Cogna is moving ahead of peers in terms of ESG practices

Today we hosted a call (replay) with Juliano Griebeler, Cogna’s Head of Institutional Relations & Sustainability, and Eduardo Honzak, Head of IR, to discuss key ESG initiatives and goals for the coming years, including the main challenges and opportunities. In 2020, the company was recognized for the second consecutive year as one of the leading companies in the Consumer Services industries with the lowest ESG risk. Key discussion points are summarized below.

Underweight
COGN3.SA, COGN3 BZ

Price: R$2.13 21
Mar 2022

Table 1: Valuation – 2022

		EV/EB	P/E
AFYA	OW	8.8	15.1
CSED3	NC	NA	8.6
COGN3	UW	8.3	NM
SEER3	OW	5.8	10.9
VTRU	NC	11.4	8.7
YDUQ3	N	6.1	14.2
High Ed		7.2	12.2

• Cogna is moving ahead of peers in terms of ESG practices, scoring well in rankings such as MSCI, Sustainalytics, CSA. To design its ESG program, Cogna benchmarked Natura, Suzano, Ambev, Itaú, Santander, EDP, among others, which are seen as advanced in their ESG reports.

• Social – Student success: internal goal, but not yet a public commitment. The company is still debating what is the best metric to evaluate student success (wage increase, employability, NPS, etc.), and also decided to wait until the effects of the COVID-19 pandemic are better understood. However, this goal might be included in the list of public goals in the future.

• Social – Cogna generates R$10bn/yr in social impact, as calculated by an Ernst Young methodology. The largest component is student income improvement, followed by Cogna’s own payroll, and then suppliers.

• Social – Initiatives should impact 5.3m lives by 2025, including 5m through community care (ex: clinics) and social projects; 150k public teachers with portals with courses and tools, supported by Somos; and 150k entrepreneurs, including free courses (3k impacted in 2021) and activities in campuses with local entrepreneurs.

• Governance – All executives will have compensation ESG-tied goals by 2023. The company is currently updating internal policies to prepare the ground.

• Governance – Vasta (N) has 50% of independent members on its board. While it has super-voting rights for Cogna shares, which is its controller, board composition helps to increase minority shareholder representation.

• Environment – Impact 1.8m people in environmental education by 2025. Cogna seeks to efficiently manage neutral resources with several education projects, such as campaigns to raise awareness about rational energy consumption and strategic partnerships that benefit the community as a whole. Moreover, while still not quantified, the migration to digital education might bring lower consumption of materials and transportation.

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