Public companies in Brazil will be required to provide annual sustainability and climate-related disclosures, starting in 2026, according to a new announcement from Brazil’s Securities and Exchange Commission (CVM) and Ministry of Finance.
According to the CVM, the new reporting requirements will be based on the recently published sustainability and climate-related disclosure standards issued by the IFRS Foundation’s International Sustainability Standards Board (ISSB). The ISSB was launched in November 2021 at the COP26 climate conference, with the goal to develop IFRS Sustainability Disclosure Standards, driven by demand from investors, companies, governments and regulators to provide a global baseline of disclosure requirements enabling a consistent understanding of the effect of sustainability risks and opportunities on companies’ prospects.
Brazil is the latest in a series of jurisdictions to announce the adoption of the new standards, with recent announcements by the UK and Australia. In July, IOSCO, the leading international policy forum and standards setter for securities regulators called on regulators to incorporate the standards into their sustainability reporting regulatory frameworks.
Following the CVM’s announcement, ISSB Chair Emmanuel Faber said:
“We continue to hear strong support for the ISSB’s Standards from regulators globally and I commend the Brazilian Ministry of Finance and Comissão de Valores Mobiliários for providing clarity to companies and investors in Brazil by setting out a clear roadmap towards mandatory adoption.”
The new reporting requirements for part of Brazil’s Ecological Transformation Plan, the country’s strategy, launched earlier this year aimed at driving the transition to a green economy, which also includes $350 billion in planned public and private infrastructure investment.
According to the CVM, public companies and investment funds will be able to begin sustainability reporting following the IFRS standards in 2024 on a voluntary basis, with mandatory reporting to begin for public companies in 2026. From 2027, sustainability reporting will be required within three months after the end of the fiscal year, or simultaneously with the release of financial statements, whichever occurs first.
The CVM added that the new reporting requirements will help global investors to assess risks and opportunities, reduce information costs and optimize the allocation of capital, as well as to enable decisions aligned with sustainable and responsible values.
Brazil’s Minister of Finance Fernando Haddad said:
“This will generate a virtuous cycle of greater transparency and commitment, allowing the possibility of measuring the issue, because there needs to be a global institutional metric, so that the market is global.”