Brazil’s legal and regulatory landscape on environmental, social and governance (ESG) matters continued to evolve at an accelerated pace throughout 2024, despite ongoing political polarisation and institutional fragmentation. The year saw stronger co-ordination between public authorities and private-sector stakeholders, as well as a further consolidation of Brazil’s commitment to climate governance, sustainable finance and corporate transparency. Collectively, these initiatives reflect Brazil’s strategic intent to position itself as a leading jurisdiction in the global sustainable economy, marking a significant turning point in the consolidation of ESG principles within the country’s economic, legislative, regulatory and policy frameworks.

In the environmental dimension, a landmark legislative milestone was achieved through the enactment of Federal Law No. 15,042/2024, which established the Brazilian Greenhouse Gas Emissions Trading System (Sistema Brasileiro de Comércio de Emissões de Gases de Efeito Estufa – SBCE). This law lays the foundation for a regulated carbon market in Brazil, providing legal certainty for carbon credit transactions and reinforcing the country’s commitment to its decarbonisation and low-carbon transition agenda. In addition, the enactment of Federal Law No. 15,103/2025, which instituted the National Energy Transition Policy (Política Nacional de Transição Energética – PNTE), along with the Energy Transition Acceleration Programme (Programa de Aceleração de Transição Energética – ”Paten”), introduced legal and policy mechanisms to incentivise green investments and co-ordinate national strategies for a just and inclusive energy transition.

In the social dimension, 2024 witnessed advancements in legislative and regulatory measures promoting gender diversity, equity and occupational health, thereby reinforcing corporate accountability in governance structures. Among the most significant was the enactment of Federal Law No. 15,177/2025, which mandates that at least 30% of corporate board positions in large and publicly traded companies be held by women, and the updates to Normative Ruling No. 1 of the Labour and Employment Ministry, expanding companies’ obligations to include the identification, prevention and mitigation of psychosocial risks in the workplace.

In the governance and financial spheres, the Brazilian Securities and Exchange Commission (Comissão de Valores Mobiliários – CVM) introduced a series of pivotal regulatory updates through Resolutions Nos. 217, 218 and 219. These measures formally incorporated mandatory sustainability-related financial disclosures aligned with the first two IFRS Sustainability Disclosure Standards from the International Sustainability Standards Board (ISSB) – IFRS S1 (General Requirements for Disclosure of Sustainability-related Financial Information) and IFRS S2 (Climate-related Disclosures) – representing a decisive step towards strengthening market transparency, investor confidence and the alignment of Brazilian companies with global ESG-related disclosure practices.

Throughout 2024, Brazil made remarkable strides in advancing the environmental dimension of the ESG agenda, enacting key regulations and policy measures to modernise and strengthen its environmental governance framework. These initiatives reflect a co-ordinated national effort to align Brazil’s domestic regulatory and policy structures with its international commitments, and to accelerate the country’s transition towards a low-carbon, resilient and sustainable economy.

Establishment of the Brazilian Greenhouse Gas Emissions Trading System

A defining milestone of the year was the enactment of Federal Law No. 15,042/2024, establishing the SBCE. The SBCE adopts a cap-and-trade mechanism, inspired by leading international models, most notably, the European Union Emissions Trading System (EU ETS), setting maximum greenhouse gas (GHG) emission limits for specific sectors and entities. Companies whose emissions exceed their assigned caps must offset the surplus by acquiring or trading carbon credits within the regulated market. The law aligns Brazil’s climate governance structure, reinforcing the country’s National Climate Change Policy and its commitments under the Paris Agreement.

Launch of the ESG Parliamentary Front at Brazil’s National Congress

Another institutional milestone was the launch of the ESG Parliamentary Front (Frente Parlamentar ESG na Prática – FPESG) in November 2024, formally established as a nonpartisan initiative within the National Congress. Comprising 189 deputies and nine senators, the FPESG aims to advance ESG-related legislation, strengthen socio-environmental governance and promote accountability in corporate sustainability practices, including efforts to prevent greenwashing. Aligned with the United Nations 2030 Agenda for Sustainable Development, the FPESG seeks to enhance dialogue and co-operation among public authorities, private entities and civil society organisations. Its creation represents an important step towards institutionalising ESG principles in Brazil’s legislative agenda.

