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Brazil Joins Growing List of Jurisdictions Mandating Sustainability Reporting

Brazil Joins Growing List of Jurisdictions Mandating Sustainability Reporting

Sustainability reporting
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The Brazilian Ministry of Finance and the Comissão de Valores Mobiliários (CVM) have announced that the International Sustainability Standards Board’s (ISSB) IFRS Sustainability Disclosure Standards will be incorporated into the Brazilian regulatory framework, setting out a roadmap to move from voluntary use starting in 2024 to mandatory use on 1 January 2026.

These public authorities signalled that the ISSB’s Standards can help strengthen Brazilian capital markets by enhancing transparency around sustainability-related risks and opportunities and facilitate companies attracting capital and global investments. Brazil has required use of IFRS Accounting Standards since 2010.

The announcement coincides with the IFRS Foundation Trustees meeting in Panama City, during which IFRS Foundation Trustees and staff met with representatives of key stakeholders in the region.

The Inter-American Development Bank and Latinex co-hosted an event focused on the role IFRS Accounting and Sustainability Disclosure Standards can play in delivering a more resilient, sustainable and competitive financial sector in the region so that it can face the challenges of the future, with the Panamanian Minister of Commerce and Industry addressing the event.

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Furthermore, the Panamanian Banking Association and Ministry of Economy and Finance held a dinner during which Erkki Liikanen, Chair, IFRS Foundation Trustees provided an address. He reflected that the meetings were being held in the run up to Latin America and the Caribbean Climate week, which provides a stark reminder of the urgency of the work to advance climate-related disclosures, given the increasing risk climate poses to capital markets in the region.

On 18 October, ISSB Chair Emmanuel Faber met with the Association of Supervisors of Bank of the Americas during its annual High-Level Meeting during which they discussed how enhanced sustainability-related disclosures, through the ISSB’s Standards, would benefit the banking sector by providing more reliable and comparable data around emerging risks and opportunities.

During the week, the Superintendency of Banks of Panama announced its support for the ISSB and commitment to promoting use of the ISSB’s Standards by regulated entities.

Last month, the IFRS Foundation published the Spanish translation of IFRS S1 so that companies across Latin America can begin using the Standard, with the IFRS S2 translation to follow soon. The Portuguese translation is also expected in coming months.

Latin American jurisdictions have been at the forefront of mandating sustainability-related financial disclosures. Both Chile and Colombia have mandated use of the Task Force on Climate-Related Financial Disclosures (TCFD) recommendations and SASB Standards, which the ISSB’s Standards build upon. National standard-setters in Mexico are also publicly discussing plans for use of the ISSB’s Standards. 

Reflecting on the announcements, 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.

I also want to thank our partners in Panama for their hospitality this week and the steps they are taking to introduce the ISSB’s Standards locally.

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