ForecastingStocks

The Environmental pillar measures how a company affects, and is affected by, the natural world. It is usually the first thing people picture when they hear "ESG", but it is broader than just carbon.

What gets measured

Greenhouse-gas emissions — often split into Scope 1 (direct emissions from operations), Scope 2 (purchased electricity), and Scope 3 (the whole value chain, including suppliers and product use). Scope 3 is the hardest to measure and frequently the largest.
Energy and resource use — total energy consumed, share from renewables, water withdrawal, raw-material efficiency.
Waste and pollution — hazardous waste, air and water pollutants, plastic, spills.
Land and biodiversity — deforestation, habitat loss, sustainable sourcing.

Two directions of risk

A useful way to think about the E pillar is that risk flows both ways:

Impact — the harm the company does to the environment (its emissions, its waste).
Exposure — the harm the environment can do to the company. A coastal factory faces flooding risk; an oil producer faces transition risk as the world shifts away from fossil fuels and some reserves become stranded assets that can never be profitably extracted.

Why it matters for Brazil

For Brazilian investors the E pillar is especially concrete. Agriculture, mining and energy are huge parts of the economy, and topics like Amazon deforestation, water use, and the country's largely renewable electricity grid are central to how global investors assess Brazilian companies. A meatpacker linked to illegal deforestation, for example, can lose access to European buyers and foreign capital quickly.