Decoding Brazil’s ESG Regulations: What Global Companies Need to Know

Brazil moved early on sustainability disclosure, and in October 2023 the Securities Exchange Commission of Brazil, known as CVM, issued Resolution 193 requiring listed companies to report in line with IFRS S1 and S2, locally adopted as CBPS 01 and CBPS 02 through CVM Resolutions 217, 218, and 219 (October 2024), beginning with fiscal year 2026. Brazil was the first major economy to embed the ISSB baseline into domestic law. That early move now sits within a broader wave: as of early 2026, 37 jurisdictions accounting for roughly 60 percent of global GDP are adopting or referencing ISSB Standards, meaning Brazilian disclosure practices increasingly serve as a benchmark rather than an outlier.

Capital markets have responded fast. Between late 2023 and early 2025, green and transition bond issuance on B3 topped 9 billion US dollars, more than the previous five years combined, and international investors now treat Brazilian issuers as early indicators of how the ISSB framework may function in emerging markets. Lenders are also testing climate-adjusted pricing tied to the Central Bank's climate stress test regime that started in 2025.

For multinationals, the stakes run higher than ticking a disclosure box. Brazil sits at the centre of global agribusiness, metals, and battery supply chains, all under rising scrutiny for deforestation and Scope 3 emissions. Aligning Brazilian subsidiaries with the new rule set will therefore influence the credibility of group-level sustainability statements filed in the United States, Europe, and Asia.

Regulatory building blocks that companies cannot ignore

• CVM Resolution 193 and CBPS 01/02. CVM Resolution 193, finalised in 2024 and operationalised through CVM Resolutions 217, 218, and 219, embeds the ISSB concepts of materiality and enterprise value. Listed companies are now required to prepare and disclose sustainability-related financial information in accordance with CBPS 01 and CBPS 02 (the Brazilian adoptions of IFRS S1 and S2) for the 2026 fiscal year, with reasonable assurance required from fiscal years commencing on or after January 1, 2026. Companies should already be collecting data for their first mandatory filing cycle.

• Resolution BCB 387. This resolution requires banks to integrate climate and nature risks into governance, strategy, and risk management. Mandatory scenario analysis has been in effect since 2025. Any firm relying on local credit facilities will face sharper lender questions as banks incorporate client climate risk data into their own regulatory submissions.

• Law 15.042/2024 (SBCE). Signed by President Lula on December 12, 2024, this law established the Brazilian Greenhouse Gas Emissions Trading System (SBCE), creating a regulated carbon market that caps entities emitting more than twenty-five thousand tonnes of carbon dioxide equivalent a year. The SBCE is being implemented in five phases: Phase I covers regulatory development (12 to 24 months from enactment), Phase II operationalises emissions reporting, Phase III implements monitoring plans and emissions reports over a two-year window, Phase IV launches the first National Allocation Plan with free allowances, and Phase V brings full system operation. Companies emitting above 10,000 tonnes of CO2 equivalent per year face reporting obligations; those above 25,000 tonnes face reconciliation duties. An interim secretariat has been established to prepare the regulations for SBCE operation while the permanent management body is formally set up.

Immediate moves for foreign‑controlled entities

Map your regulatory touchpoints. Identify which Brazilian subsidiaries fall under CVM or Central Bank oversight, then align group data architecture so reporting can feed both local and global dashboards. Note that CVM filings must now follow CBPS 01 and CBPS 02 specifically, not just IFRS S1 and S2 in their original English form.

Recalibrate scenario analysis. The Central Bank guidance references the NGFS science-based scenarios; embed the same variables in enterprise risk models to avoid duplicate runs later.

Stress-test procurement. With Law 15.042/2024 now in force, suppliers that exceed the emissions threshold will need verified inventories as the SBCE phases in reporting obligations. Begin collecting granular activity data now rather than waiting for the compliance deadlines to arrive.

Engage proactively. Brazilian regulators maintain public consultations. Submitting evidence of practical implementation challenges can influence interpretive guidance, and it demonstrates good-faith engagement to supervisory teams.

Navigating unresolved disclosure questions

Brazilian regulators achieved speed, not yet completeness. Biodiversity is the most visible gap. The Federal Government formally established the Brazilian Sustainable Taxonomy (TSB) through Decree 12,705/2025 on October 31, 2025, ahead of COP30. The TSB covers eight economic sectors including agriculture, energy, and transportation, and sets technical criteria for identifying sustainable economic activities based on climate mitigation, adaptation, biodiversity conservation, and social equity objectives.