National Energy Transition Policy and the “Paten” Programme

In early 2025, the federal government enacted Federal Law No. 15,103/2025, creating the Paten programme to advance Brazil’s energy transition and sustainable development. Implemented through a Green Fund and tax settlement mechanisms tied to reinvestment in green projects, Paten complements the PNTE and aims to co-ordinate climate, energy and industrial policies, mobilising an estimated BRL2 trillion in green investments over the next decade.

In 2024, Brazil experienced significant regulatory and policy advances in the social pillar of the ESG framework, reflecting a growing institutional commitment to diversity, inclusion, social protections and workers’ well-being. The period was marked by the enactment of progressive federal legislation, the issuance of ministerial regulations and ongoing judicial developments, which include the following.

Gender and Racial Diversity on Corporate Boards

A landmark noteworthy measure was the enactment of Federal Law No. 15,177/2025, which mandates that women must hold at least 30% of the positions on corporate boards of directors, and that black or disabled women must occupy at least 30% of those positions. This legislative development aligns with global trends in promoting gender equity and corporate governance reform, aiming to foster more inclusive leadership structures in Brazilian corporations.

Psychosocial Risk Management and Workplace Mental Health

In August 2024, the Labour and Employment Ministry amended Normative Ruling No. 1 to expand the obligations relating to workers’ occupational health. The revised regulation, effective as of 26 May 2026, requires companies to analyse, identify, prevent and mitigate psychosocial risks to which their workforce, including outsourced workers, may be exposed.

By incorporating these risks into employers’ Risk Management Programmes (Programas de Gerenciamento de Riscos), the amendment represents a paradigm shift in Brazilian labour regulation, elevating mental health and well-being to the same level of importance as traditional occupational safety risks (eg, physical, chemical and biological agents).

Strengthening Social Inclusion Through Public Procurement – School Feeding Programme

Another important social policy advancement was the enactment of Federal Law No. 15,226/2025, which increased from 30% to 45% the minimum percentage of resources from the National School Feeding Programme (Programa Nacional de Alimentação Escolar) that must be allocated to the procurement of food directly from family farming and rural enterprises.

The law further prioritises purchases from indigenous and quilombola communities and from formal and informal women’s groups, thereby reinforcing social inclusion and supporting vulnerable and traditional populations.

Work Schedule Reform and Well-Being at Work

Legislative proposals under consideration include adopting a “5–2 work schedule” (five days of work followed by two consecutive days of rest), particularly in sectors such as commerce and healthcare, which traditionally follow the “6–1” regime (six days of work followed by one day of rest).

Although these proposals remain under congressional debate, they reflect a growing recognition of the need to align and integrate Brazilian labour standards with contemporary occupational health matters, enabling rest, flexibility and employee productivity as key factors for sustainable employment relations.

Maternity and Paternity Leave Developments

In the area of paternal protection, Federal Law No. 15,222/2025 introduced the possibility of extending maternity leave by up to 120 days after hospital discharge in cases where the mother or newborn is hospitalised for more than two weeks, provided that a causal link between the hospitalisation and childbirth is established.

Moreover, paternity leave is also expected to evolve in the near term. Following the Brazilian Supreme Federal Court (Supremo Tribunal Federal – STF) decision recognising a constitutional omission in existing legislation governing paternity leave, the 18-month period granted to Congress to address the matter has expired. Consequently, the STF formally notified the National Congress to report on the status of pending bills on paternity leave regulation.

Throughout 2024 and early 2025, Brazil experienced substantial progress in the governance dimension of the ESG agenda, driven by the increasing institutionalisation of transparency, integrity and accountability standards within both the public and private sectors. These developments reflect the consolidation of ESG principles in the dissemination of sound corporate practices, particularly among financial institutions and private companies.

Enhancement of Corporate Disclosure and ESG Reporting Obligations

In 2024, the CVM adopted a landmark regulatory framework aligning Brazilian disclosure standards with international sustainability reporting benchmarks. The CVM mandated sustainability disclosures aligned with ISSB standards (with mandatory reporting starting in 2026), and the Brazilian Stock Exchange (B3 – Brasil, Bolsa, Balcão) updated its listing rules to include diversity and ESG policy requirements for publicly traded companies (“Listed Companies”).

