• Brazil’s securities regulator has dropped planned mandatory ISSB-aligned sustainability reporting for listed companies.
• Companies that opt out must publicly explain their decision when filing 2027 annual financial statements.
• Firms that report voluntarily must use CBPS and ISSB-based standards and commit to reporting for three consecutive years.

Brazil Eases ESG Reporting Mandate

Brazil’s securities regulator has pulled back from mandatory sustainability reporting, reshaping one of the world’s most closely watched emerging-market ESG disclosure regimes.

The Securities and Exchange Commission of Brazil, known as CVM, has enacted Resolution CVM 244. The rule amends Brazil’s sustainable finance framework and revokes the planned mandatory use of international sustainability disclosure standards for publicly held companies.

Mandatory reporting had been scheduled to begin with fiscal years starting on or after January 1, 2026. Companies would have reported on 2026 data under standards aligned with the International Sustainability Standards Board.

That requirement is now voluntary.

The move changes Brazil’s earlier position as a potential first mover among major emerging economies. It also places the country within a wider global debate over how far regulators should go in forcing climate and sustainability disclosures.

ISSB Standards Stay In Place For Voluntary Reporters

CVM has not abandoned the technical framework behind the rules. Companies that choose to publish sustainability reports must still comply with standards issued by the Brazilian Sustainability Pronouncements Committee, known as CBPS.

Those standards are based on the IFRS Foundation’s International Sustainability Standards Board framework. They include IFRS S1 for general sustainability-related disclosures and IFRS S2 for climate-related disclosures.

This means Brazil is keeping the reporting architecture intact. What has changed is the use of state compulsion.

The revised regulation creates a “comply-or-explain” system. Public companies that choose not to publish a sustainability report must disclose that decision to the market. They must also explain the reasons for the decision.

That announcement must be made by the time companies file their annual financial statements in 2027.

Three-Year Rule Aims To Protect Market Discipline

CVM has added safeguards to prevent weak or inconsistent reporting cycles.

Companies that opt into sustainability reporting must prepare reports for at least three consecutive years. The requirement is designed to stop firms from publishing selectively when conditions look favorable.

The rule also sets an advance warning requirement. If a company decides to stop reporting, it must announce that decision in the fiscal year before it exits the reporting process.

For investors, this creates some continuity. It also gives markets time to assess whether a company’s withdrawal reflects cost concerns, strategy, governance issues, or weaker ESG performance.

For issuers, the change provides regulatory relief. Mid-sized listed companies and category B domestic issuers are likely to feel that relief most clearly. Many had raised concerns about data systems, internal controls, and external assurance costs.

Large multinational companies may still report. Foreign institutional investors often expect ISSB-aligned data, especially from firms exposed to global capital markets.

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Cost, Governance And Investor Demand Collide

Brazil’s original mandate was introduced under Resolution CVM 193 in 2023. It created a voluntary pilot phase for 2024 and 2025. Mandatory disclosure was then due to follow from 2026.

The framework formed part of Brazil’s wider sustainable finance agenda. It also supported the country’s Ecological Transformation Plan, which seeks to strengthen green investment and policy credibility.

The rollback shows how regulators are now testing the balance between transparency and corporate cost burdens. Climate data remains valuable for investors. Yet many companies argue that reporting rules can divert capital from operations, growth, and decarbonization work.

CVM framed the update as a way to preserve comparability while giving companies more control over capital allocation.

“The changes aim to improve the voluntary adoption model, preserving the transparency and comparability brought about by the need to comply with accounting standards, but restoring the necessary respect for the freedom of entities to estimate the expected costs and benefits of their decisions on how to use investor resources,” the Securities and Exchange Commission of Brazil (CVM), said in an official statement.

A Wider Shift In Climate Disclosure Policy

Brazil’s decision lands as other major markets revisit climate disclosure mandates.

In the United States, the Securities and Exchange Commission has faced sustained legal and political pressure over its corporate climate disclosure rules. Cost concerns have focused heavily on Scope 3 value-chain emissions reporting.

In Europe, the Corporate Sustainability Reporting Directive remains in force. Even so, industry pressure has pushed policymakers to consider exemptions and reporting caps to protect competitiveness.

Brazil’s pivot does not remove sustainability reporting from the market. It shifts responsibility toward boards, management teams, and investors.

Companies must now decide whether transparency helps them access capital, manage risk, and build credibility. Investors must decide how strongly they will reward voluntary disclosure.

CVM leadership has linked the change to a broader modernization agenda.

“The CVM has passed through an accelerated process of institutional advances… with focus on modernization, predictability, agility, and dynamism. In this scenario, our regulatory agenda includes themes like tokenization, the redesign of classic intermediary roles, and the implementation of sustainable finance assuming absolute protagonism,” said Otto Lobo, Interim President, CVM.

For the C-suite, the message is direct. Brazil is no longer forcing every listed company into mandatory ISSB-aligned reporting. But the market will still judge which companies can explain their climate risks, governance choices, and capital allocation with credibility.

The regional significance is clear. Brazil has softened the legal edge of ESG disclosure, but it has not stepped away from global reporting standards. That distinction will shape how emerging markets balance climate transparency, investment access, and corporate autonomy.

ESG News Editorial Team

The ESG News Editorial Team is comprised of veteran financial journalists and sustainability analysts dedicated to providing real-time, objective reporting on global ESG regulations, climate finance, and corporate governance. Our desk monitors daily developments from the SEC, IFRS, CSRD and international regulatory bodies to ensure our 1M+ readers receive accurate, data-driven insights into the evolving sustainable investment landscape. Follow the ESG News Editorial Team for expert reporting on global sustainability standards, ESG disclosures, and climate policy. Access over 10,000 investigative reports and real-time updates.