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

Why Brazil matters for ESG compliance

Brazil moved early on sustainability disclosure, and in October 2023 the Securities Exchange Commission of Brazil, known as CVM, issued Resolution 193 that requires listed companies to report in line with IFRS S1 and S2 beginning with 2026 filings. Brazil is the first major economy to embed the ISSB baseline into domestic law, setting a precedent that other Latin American markets are already studying.

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 starts this fiscal year.

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, finalised in 2024, embeds the ISSB concepts of materiality and enterprise value, making Brazil one of the first jurisdictions to enforce climate and broader sustainability metrics with audit‑level assurance.

• Resolution BCB 387 requires banks to integrate climate and nature risks into governance, strategy, and risk management, with mandatory scenario analysis due from 2025. Any firm relying on local credit facilities will face sharper lender questions.

• The lower house is expected to pass Bill 412 2022 this session, creating a national emissions trading scheme that will cap entities emitting more than twenty‑five thousand tonnes of carbon dioxide a year. Preparatory monitoring and verification rules are likely to be released within the next quarter.

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.

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. If the carbon bill is approved, suppliers that exceed the emissions threshold will need verified inventories by 2026, so begin collecting granular activity data now.

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 Ministry of Finance released a draft sustainable taxonomy in December 2024 that maps agriculture, mining, and energy activities to nature positive criteria. While voluntary today, the document anticipates mandatory tagging of revenues and capital expenditure by 2026, which will push companies to gather far richer geospatial data than is required under IFRS S2. Boards need to monitor these experiments because CVM has already signalled that a second wave of rules will add nature indicators once global standards stabilise.

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 forthcoming emissions trading scheme 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 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 because the taxonomy consultation points to mandatory reporting by 2026.

• 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 Brasília’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. Curious about who we are or the impact we’re making? Learn more about us here.

Frequently Asked Questions

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

Listed companies must begin mandatory reporting aligned with IFRS S1 and S2 for the fiscal year starting January 1 2026, with voluntary reporting encouraged for 2024 and 2025.

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 starting in 2025.

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

Entities emitting more than twenty five thousand tonnes of carbon dioxide a year will need verified inventories once the law enters into force. Buyers are already adding cost pass through clauses to long term purchase agreements.

Is Brazil requiring biodiversity disclosures in 2025 audits?

Not yet. Biodiversity metrics remain voluntary, but the draft taxonomy and TNFD pilots indicate likely future inclusion. 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.

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