The Office of the Comptroller General (Controladoria-Geral da União) advanced Brazil’s integrity and anti-corruption agenda by issuing new guidelines to promote consistency and efficiency in corporate compliance programmes. One such example is the Integrity Programme Guide: Guidelines for Private Companies – Volume II, which provides direction to the private sector, enabling companies to consolidate integrity assessment criteria, gain a clearer understanding of potential risks and enhance their internal compliance programmes.

Expansion of Corporate and Group Liability

Brazilian jurisprudence also evolved significantly in 2024 regarding corporate liability under the Anti-Corruption Law (Federal Law No. 12,846/2013), notably affirming that joint liability may extend across an entire corporate group, including to parent companies, subsidiaries, affiliates and consortium members – see Special Appeal No. 2209077/RS of Brazilian Superior Court of Justice (Superior Tribunal de Justiça). This decision strengthens the judiciary’s interpretation of collective responsibility in the context of corruption and administrative misconduct, signalling heightened exposure for corporate groups operating through complex ownership or contractual structures.

Judicial and Regulatory Scrutiny of Governance Failures

Brazilian authorities also intensified oversight of corporate governance practice through both regulatory enforcement and judicial action. High-profile cases, such as the suspension of Petrobras board members for conflicts of interest, highlighted the growing judicial scrutiny of governance failures. Simultaneously, authorities intensified their focus on greenwashing and irregularities in carbon credit markets, signalling a broader convergence between environmental regulation and corporate governance enforcement. ESG-related criteria also began influencing public procurement rules.

In Brazil, the ESG transition has been advanced through a decentralised, multi-institutional governance structure encompassing federal, state and municipal levels of government, as well as a diverse range of regulatory and supervisory authorities. Currently, there is no single centralised authority vested with global responsibility for ESG-related matters. Instead, each regulatory body exercises its statutory and regulatory competencies within the scope of its legal mandate, enacting rules and standards applicable to the entities and/or sectors under its jurisdiction.

Nevertheless, certain authorities stand out due to the broad reach and/or cross-sector relevance of their regulations.

CVM

The CVM is one of the primary institutional drivers of Brazil’s ESG regulatory evolution, given its broad oversight of the capital markets, including investment funds and Listed Companies across different economic sectors.

In recent years, the CVM has consolidated its leadership in advancing the ESG agenda in Brazil, particularly by promoting greater transparency and accountability in corporate disclosures. A landmark development occurred in October 2024, when the CVM enacted Resolutions Nos. 217, 218 and 219, establishing mandatory sustainability-related financial disclosure obligations for Listed Companies.

These resolutions formally align Brazil’s disclosure framework with the ISSB standards, specifically, IFRS S1 and IFRS S2, marking a decisive step towards global regulatory convergence.

The CVM’s regulatory efforts reflect a broader institutional commitment to integrating ESG principles into corporate governance, enhancing investor protection and reinforcing market integrity.

As a general principle, ESG laws and regulations in Brazil have cross-sectoral effects, influencing a wide range of industries across the national economy. In the coming years, however, the strongest regulatory impacts are expected in high-emission and resource-intensive sectors, as well as in industries subject to stringent environmental licensing, compliance and disclosure obligations.

At the same time, as Brazil advances in consolidating its sustainability and climate governance framework, some sectors are also poised to benefit, particularly those able to leverage low-carbon innovation, reforestation and biodiversity-based business models. In this context, forestry and sustainable agribusiness are emerging as strategic opportunities within the national ESG agenda, combining regulatory compliance with economic diversification, investment attraction and long-term value creation.

Listed Companies

Listed Companies will face a significant increase in regulatory requirements starting in January 2026, following the adoption of the new sustainability disclosure framework introduced by the CVM through Resolutions Nos. 217, 218 and 219, enacted in October 2024. These rules require the reporting of sustainability-related financial information in accordance with the IFRS S1 and IFRS S2 standards, which have been locally incorporated into Brazil’s regulatory framework as the Brazilian Sustainability Pronouncements Committee (Comitê Brasileiro de Pronunciamentos de Sustentabilidade – CBPS) pronouncements CBPS 01 and CBPS 02. This new report standard will profoundly reshape corporate governance and transparency practices, compelling issuers to integrate climate and sustainability-related risks and opportunities into their financial disclosures. Consequently, Listed Companies will be subject to enhanced scrutiny and increased accountability before investors, regulators and other stakeholders, marking a decisive step towards aligning Brazil’s capital market with global ESG disclosure standards.

