May. 20, 2022
Good afternoon! To whom it may concern, please find below our contributions ( Vale S.A.) to the public consultation in place. We have a few comments regarding the topics that were asked on the proposal and we followed the order and the numbers of the questions. 1,2) We already disclose information regarding TCFD in a Climate Change Report and CDP annually. Would be necessary to do it in another report for SEC? It would be better to disclose in a separate report, as we already do it today. 4) Guidelines are always helpful. We could support it. 8) Yes, we can disclose any climate-related risks that are reasonably likely to have a material impact on the registrant, including on its business or consolidated financial statements, which may manifest over the short, medium, and long term, as proposed. Short term: 1-5 years; mid term: 5-20 years and long term: 30-50 years and to end of the century as we consider for IPCC climate change scenarios. 9) It is important to define that climate variables are causes for possible physical impacts on a site/business/company. So, this definition should be clear in the definition of Physical risks related to climate. We should follow TCFD recommendations and definitions for risks and opportunities related to climate. 10) We could provide Geo codes of the facilities and country, region, city as well. 17) This is an important issue. As a global and huge company such as Vale, it is difficult to analyze in detail the whole value chain for physical impacts. We could analyze the regions of our clients for instance, but it is not easy to analyze each facility that could buy our products. 38) About Governance, we already disclose our climate related Governance, in fact, the Board of Directors should be able to prove its expertise on Climate Changes. The need for a specific Climate Risk management, and/or people with proven expertise, is likely to be approved and we support it. Other comments: Scope 3 The definition of "materiality" adopted for application to Scope 3 is broad to the extent that it does not allow for the provision of comparable information between organizations in the same sector. Only the reason for not having a threshold percentage of Scope 3 emissions is disclosed (because a low percentage of Scope 3 emissions can have significant risks for the company), however, the reason for not having standard material themes for organizations in the same sector is not informed. Thus, to enhance the potential comparison, necessary for investors, it would be pertinent to adopt a list of standard material issues for organizations in the same sector. This list could be developed from research of recognized frameworks and research with investors specializing in the sector. If the organization does not consider a certain topic on the list to be material, the organization must justify such consideration, making this justification mandatory and not optional as the proposal currently shows. Before the proposal becomes mandatory, this list could go through a public consultation with comments from organizations, as we are doing now. It is important to highlight that we support adopting GHG Protocol guidelines to report GHG emissions. Scope of the emission calculation methodology According to the GRI reporting principles and as good practice, it is important to consider the principles of comparability and reliability and accuracy in reporting information climate-related. This way, it was considered that the wide range of choices made by organizations to calculate their emissions is a factor that would reduce these principals in front of investors. Thus, a choice of methodology would be pertinent. The alternatives would be one methodology can be adopted for all companies, or a more adequate methodology can be determined for each sector. In this sense, the choice of methodology by sector would be more pertinent, involving the organizations in these choices by means of public consultation. The argument used for the SEC's proposal is that there are several calculation methods, and the development of this subject is continuous, so if the proposal adopts one method, it may become outdated in a few years. However, if the method becomes outdated or other methods become more developed, the methodology can always be changed, giving organizations time to adapt. We recommended GHG Protocol as a standard and guidance for companies that seek to calculate their GHG emissions, because GHG Protocol is one of the most widely used methodologies worldwide by companies, organizations and governments for the creation and implementation of GHG and the tool is also compatible with the ISO 14.064 standard and with the quantification methodologies of the Intergovernmental Panel on Climate Change (IPCC). Another point to be considered is the adoption of databases for emission factors, ensuring consistency and reliability of information. Regarding the methodology adopted, whether it is freely chosen by the organization or chosen by the SEC, it would be relevant to disclose the standard deviations (errors) of these methodologies. Assurance We are aware that reasonable assurance provides a higher level of assurance, and it is important to help investors and issuers evaluate the climate-related risk. However, reasonable assurance level provides high cost to companies, therefore, it could be a critical issue. “[…] For example, according to one commenter, 80 percent of S&P 100 companies currently subject certain items of their ESG information, including climate related disclosures such as greenhouse gas emissions, to some type of third-party assurance or verification. Several commenters recommended that we require climate-related disclosures to be subject to limited assurance, which provides a lower level of assurance than reasonable assurance, but is less costly, and is the most common form of assurance provided for ESG, including climate-related disclosures, in the current voluntary reporting landscape.” Best regards, Isabella Costa Gestão Ambiental / Environmental Management Vale S.A.