Index forms first portfolio of the year with 70 companies from 37 sectors

B3 launched its first 2023 portfolio of the Corporate Sustainability Index (ISE), the 18th, which brings together 70 companies, a record, and which, together, are equivalent to around BRL 2 trillion in market value.

In addition to the increase in the number of companies – 23 more than the 17th edition – this last one also has more diversity of sectors than the previous one, there are 37 against 27.

“With 47 companies and fewer sectors, the index was more concentrated. Now with 70, it is positive, as there is greater diversification of sectors. This helps to better balance the index”, evaluates Marcella Ungaretti, head of Research ESG at XP Investimentos.

According to specialists, the record of companies that are now part of the ISE B3 demonstrates greater concern with sustainability issues and corporate governance practices, pillars of the ESG (which stands for Environmental, Social and Corporate Governance).

For Fabricio Soler, environmental lawyer and graduate professor in Environmental Law and Strategic Management of Sustainability at PUC-SP, these values ​​are “in line with the policies for mitigating and adapting climate change adopted worldwide.”

It is also a sign that there is a maturation of companies with the consolidation of the ESG and its criteria are now considered “in the assessment of risks, opportunities and respective impacts, with the objective of guiding activities, businesses and sustainable investments”, he explains.

The discussions brought about by COP27 – the United Nations Climate Conference held in November, in Egypt – also boost the adoption of the ESG agenda and participation in the ISE B3, in the professor’s opinion. “COP27 brought relevant discussions to the market, in addition to reiterating the commitment previously made to seek to limit the global temperature increase to 1.5°C.”

Soler also points out that the Climate Conference called on multilateral banks and financial institutions to simplify access and promote climate financing for developing countries.

Criteria

To participate in B3’s Corporate Sustainability Index, companies must obligatorily meet criteria related to ESG business practices.

With the interest in participating in the ISE B3, the company’s ESG grade is disclosed to the market, as explained by Marcella Ungaretti. From then on, B3 verifies which ones may or may not be included in the index.

Cesar Sanches, Sustainability Superintendent at B3, lists the criteria for participating in ISE B3:

• Be among the top 200 in the Negotiability Index (IN), which measures the volume traded by an asset on the stock exchange, during the validity period of the three previous index portfolios;
• Have a 50% presence in trading sessions in the same period;
• Not be classified as “penny stock”. This means that shares traded below R$1.00 are not eligible to be included in the index.

Sanches points out that, based on these criteria, eligible companies are invited to the process, but participation is voluntary and free of charge.

In the composition of the 18th portfolio, 83 companies that applied were eligible, but after the selection process, 70 were approved, including the 47 that were already part of the portfolios formed in 2022.

Sanches explains that B3 improved the methodology for evaluating companies in 2021.”The current methodology made the index simpler and more transparent for investors. The process has also become more objective for companies, and the questions are closer to what the market is used to reporting, considering the synergy with international standards”.

Marcella, from XP, points out that it does not mean that the companies that are part of the ISE B3 are in full ESG status. “The ESG agenda is a journey. Companies need to improve this approach over the long term.”

See the companies that are part of the 18th ISE B3 portfolio

The ISE B3 portfolio, valid for the period between January and April 2023, is made up of the following companies:

• Aeris;
• AES Brasil Energia;
• Aliansce Sonae;
• Ambev;
• Ambipar;
• Americanas SA;
• Arezzo, Blue;
• B3 SA;
• Bank of Brazil;
• Pan Bank;
• Bradesco;
• Braskem;
• BRF, BTG Pactual;
• CCR;
• Cemig;
• Cia Brasileira de Alumínio;
• Cia Brasileira de Distribuição;
• Sky;
• Cogna Education;
• Copel;
• Cosan;
• CPFL;
• CTEEP;
• Dexco;
• Diagnostics of America;
• Ecoroads;
• EDP;
• Eletrobrás;
• Eneva;
• Engie;
• Fleury;
• Gafisa;
• Grendene;
• Guararapes;
• Hypera;
• Iochpe Maxion;
• Irani Paper and Packaging;
• Itaú Unibanco;
• Itausa;
• Klabin;
• Light;
• Renner stores;
• M. Dias Branco;
• Magazine Luiza;
• Marfrig;
• Minerva;
• Moved;
• MRV;
• Nature;
• Neoenergy;
• Raya Drogasil;
• Raizen;
• Rede D’or, Rumo;
• Sanepar;
• Santander;
• Santos Brazil;
• Paths;
• Simpar;
• Agricultural SLC;
• Suzano;
• Telephone;
• Tim;
• Usiminas;
• Come on SA;
• Via;
• vibrates;
• Weg.

* Under the supervision of Ana Carolina Nunes