Conectas Direitos Humanos v. BNDES and BNDESPAR

On June 21, 2022, Conectas Direitos Humanos filed a claim against BNDES (Brazil's Development Bank) and BNDESPar, the bank's investment arm responsible for managing its shareholdings in various Brazilian companies held by the bank. According to Conectas, this is the world's first civil climate action against a national development bank. Although BNDESPar, which is publicly owned, follows an Environmental and Social Policy for Operating in Capital Markets, which bans support for companies with a track record of environmental crimes and modern-day slavery, this policy does not include climate criteria. The company also does not report the carbon emissions associated with its investment portfolio and still maintains equity positions in sectors that are among the most carbon-intensive in the Brazilian economy. The lack of rules or protocols for assessing the impacts of its investments on the climate crisis are in violation of the Brazil's commitments under the Paris Agreement and the country’s own PNMC (National Policy on Climate Change), among other provisions. Based on two technical opinions, Conectas asks the court to require BNDESPar and its controller, BNDES, to be given 90 days to adopt transparency measures and present a plan with rules and mechanisms to commit their investments and divestments to the reduction of greenhouse gas emissions by the companies they finance. In practice, these actions will affect the just transition and guarantee the country's readjustment in the world economy towards sustainable development, which would be the institutional mission of BNDES itself. The plan should align with commitments to reducing GHG emissions by 2030 in the sectors currently financed by the company, in accordance with the international commitments assumed by Brazil. In addition to presenting concrete goals, the plan should be prepared together with civil society, public bodies and academics, and it should provide for environmental and social compensation whenever the targets are not achieved. The case also calls for the creation by BNDESPar of a Climate Situation Room to assess compliance with the targets established in the plan to reduce greenhouse gas emissions, while publishing the progress or setbacks in the sectors that have investments from BNDESPar. One of the requests made in the case is for the Room to be accessed by representatives of civil society, traditional peoples and communities, the Public Prosecutor’s Office, the Public Defender’s Office, academics and members of the Judiciary. On June 22, 2022, a subpoena was issued to the parties required to manifest on the requested urgency relief. BNDES and BNDESPAR presented their answer. They defended that the BNDES system has internal policies, structured procedures and appropriate conduct to address environmental, social and climate issues, including the promotion of the carbon market. They informed that they adopt international and national protocols of best ESG and climate practices, such as the NDC Panel - a platform that shows the performance of the BNDES system in relation to Brazilian climate goals, including monitoring emissions from the projects it supports. They asserted that the system has a pilot methodology for assessing climate risks of supported projects. They highlighted that, in 2022, the measurement of greenhouse gas (GHG) emissions from its administrative activities, calculation of financed GHG emissions and the adoption of divestment processes in carbon-intensive companies and activities were carried out. They defended their passive illegitimacy, since the Federal Supreme Court established, in the judgment of ADPF 708 (Climate Fund), that it is the competence of the Union to execute public policies related to the climate issue. They claimed that the time limit for filing claims related to the PNMC would already be expired and that the claims in the initial petition disregard possible consequences on economic activities carried out by the defendants. They argued that the Paris Agreement proposes that the treatment of climate issues by countries is conditional, voluntary and a long-term commitment and that Brazil already occupies a leading position in the fight against climate change. They pointed out that climate litigation would imply a violation of the separation of Powers, as it seeks to make the Judicial Branch an instance of political climate governance. Because they are state-owned companies, they argued that they do not have the autonomy to develop their own environmental policy, but must comply with the policies defined by the Federal Union, environmental legislation and the Federal Constitution. Conectas Direitos Humanos presented a reply, in which it rebutted arguments brought by the defense and emphasized the importance of the Judicial Branch in climate litigation, in order to protect citizens' rights. It pointed out that the climate measures sought by the claim are distinct from the environmental measures listed by the defendants. It clarifies that the core of the debate of the ACP is (i) that the Brazilian legal system implies the necessary collaboration of BNDESPAR to achieve the country's climate goals and (ii) that the entity does not adopt measures in this regard, considering the most advanced technical criteria that exist