Brazil: CVM requires disclosure of ESG information

published on 30 October 2023 | reading time approx. 1 minute

On 6 October 2023, the Brazilian Securities and Exchange Commission (CVM) published Resolution 193, which establishes new rules for the disclosure of financial information related to sustainability. The new rules make Brazil the first country in the world to adopt the standards of the International Sustainability Standards Board (ISSB).

Companies listed on the stock exchange, investment funds and securitisation companies will be obliged to disclose information on their environmental, social and governance (ESG) impacts, including greenhouse gas emissions, water use, waste management, climate risk management, human rights, labour relations and corporate governance.

The new rules are an important step towards combating greenwashing, which is the practice of companies promoting themselves as sustainable without having the corresponding ESG practices.

Companies will be obliged to disclose specific metrics about their ESG impacts, which will make it easier for investors to compare companies and identify those with the best practices. In addition, companies will be required to hire independent auditors to audit their ESG information.

Resolution 193 will have significant impacts on the Brazilian capital market, including:

Increased transparency and accountability for companies: The new rules will require companies to disclose more detailed information about their ESG impacts. This will allow investors to better assess sustainability-related risks and opportunities.
Growth of the sustainable capital market: Resolution 193 should stimulate the growth of the sustainable capital market in Brazil. This is because the new rules will make it easier for investors to identify and invest in companies with good ESG practices.
Reducing greenwashing: The new rules should help reduce greenwashing, which is the practice of companies promoting themselves as sustainable without having the corresponding ESG practices. This is because the new rules will require companies to disclose more robust information about their ESG practices.
Attracting global investment: Brazil's adoption of the ISSB standards will make its capital markets more attractive to global investors. Investors are increasingly looking to invest in companies that are transparent about their sustainability performance.

Mandatory compliance with the resolution for public traded companies will begin on 1 January 2026, with the possibility of voluntary adoption starting in 2024.