In a groundbreaking move to promote sustainability and climate accountability, Brazil’s Securities and Exchange Commission (CVM) and Ministry of Finance have jointly announced that all public companies operating in the country will be obligated to provide annual sustainability and climate-related disclosures from 2026 onwards.
Until then, as of 2024, publicly traded companies and investment funds in Brazil will have the option to report on their sustainability voluntarily. Beginning in 2027, companies will be required to submit their sustainability reports either within three months after the end of a fiscal year or alongside their financial statements.
“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,” Brazilian Finance Minister Fernando Haddad said.
The new reporting framework, CVM explains, will be based on the sustainability and climate-related disclosure guidelines recently issued by the International Sustainability Standards Board (ISSB), a subsidiary of the International Financial Reporting Standards (IFRS) Foundation.
The ISSB, launched at COP26, develops and approves IFRS Sustainability Disclosure Standards. It is responsible for “all sustainability-related technical matters of the IFRS Foundation.”
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“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,” said Emmanuel Faber, Chair of ISSB.
In the press release announcing Brazil’s move, the IFRS points out that “Latin American jurisdictions have been at the forefront of mandating sustainability-related financial disclosures.”
Panama announced its support for the ISSB this week while “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,” the IFRS writes, adding that authorities in Mexico are also “publicly discussing plans for use of the ISSB’s Standards.”
Editor’s Note: The opinions expressed here by the authors are their own, not those of Impakter.com — In the Featured Photo: Rio de Janeiro, Brazil, September 3, 2021. Featured Photo Credit: Wikimedia Commons.