Petrobras

Petrobras invests in research and development (R&D) across various areas, including exploration and production (E&P), refining, advanced methane monitoring technologies, biofuels, offshore wind, hydrogen and carbon capture and storage (CCS). There are indications that Petrobras is investing in non-mature mitigation technologies, such as conceptual studies on floating wind turbines in ultra-deep waters and carbon dioxide conversion through microalgae. However, Petrobras dedicates only approximately 10% of its R&D budget to low-carbon technologies, which falls significantly short of the sector’s 1.5°C expectation of 77%.

The emissions reduction targets set by Petrobras, include scope 1 and 2 absolute emissions reduction by 30% by 2030 compared to 2015, zero routine flaring by 2030 and a 30% reduction in emissions intensity in the E&P segment by 2025. The company aims to maintain the emissions intensity achieved in 2025 until 2030. The targets could not be scored on the alignment with the company’s 1.5°C pathway as the use of offsets has not been quantified. The company should develop a long-term target that aligns with its 1.5°C pathway and covers its scope 1, 2 and 3 emissions and intermediate targets at gaps of no more than 5 years to incentivise near-term action on longer-term goals.

Petrobras states it has implemented ESG-aligned contractual actions and the company’s questionnaire is sent to suppliers representing 95% of total procurement spend. Petrobras incorporates emissions reduction standards into the annual audits of its suppliers. However, suppliers are not required to publicly report on their GHG emissions, nor are emissions reduction criteria included in the selection or renewal of supplier contracts. To achieve the scale of value chain emissions reduction required by the low-carbon transition, it is imperative that integrated companies engage their suppliers and create demand for low-carbon alternatives.

Petrobras has incorporated an offshore carbon dioxide (C02) reinjection program in the pre-salt fields as a key part of its decarbonisation plan. However, this programme is primarily focused on enhanced oil recovery (EOR). Unfortunately, Petrobras has not specified whether the CO2 used for reinjection originates from industrial sources or natural reservoirs. Furthermore, the company has not implemented a monitoring, reporting, and verification (MRV) system to ensure the proper sequestration of CO2. To improve transparency, Petrobras should disclose the sources of CO2 and assess the benefits of this activity in terms of reducing the emissions intensity of the oil produced.

Petrobras has set several emissions reduction targets for its E&P and refining sectors for 2025 and 2030, as well as a 55% reduction target in the intensity of methane emissions in the upstream segment by 2025 compared to 2015. The company aims to reduce its scope 1 and 2 emissions by 100% by 2050 and influence partners operating in Brazil to achieve the same ambition by 2050. The use of offsets is not specified.

Petrobras plans to reduce emissions intensity in exploration and production and invest USD 3.7 billion in the decarbonisation of operations, USD 0.6 billion in biorefining and USD 0.1 billion in skills for the future between 2023 and 2027. Its strategies include electrifying equipment, EOR with CCS, refinery efficiency programs, and producing sustainable fuels. The company evaluates risks using internal and external scenarios, including the International Energy Agency (IEA) Net Zero Emissions (NZE) by 2050 Scenario and discusses results qualitatively and financially.

During 2021, Petrobras stopped operating in the wind and hydroelectric power generation segment. The company’s upstream oil segment has grown in 2022 compared to 2017. Petrobras is expanding its oil production at Buzios field by adding more Floating Production Storage and Offloading (FPSO) in the field in 2022. It announced more than USD 64 billion investment in exploration and production-related activities as part of its five-year strategic plan from 2023 to 2027.

Petrobras decreased its midstream scope 1 and 2 emissions intensity but saw only a marginal decline in its upstream oil and gas scope 1 and 2 emissions intensity between 2016 and 2021. This is in contrast to the company’s 1.5°C pathway, which requires Petrobras to deliver an 8% annual decrease in scope 1 and 2 emissions intensity between 2021 and 2026. Petrobras is currently projected to exceed its total 1.5°C carbon budget by more than 50% for the period 2022-2050.

The company’s transition plan is undermined by a lack of scope 3 targets as well as sufficient interim targets. The investments planned in low-carbon technologies between 2023 and 2027 account only for 6% of total capital expenditure. Petrobras is planning to increase its crude oil production over the next five years showing a critical lack of urgency to transition.

The company publicly discloses a commitment to engaging in social dialogue with workers and unions. However, no relevant disclosure was found regarding the categories of stakeholders it engages with on a just transition. Nor was there any evidence to show the company’s ongoing social dialogue and meaningful engagement with affected stakeholders. No evidence was found of the company undertaking just transition planning to mitigate the social impacts of the low-carbon transition on workers, affected stakeholders and its business relationships. Additionally, no evidence was found to demonstrate the company’s engagement in social dialogue and with stakeholders in its just transition planning.

No public commitment by the company was found stating its intention to create and support access to green and decent jobs as part of the low-carbon transition. Moreover, no evidence was found of the company’s action to promote these jobs in a way that ensures gender balance and inclusion of vulnerable groups. Additionally, no relevant disclosure was found of the company’s assessment of employment dislocation risks. The company has a commitment to re- and up-skill workers and stakeholders affected by the low-carbon transition and discloses the actions it takes in this regard. For instance, it conducts leadership training, human rights training, mentoring, tutoring, and technical and managerial rotations for its experienced employees. Furthermore, the company discloses the measures it takes to embed equality of opportunity for women and vulnerable groups in these actions. It does this through women’s mentoring program to leverage female leadership. However, no relevant disclosure was found of a process for identifying skills gaps for workers and affected stakeholders in the context of the transition.

No relevant disclosure was found to show if the company identifies impacts of the low-carbon transition on social protection for workers and affected stakeholders, nor how it contributes to social protection. Additionally, no evidence was found that the company expects its business relationships to contribute to the social protection of their workers and affected stakeholders. No relevant disclosure was found to show how the company identifies any misalignment of its lobbying activities with policies and regulations that support the just transition, nor of the measures it takes to address misalignment. Furthermore, no evidence was found that the company lobbies for policies and regulations for green and decent job creation; retention, education and reskilling; and social protection for workers.

The company commits to respecting human rights. However, no evidence was found that the company commits to the ILO fundamental rights at work, and it expects its business relationships to demonstrate the same commitments. The company discloses a human rights due diligence process that includes the identification and assessment of salient human rights risks, such as non-payment of labor costs, accommodation conditions, and exhaustive working hours. The company takes action to mitigate these risks in its own operations and supply chain, and it engages with affected stakeholders. Moreover, the company has a grievance mechanism available to workers and external stakeholders.

The company commits to respecting the health and safety of its workers and expects the same commitment of its business relationships. No evidence was found of a time-bound target for paying all workers a living wage. While the company discloses the proportion of its direct workforce covered by collective bargaining agreements, no relevant disclosure was found of the company’s required working hours. The company the gender of its workforce by employee category. However, no relevant disclosure was found of additional indicators of workforce diversity. The company commits to gender equality and women’s empowerment.

No evidence was found that the company commits to protecting personal data and that it has a privacy statement regarding the collection, sharing and access to personal data. No relevant disclosure was found of the company’s global tax strategy and the corporate income tax paid for each relevant jurisdiction. The company does have a policy prohibiting bribery and corruption, and it includes corresponding clauses in its contracts with business relationships. However, no evidence was found that the company has a lobbying and political engagement policy and that it specifies that it does not make political contributions. No relevant disclosure was found of the company’s expenditure on lobbying activities.