Too big to fail: Measuring the alignment of the Brazilian fund’s industry with climate goals

In a collaborative initiative, PACTA joined forces with the German Agency for International Cooperation programs, Finanças Brasileiras Sustentáveis (FiBraS), and Programa Políticas sobre Mudança do Clima (PoMuC), along with the Brazilian Securities Commission (CVM), to conduct an assessment of Brazilian funds' portfolios in relation to the goals of the Paris Agreement.

The assessment was conducted using publicly available data on fund compositions, sourced from, with a timestamp of December 2021.

The study encompassed the analysis of 5,385 funds’ portfolios, managed by 638 different asset managers based in Brazil, totaling approximately USD 150 billion in assets under management, comprising equities and corporate bonds.

One significant finding of the study is that the portfolios of Brazilian asset managers, as observed in the sample, exhibit a high level of concentration, with an average of 30% of equities and corporate bonds (AuM) allocated to climate-relevant sectors, while in other jurisdictions an average of 5% is usual.

On the downside, asset managers’ portfolios are highly exposed to assets that are likely to be phased out in the mid-term if climate change is effectively addressed, such as oil and gas, which are often referred to as stranded assets.

The study reveals a significant allocation of portfolios to climate-relevant sectors, surpassing the levels observed in other jurisdictions.

On average, Brazilian funds have allocated 10% of their portfolios to the fossil fuel sector. The power sector holds significant relevance in the composition of funds, accounting for 5% to 10% of total assets. When analyzing the volume production trajectory for renewable power in the next five years, it is evident that the portfolios of the Brazilian funds industry are misaligned across various asset types.

Brazil’s steel sector holds a prominent position in the global market, housing headquarters and production facilities for major steel-producing companies like Vale, Gerdau, and Usiminas. Given the sector’s significance to the overall economy, Brazilian funds have allocated between 10% to 40% of their equities portfolios to steel, which is considerably higher than the average allocation in other countries (typically around 3% of portfolios).

PACTA also provides individual interactive reports for each peer group of funds analyzed.

  •       Ações Indexados (ACIDX)
  •       Ações Ativo (ACAT)
  •       Ações ESG (ACESG)
  •       Multimercado Alocação (MLTA)
  •       Multimercado Estratégia (MLTE)
  •       Renda Fixa Crédito Privado (RFCP)


The study concluded with the following recommendations to the Brazilian financial authorities:

i)   Invest in capacity building

ii)   Implement complementary non-GHG metrics and standards

iii)  Continuously monitor climate-related risks

iv)  Encourage and unlock the potential for impact




Building off a vast climate-related financial database, the PACTA tool aggregates global forward-looking asset-based company data (such as the production plans of a manufacturing plant over the next five years), up to the parent company level. The tool then produces a customized, confidential output report, which allows investors to assess the overall alignment of their portfolios with various climate scenarios and with the Paris Agreement. This report is part of the PACTA Coordinated Projects (PACTA COP): our dedicated program in which we work together with individuals or groups of governments and supervisors to help them apply PACTA to the portfolios of their regulated entities.



This project has received funding from the German Agency for International Cooperation (GIZ) GmbH (as commissioned by the Government of the Federal Republic of Germany) under agreement n. 81279616. This document does not represent the opinion of the GIZ, and the GIZ is not responsible for any use that may be made of the information it contains.


2DII today announced it is transferring stewardship of the Paris Agreement Capital Transition Assessment (PACTA) to RMI, formerly Rocky Mountain Institute. PACTA measures financial portfolios' alignment with various climate scenarios, including those consistent with the Paris Agreement. Under RMI’s stewardship, PACTA will remain a free, independent, open-source methodology and tool, and will continue to provide the financial and supervisory community with forward-looking, science-based scenario analysis to help users make climate-aligned financing decisions. RMI will invest in scaling up PACTA’s usability and applicability in day-to-day investment decisions as well as reporting requirements.

Access the full press release here: the coming weeks, we will update this website with additional information. For now, please note that all contact information remains unchanged.