Energy Sector

The energy sector, encompassing oil and gas, electricity and biofuels, will remain at the forefront of ESG-driven regulatory transformation. With the enactment of the PNTE in 2024, Brazil reinforced its commitment to a low-carbon energy matrix, emphasising renewable generation, energy efficiency and technological innovation. Under this framework, companies in the energy and fuel industries must adapt their governance mechanisms and investment strategies to meet stricter emission-reduction targets and enhanced sustainability reporting standards. As a result, the sector will face heightened compliance expectations, more rigorous regulatory oversight and increasing market pressure to demonstrate credible decarbonisation pathways, consolidating its position as a central pillar of Brazil’s climate transition.

Agriculture and Forestry

Among the most exposed to ESG regulations, the agriculture and forestry sectors are well positioned to benefit from Brazil’s sustainability agenda. Given their environmental footprint and importance to the national economy, these sectors are expected to be significantly influenced by evolving ESG standards, particularly regarding land use, carbon credits, deforestation control and biodiversity-based value chains.

By integrating environmental restoration, carbon sequestration and sustainable land management with Brazil’s legal and policy frameworks, agribusiness can effectively transform compliance obligations into drivers of innovation, investment and competitiveness.

In Brazil, the evolution of the national ESG agenda has been closely tied to shifts in political priorities, international co-operation and trade-related pressures, all of which collectively determine the country’s regulatory direction and institutional commitment to sustainability.

Under the current federal administration, Brazil has undertaken a renewed political effort to reposition itself as a global leader in climate and environmental governance. This effort has been characterised by strengthening environmental protection agencies and reactivating international co-operation, such as the Amazon Fund and bilateral climate finance mechanisms supported by Germany, Norway and other international partners.

At the international level, trade and regulatory pressures have also become powerful drivers of ESG compliance and policy modernisation in Brazil. The new EU Directive 2024/1760 on Corporate Sustainability Due Diligence (CS3D), published in July 2024, exemplifies this trend. The Directive imposes human rights and environmental due diligence obligations across the entire value and supply chain, representing a significant force to drive change in the Brazilian ESG landscape.

In this context, Brazil is expected to further align its national policies and regulatory instruments with international ESG and due diligence frameworks, particularly those originating from the European Union and multilateral climate agreements.

In the coming year, Brazil is expected to deepen its focus on ESG-related corporate governance, with key developments including preparations for mandatory sustainability disclosures aligned with the ISSB standards starting in 2026, prompting companies to enhance board oversight and integrate ESG into strategy. Regulatory bodies such as the CVM and B3 are pushing for greater board diversity, ESG-linked executive compensation and robust internal controls. Integrity programmes are becoming more central, especially for firms engaging in public procurement, as anti-corruption enforcement intensifies. Voluntary initiatives such as the Business Integrity Pact and increased scrutiny from investors and regulators will pressure companies to strengthen transparency, data governance and risk management. These shifts reflect a maturing ESG landscape where governance is increasingly tied to corporate performance, regulatory compliance and market credibility.

Listed and unlisted companies have particularities that grant different degrees of flexibility in the ordinary management of their businesses. Unlisted companies are mainly subject to the rules set forth under Brazilian law, specifically the Brazilian Civil Code (Federal Law No. 10,406/2002) and the Brazilian Corporations Law (Federal Law No. 6,404/1976), which provide general provisions intended to ensure consistency of corporate activities. These include, for example, the maintenance of corporate books, publication of mandatory notices, and filing of corporate acts with the relevant Board of Trade.

In addition to these obligations, Listed Companies must comply with a broader and more detailed regulatory framework, designed to ensure that their conduct aligns with current political, economic and social expectations. Institutions that play key roles in this supervision are: (i) the CVM, whose authority derives from the Brazilian Corporations Law; (ii) B3; and (iii) other self-regulatory or specialised entities.

CVM Resolution No. 80/2022, for instance, requires Listed Companies to include ESG-related information in their Reference Form, specifically under Items 1.9, 2.10 and 8.1 of Annex C. Meanwhile, B3, under the Novo Mercado Regulation, requires that at least two independent directors serve on the board of directors (Articles 15, 16 and 17), as well as the presence of independent members in other governance bodies, such as the audit committee. Listed Companies must also adopt policies addressing strategic, operational, regulatory, financial, political, technological and environmental risks.

