Brazil shifts from mandatory to voluntary sustainability reporting

illuminem summarises for you the essential news of the day, reviewed by our editorial team. Read the full piece on ESG Today or enjoy below:

🗞️ Driving the news: Brazil’s Securities and Exchange Commission (CVM) has shifted its sustainability reporting rules from mandatory to voluntary
• Public companies will no longer be legally required to file ISSB-aligned sustainability and climate disclosures starting with 2026 data, though companies that choose not to report must publicly explain their decision
• Firms that report must comply with ISSB-based standards and commit to at least three consecutive years of disclosure

🔭 The context: Originally announced in 2023, mandatory sustainability reporting was due to begin for fiscal years starting January 1, 2026, using standards from the Brazilian Sustainability Pronouncements Committee (CBPS) aligned with IFRS S1 and S2
• The new “comply-or-explain” framework allows firms discretion while maintaining transparency for investors

🌍 Why it matters for the planet: Voluntary reporting may reduce the scope and consistency of corporate climate and sustainability disclosures, potentially limiting investor insight into environmental risks and slowing corporate accountability on emissions, biodiversity, and climate strategies
• The transparency of voluntary adoption depends on companies actively disclosing reasons for opting out

⏭️ What’s next: Companies are urged to announce their reporting decision with annual financial statements in 2027
• Regulators and investors will likely monitor uptake to assess whether voluntary reporting delivers meaningful environmental disclosures
• Over time, CBPS standards may guide market expectations even without mandatory enforcement

💬 One quote: “The changes aim to improve the voluntary adoption model, preserving the transparency and comparability… while restoring the necessary respect for the freedom of entities to estimate the expected costs and benefits of their decisions.” – CVM

📈 One stat: Firms that opt to report must maintain sustainability disclosures for at least three consecutive years, or publicly explain why they discontinue

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