The TSB is currently voluntary but is structured in two phases lasting up to three years, with mandatory application expected as the framework matures. While the mandatory revenue and capital expenditure tagging that earlier drafts anticipated for 2026 has not yet materialized, the taxonomy's integration into credit lines, financial product labelling, and potential tax incentives means companies should begin aligning their data systems now. CVM has signalled that a second wave of disclosure rules will add nature indicators once global standards stabilise, and the TSB provides the classificatory backbone for that expansion.

Governance and liability edge

Brazil's civil code imposes strict joint liability on directors for environmental harm. As climate litigation grows worldwide, claimants increasingly file in Brazilian courts, then leverage judgments to challenge consolidated accounts in New York or London. The Central Bank climate stress test and the SBCE will feed a larger data trail that plaintiffs can mine. Multinationals therefore face a legal risk profile that extends beyond their Brazilian perimeter, especially if group statements rely on shared controls.

Financial incentives accelerating the curve

Policy is not only about sticks. The National Treasury issued two billion US dollars of sustainable sovereign bonds in 2023, followed by a second transaction in 2024, each oversubscribed more than five times. Local exchanges have replicated the momentum. B3 reports that green and social labelled issuance doubled again in the first quarter of 2025, giving early movers a cost of capital advantage that can outweigh first-mover effort.

Strategic actions that deliver immediate value

Build a unified control room. Map regulatory requirements, including CBPS 01/02 for CVM filings and SBCE reporting obligations under Law 15.042/2024, to a single data glossary so Brazilian numbers feed SEC or CSRD filings without rework.

Reprice land use risk. Use IFRS Foundation sustainability guidance alongside satellite alerts to stress test cash flow under deforestation assumptions.

Integrate nature governance. Add biodiversity chapters into board charters now. The TSB is voluntary today but is designed to transition to mandatory status, and early alignment will avoid costly retrofitting once CVM formalises nature-related disclosure requirements.

Monetise transition opportunities. Reference the Central Bank sustainability policy when structuring local debt to meet lender expectations and unlock coupon step-down incentives.

Call to explore deeper scenarios

Even well-resourced multinationals seldom maintain an up-to-date view of Brasilia's fast-moving rulemaking calendar. Gasilov Group works on the ground with regulators, sector associations, and global standard setters. Contact us here to pressure test your disclosure road map, quantify cross-border legal exposures, and design capital-efficient transition strategies.

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Written by: Gasilov Group Editorial Team

Reviewed by: Arif Gasilov, Partner, Climate & Environmental Reporting​

Leads CSRD and ESRS alignment, double materiality assessments, emissions baselining, and climate risk mapping, with hands-on experience across corporate and public sector sustainability engagements in North America and Europe.

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Frequently Asked Questions (FAQ):

What is the compliance deadline for CVM Resolution 193 reporting in Brazil?

Listed companies must begin mandatory reporting aligned with IFRS S1 and S2 (adopted locally as CBPS 01 and CBPS 02) for the fiscal year starting January 1, 2026. Voluntary reporting was encouraged for 2024 and 2025, but the voluntary window has now closed and mandatory reporting is in effect. Reasonable assurance is required from the 2026 fiscal year onward.

Does the Central Bank climate stress test apply to non-financial corporates?

Direct requirements target banks, but corporates that borrow locally will feel the effect because lenders must incorporate client climate risk data into scenario analysis. This requirement has been in effect since 2025.

How will Brazil's emissions trading scheme affect supply chain contracts?

Law 15.042/2024 is now in force and the SBCE is being implemented in phases. Entities emitting more than twenty-five thousand tonnes of carbon dioxide equivalent a year will face reconciliation obligations as the system matures, and those above ten thousand tonnes face reporting duties. Buyers are already adding cost pass-through clauses to long-term purchase agreements in anticipation of full compliance requirements.

Is Brazil requiring biodiversity disclosures in 2025 audits?

Not yet. Biodiversity metrics remain voluntary, but the TSB established by Decree 12,705/2025 and ongoing TNFD pilots indicate likely future inclusion. The TSB's two-phase structure anticipates a transition from voluntary to mandatory status within three years. Firms should prototype data collection now to avoid later restatements.

Can Brazilian green bonds issued on B3 qualify under EU green bond standards?

In many cases yes. B3 aligns its thematic bond guide with the International Capital Market Association principles, which are referenced by the EU Green Bond Standard, but each deal must still map use of proceeds to EU taxonomy categories.