In summary, by becoming a Listed Company, it is essential that practices, culture and values align with market standards, particularly regarding governance disclosure, handling of sensitive information, and risk assessment. These measures broadly fall under what are now commonly referred to as “ESG practices”.

The decision to pursue a listing must therefore be carefully evaluated, ensuring full preparedness to comply with enhanced obligations. Failure to comply may result in sanctions by the CVM or other authorities, and even delisting.

Brazilian law is silent on metrics or requirements for connecting ESG measures to the legal duties and responsibilities of directors and officers. Nonetheless, from the practical and governance standpoints, as senior management plays a central role in defining the organisation’s culture, strategic direction and ethical standards, they are often decisive in determining the degree to which ESG principles will effectively integrate an organisation’s corporate governance and operational practices.

The adoption of ESG measures can significantly contribute to an organisation’s people management strategies and enhance its market reputation. By integrating ESG principles into its operations, the company can create a more responsible, inclusive and transparent work environment. These measures not only reflect a commitment to ethical practices but also serve as valuable tools in attracting and retaining talent, fostering greater employee engagement, reducing absenteeism, and ultimately improving overall productivity and operational efficiency. In a competitive market, such efforts can also strengthen the employer’s brand and position the organisation as a desirable place to work.

As in other jurisdictions, a company can be structured in a manner different from traditional corporate forms, with a specific purpose and focused on social or cultural initiatives, whether for-profit or not-for-profit. However, in Brazil, such corporate structures are not governed by an extensive set of laws, rules or regulations.

The main laws applicable to these entities are: (i) the Brazilian Civil Code (Federal Law No. 10,406/2002); (ii) the Public Records Law (Federal Law No. 6,015/1976); and (iii) the Law on Civil Society Organisations of Public Interest (Federal Law No. 9,790/1999).

Thus, although there is legislation addressing such entities, the regulatory framework remains incipient. With growing discussions surrounding ESG matters in Brazil, we may see greater interest in clearly defining the obligations, rights and other terms applicable to associations, foundations, co-operatives and social organisations.

In Brazil, ESG obligations are increasingly shaping corporate governance and redefining the relationship between companies and their shareholders. The incorporation of ESG criteria into corporate strategy expands the traditional scope of fiduciary duties under Brazilian law. Directors and officers must now consider not only shareholders’ economic interests but also broader stakeholder and sustainability impacts, consistent with the principles of transparency, accountability and long-term value creation set out in the Brazilian Corporations Law and CVM regulations.

From a legal perspective, ESG factors now shape disclosure requirements, risk management policies and corporate transactions. Shareholders are demanding greater visibility on how companies identify and address ESG-related risks, particularly in capital markets and M&A contexts, where due diligence increasingly incorporates ESG metrics.

This evolution enhances more active stewardship and engagement, reinforcing a governance model where the protection of shareholder value is intrinsically linked to the effective management of environmental and social risks.

Changes in the Brazilian landscape have been under way since COP28 (2023 United Nations Climate Change Conference), during which Brazil committed to improving its domestic framework and strengthening its ESG agenda. One of the key commitments was the Sustainable Taxonomy, designed to identify and classify sustainable economic activities based on empirical evidence. This initiative seeks to promote a green economy and prevent greenwashing (false claims of sustainability without effective implementation).

A major milestone was Federal Law No. 14,904, which sets guidelines for climate change adaptation plans, placing sustainability and environmental protection at the core of national policy. Complementarily, in October 2024, the CVM issued Resolutions Nos. 217, 218 and 219, creating a new obligation for publicly held companies, investment funds and securitisation companies: the preparation and disclosure of annual sustainability-related financial reports. These resolutions formally incorporate CBPS 01 and CBPS 02, derived from IFRS S1 and IFRS S2 issued by the ISSB.

Additionally, the Interinstitutional Committee for the Brazilian Sustainable Taxonomy (Comitê Interinstitucional da Taxonomia Sustentável Brasileira – CITSB), created under Decree No. 11,961/2024 and approved in August 2025, is finalising technical reports expected to guide sustainable investment decisions.

