As part of The Climate Group’s countdown to Climate Week NYC, we are releasing exclusive interviews with low carbon business and government leaders from around the world. Today we speak to Clesio Antonio Balbo, President of Balbo Group, Brazil’s largest organic sugar producer, to find out more about the challenges and opportunities of doing sustainable business in Latin America’s biggest – and currently most fragile – economy.
Amid growing debt following Brazil’s disappointingly slow economic growth, this week Standard & Poor downgraded the country's credit rating to the lowest ‘junk’ grade, which denotes high risk.
As one of Brazil’s biggest industries, agriculture has taken a big hit in the last year. The sugar sector in particular has seen plant closures and dropping exports which are impacting the 20% of global sugar supply Brazil accounts for.
But it’s easy to forget the world’s tenth largest consumer of energy is also a leader in biofuel technology, and earlier this summer agreed to increase renewables use by 2030 in a partnership with the US government.
Clean energy offers a cheaper, more sustainable option for industries like agriculture as they seek to survive uncertain markets, which Brazil’s leading sugarcane grower, Balbo Group, is well aware of. President Clesio Balbo tell us: “Sustainability is part of our strategy. We went beyond certified organic agriculture by focusing on soil recovery and enhancing its living fertility.”
By diversifying from its core product and transitioning to more sustainable production, Balbo has managed to expand, save money and cut emissions at the same time.
“The production processes replaced carbon emissions from former sugarcane burnings by carbon sequestration and carbon storage into the soil”, explains the President. “Nowadays, thanks to our production processes, from the same fields, we get more tons of sugarcane per hectare, and from these crops we get sugar; alcohol for cosmetic industry, alcohol as vehicle fuel; heat for our industrial plants; electrical power for our own use; electrical power surplus to sell; fertilizers for our fields; biodegradable plastics and natural wax.”
Clesio Balbo believes honing in on diversification and productivity for low carbon farming is easy to achieve on a larger scale. “We have already achieved large-scale sustainable sugar cane agriculture. Here, at Balbo Group, we produce sugar, organic alcohol and electrical energy in large scale. Only our company produces enough electrical energy to provide electricity for a city with 600,000 inhabitants.”
Brazil’s burgeoning biofuel production – installed capacity is around 6 million cubic meters from 50 key biodiesel plants – is set to continue according to Clesio Balbo, driven by “promising” research the country is doing with native species that might be used in the future, such as macaúba (Acrocomia aculeata).
But he warns incentives for businesses to migrate to other sustainable energy sources needs to be spurred by greater buy-in at all levels. “There is a low level of consumer consciousness in general regarding the advantages of using clean energy, [but] there is a big change going on [which is] increasing the demand. There is also social advantages; there is a reduction of air pollution, saving on health care money and better wellbeing for our workers, us, families and neighbors too.
“Promoting sustainability into an organizational dynamic capability is a challenge that companies will have to deal with if they want to be competitive – naturally passing by being environmentally and socially responsible.”
The President’s message to the private-sector is to invest in renewable energy and learn lessons for the Balbo Group’s investments. “In Brazil, the sugar and alcohol sector is totally private and a 100% pro renewable energy(sugar, alcohol and electric energy, self-sufficient and suppliers for third parties). Since 1986, the Balbo Group’s strategy is to go renewable, besides going beyond certified organic. We developed - and keep developing - new technologies to take advantage of the fantastic and enormous potential of sugar cane as row material. We don’t think it is worth, we’re sure it is!
“Sustainability should be part of the business strategy; being dynamic and innovative to become a competitive factor allied to a capacity of adaptation and resilience. This dynamic choice brought the company to a new paradigm.”
There is a clear message to the government too from the Brazilian business leader, who suggests they “reduce bureaucracy and leave some adjustments to the market”. He warns: “Many Brazilian authorities, politicians and institutions lack knowledge of what is really done in the country. Many official initiatives are not well structured and, unfortunately, are not consistent for short, medium and long term.”
Speaking in more depth about Brazil’s environmental legislation, Clesio Balbo continues: “There are too many laws and too little understanding. Many rules are much more ideological oriented then environmentally focused. The government also tends to transfer some environmental protection responsibilities to businesses or to farmers, like it happened with the Forest Bill, approved in 2012.
“Few countries in the world interfere as much as Brazil on the agricultural producer decision-making. That gets very complicated in a country with such a large territory, where laws tend to generalize situations that, in reality, are diversified, different according to each particular region.
“There is also a gap between research and knowledge production, and businesses that could use technologies and knowledge to improve environmentally sound practices. Many Brazilian environmentalists are concerned only about forests and natural ecosystems, because that calls more attention internationally. This is natural for a country with important forests like the Amazon and the Atlantic Rainforest, but leads to neglected environmental citizenship and poor environmental education. It leads to a certain ‘businesses invisibility’ too, as if good agricultural or good industrial practices were only to be expected in developed (non-forested) countries.”
Clesio Balbo also emphasizes the importance of the UN global climate talks taking place in Paris this December in our interview. He says a strong agreement is important for Brazilian communities and business because it will “help generate or improve economic compensations for environmentally sound practices, allowing more investments in knowledge and technology developments.”
“We believe this could favor the dissemination of good examples among businesses. At least it would be a lot more efficient than the present bureaucratic legislation maze,” he adds.
Despite such labyrinthine policy though, Clesio Balbo trusts that Brazil’s future prospects for low carbon innovators, businesses and markets are strong. “Brazil does have a tremendous potential, mainly in the energy sector, from alcohol to wind, water, solar and others. We have the natural resources and many good experiences going on. But we still need wise investments and focused policies to make these innovations work nationwide.”
His closing message to investors and world leaders ahead of COP21 is to support the opportunities that still exist in Brazil despite its economic turmoil, by diversifying and adopting low carbon energy.
“Brazil is going through a very sensitive period concerning investments and investors, the country’s risk and its capacity to deal with the economic and political conjuncture.
“But we are still doing well in the agricultural sector and, by consequence, with environmentally sound-agricultural practices. If laws and rules became clear and clearly enforceable, the investors will look after the opportunities and help to spread the right word.”
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Climate Week NYC is a cornerstone event in the international calendar that brings together influential global figures and new voices from the worlds of business, government and investors to lead the transition toward net zero emissions. The Climate Group launched Climate Week NYC in 2009, and has since acted as the secretariat. Host to more than 70 affiliate events across the city, this year Climate Week NYC will also act as the collaborative space for climate events in support of the UN Sustainable Development Goals and the Paris Climate Agreement.