B3 Announces The 14th ISE – Corporate Sustainability Index Portfolio

B3 announced today the release of the fourteenth Corporate Sustainability Index (ISE) portfolio, effective from January 7, 2019 to January 3, 2020. The new ISE portfolio, whose technical partner since its inception is the Center for Sustainability Studies at the Fundação Getúlio Vargas (FGVces), comprises 35 stocks from 30 companies. The companies are drawn from 13 industry sectors and together account for a  market capitalization of BRL1.73 trillion, 48.66% of the combined figure for all the  companies whose stocks are traded on B3, based on the November 27, 2018 closing (in 2017, it accounted for 41.47%).

New Portfolio - 2019

*For the ISE annual portfolio process announced today, 181 companies with the 200 most liquid equities on B3 were invited. Of these, 36 signed up for the process in three categories: 33 as Eligible, 2 of them also as Simulated and 3 as Trainee.

Current Portfolio - 2018 (valid until January 4, 2019)

Since its inception in 2005, the ISE has gained +203.80% against +175.38% for Ibovespa (based on November 27, 2018 closing). In the same period, the ISE was also less volatile: 24.22% compared to 27.04% for Ibovespa.

The 2018 ISE process included the external assurance by KPMG,  which issued the index "Limited Assurance No Reservations" status. The ISE assurance process has been carried out since 2012, providing even greater more credibility and reliability to the index. Furthermore, the ISE has also maintained its daily press monitoring partnership with the PR company Imagem Corporativa.

With transparency being one of B3’s key agenda item, the publication of the  responses to the evaluation questionnaire is a prerequisite for companies to join the ISE. The responses given by 30 companies of the 2018 portfolio will be available at www.isebvmf.com.br.

X-RAY OF THE 2019 PORTFOLIO

• 67% of companies state that they review and define their business models by adopting as a criterion their externalities (unpriced positive or negative impacts) and providing for adjustments in the short, medium and long term. (new question)
• 74% of companies guide their commitments based on the UN Guiding Principles on Business and Human Rights. (new question)
• 96% of companies establish disciplinary measures in case of violation of rights regarding sexual orientation and gender identity. 26% have structured programs in place to ensure rights for the LGBT group. (new questions)
• 17% of company boards incorporate criteria related to the participation of women in the selection processes of their officers and statutory directors, and 10% incorporate criteria regarding the participation of black people. (new question)
• 98% of companies included climate change issues in their materiality reviews over the past 3 years. (new question)
• 91% considered mitigation and adaptation issues in these analyzes (6% included only mitigation and 2% adaptation only). As a result of these analyzes, 85% identified the mitigation and adaptation themes as material (6% identified only mitigation, 0% adaptation only, and 9% did not identify any of the two themes as material). (new questions)

With regard to the Sustainable Development Goals (SDGs), this year the questionnaire was divided into two phases.

Phase 1: Utilize the SDG Agenda 2030 as a benchmark to identify and integrate relevant aspects of sustainability into the company's business by prioritizing the most relevant SDGs for its business, performing a materiality analysis and having as a criterion the positive and negative impacts of the company's activity.

Phase 2: Based on the set of SDGs that the company prioritized, identify what practices the company adopts to incorporate the foundations of the SDG Agenda 2030 in its activity.

About Phase 1:

• Four goals stood out since they were analyzed and considered as a priority by companies, due to the relevance of the positive and negative impacts on the company's activity: SDG 9 (infrastructure, industrialization, innovation) by 85%; SDG 8 (growth, employment, work) by 76%; SDG 13 (climate change) by 70%; and SDG 12 (sustainable production and consumption) and SDG 16 by 59%.
• SDG 7 (energy for all), although it was not included in the materiality analysis of 19% of the companies, it was prioritized by 61% of the total companies.
• SDGs regarded as non-priority: ODS 5 (gender equality) by 54%; ODS 10 (reduce inequality) by 61%; ODS 6 (water and sanitation for all) by 59%; ODS 14 (seas and oceans) by 61% and ODS 17 (means of implementation and partnerships) by 56%.

About Phase 2:

• 83% of the companies have defined and ongoing processes for integrating the SDGs into their desired strategies, targets and results.
• 57% of the companies analyze and address the cross-implications between prioritized SDGs and other SDSs.