Undeniably, Brazil’s political and economic landscape is clearly shifting towards stronger corporate accountability on ESG practices, increasing transparency and enabling investors to better understand what is truly happening inside companies.

Certain laws must be observed for different types of financing transactions (whether granting or obtaining funds), including: (i) the Brazilian Civil Code; (ii) the Brazilian Corporations Law; (iii) the National Financial System Law (Federal Law No. 4,595/1964); (iv) the Business Environment Law (Federal Law No. 14,195/2021; (v) the New Foreign Exchange Framework (Federal Law No. 14,286/2021); and (vi) the Cryptoassets Law (Federal Law No. 14,478/2022).

Considering the delegated regulatory authority, it is also essential to comply with the rules issued by the Brazilian Central Bank (Banco Central do Brasil – BACEN), the CVM, B3, the National Monetary Council (Conselho Monetário Nacional – CMN) and, more recently, the CITSB. In addition, companies may be required to follow regulations from market-driven entities, such as the Brazilian Financial and Capital Markets Association.

Each of the above-mentioned frameworks guides the appropriate structuring of financing transactions, and the selected approach must align with the strategic objectives of the company receiving the funds. In practice, each funding model entails distinct legal requirements, risk allocation and operational procedures.

While the Brazilian Civil Code provides general guidelines for the granting of collateral, the CVM regulates and supervises public offerings of securities, such as debentures, investment fund quotas, tender offers, CRI, CRA, CR and tokenised assets.

The same logic applies to companies registered as securities issuers before the CVM. Thus, the applicable legal framework will vary depending on the financing route chosen, and the particularities of each transaction must be carefully assessed to ensure compliance and efficient execution.

Brazil has been making steady progress towards facilitating access to sustainable finance, though legal and regulatory changes are still being consolidated, leaving certain barriers to be addressed.

In all cases, to access this type of financing, particularly following the recent position adopted by the CITSB, the borrowing company must demonstrate proper eligibility, present a clear investment project and, above all, demonstrate that the project’s outcomes align with sustainability objectives. For example, in small hydroelectric projects, it is essential to demonstrate that the activation of the hydroelectric project complies not only with the applicable environmental legislation but also contributes to the local ecosystem and promotes socioeconomic benefits for the community (eg, job creation).

Accordingly, it can be said that, with the latest initiatives from the CVM (regarding the preparation of periodic ESG reports) and other governmental authorities, access to sustainable finance, though still somewhat restricted, is becoming progressively easier, but only for those companies truly committed to the ESG agenda and not merely seeking financing due to tax incentives (eg, Federal Law No. 12,431/2017 concerning incentivised debentures).

From an economic and financial standpoint, carbon-intensive assets (such as oil, gas, coal, cement, and steel) tend to become stranded assets, losing value and shortening their useful life. Consequently, it becomes increasingly costly to secure the financial resources to fund activities associated with them.

This financing difficulty may lead to a rapid withdrawal of capital, causing supply bottlenecks and price volatility, with inflationary and energy security effects that harm everyone, especially the most vulnerable groups, who lack access to renewable energy sources.

To mitigate these risks and ensure a just and inclusive transition, it is essential for the government, with the active participation of civil society, to develop programmes and public policies aimed at mapping distributive impacts and implementing compensatory measures for the most vulnerable groups until the ESG transition is completed and universal access to renewable energy sources is achieved.

In the coming years, Brazil’s sustainable finance sector will face complex structural and market challenges. Beyond the risks of greenwashing (arising from misleading environmental claims and insufficient transparency), significant barriers remain to expanding access to green capital. Small and medium-sized enterprises often lack the financial and technical capacity to meet ESG reporting requirements or to comply with the conditions attached to sustainable finance instruments. In this context, such companies are expected to face additional challenges in adapting to the new disclosure requirements introduced by the CVM, which has adopted the international IFRS S1 and IFRS S2 sustainability disclosure standards, set to take effect in January 2026.

The effective scaling of sustainable finance at the national level will depend on establishing a coherent regulatory and institutional framework, supported by credible green taxonomies, transparent disclosure standards and long-term financing mechanisms, all of which are still under development in Brazil. It will be essential to bridge these gaps to strengthen investor confidence, mitigate material and reputational risks related to ESG matters/practices, and ensure that sustainability commitments translate into concrete, measurable outcomes. Overcoming these challenges will be critical for Brazil to fully leverage capital markets as catalysts for advancing the ESG agenda, for example.

In Brazil, there is a clear trend of soft law principles, initially adopted as voluntary ESG or governance guidelines, progressively becoming binding legal standards. Over the past few years, regulatory bodies such as the CVM, BACEN and the Superintendência de Seguros Privados (SUSEP) have incorporated sustainability-related recommendations into mandatory disclosure and compliance frameworks.

For example, CVM Resolution No. 59/2021, amended by CVM Resolution No. 168/2022 (which replaced the former Reference Form), now requires Listed Companies to report ESG practices and climate-related risks, transforming previously voluntary disclosure standards into enforceable obligations. Similarly, BACEN Resolutions Nos. 4,943/2021 and 4,945/2021 codify socio-environmental risk management and governance requirements that were once guided only by market best practices.

In the corporate and M&A context, due diligence processes increasingly rely on ESG benchmarks derived from global soft law sources, such as the OECD Guidelines and the UN Global Compact, which are gradually influencing contractual provisions and risk allocation.

This evolution demonstrates a consistent regulatory shift: principles once treated as aspirational now have legal and financial consequences. The line between soft and hard law is narrowing, reinforcing the institutionalisation of ESG and governance norms in Brazil’s corporate and capital markets environment.

In Brazil, due diligence requirements across the value chain have significantly intensified, driven by regulatory, compliance and reputational considerations. The trend extends beyond traditional financial and legal reviews to include broader assessments of corporate governance, integrity, anti-corruption controls, data protection and human rights compliance.

This intensification is partly due to the evolving international regulatory landscape, as seen in the due diligence requirements set forth under the EU CS3D.

At the national level, recent legislation and enforcement trends, such as the Brazilian Anti-Corruption Law (Federal Law No. 12,846/2013), the General Data Protection Law (Lei Geral de Proteção de Dados), and the increasing scrutiny from public authorities and investors have elevated the expectation that companies monitor the conduct of their suppliers, distributors and business partners.

In M&A and financing transactions, due diligence now routinely examines counterparties’ governance structures, internal controls and past compliance track record. This shift reflects a broader understanding that value-chain exposure can create successor liability, financial losses and reputational damage, particularly in transactions involving state-controlled entities or cross-border operations.

As a result, companies are adopting more structured third-party risk management frameworks and contractual mechanisms, such as audit rights and compliance certifications, to ensure continuous oversight of their value chain.

The increased emphasis on governance and compliance within the value chain is directly shaping how Brazilian companies select and manage their business partners. Companies are becoming more selective, prioritising counterparties with corporate governance, transparent ownership structures and verifiable compliance programmes.

For example, in M&A and debt transactions, counterparties are often required to complete detailed integrity questionnaires and adopt compliance undertakings as conditions precedent to closing or funding.

Financial institutions and private equity investors are also demanding continuous monitoring and periodic reporting, aligning commercial relationships with international governance standards.

In the social sphere, there has been recurring coverage of labour authorities’ efforts and their impact on organisations (legal liability and reputational exposures), including practices adopted by direct business partners and those inserted into the supply chain, especially regarding the labour used and the work conditions offered.

Considering this scenario, organisations have been more careful not only in the selection but in the monitoring and maintenance of their business partners. The growing use of contractual safeguards (such as anti-corruption and data protection representations and warranties, as well as termination rights and penalties for compliance breaches) is noteworthy.

Ultimately, the focus on governance-related due diligence is redefining supply chain strategy: companies increasingly favour partners that minimise compliance risk and enhance long-term transactional stability and governance across the value chain.

ESG factors have become increasingly material in Brazilian M&A transactions, influencing valuation, due diligence scope, deal structure and post-closing integration. While ESG is not yet a statutory requirement in the negotiation or approval of mergers and acquisitions, it has become a key indicator of legal and commercial risk. Investors and lenders now expect robust ESG due diligence to identify potential environmental liabilities, governance weaknesses and social compliance issues, particularly in sectors such as energy, infrastructure, agribusiness and manufacturing.

From a legal standpoint, ESG considerations are shaping contractual provisions, such as representations and warranties, indemnity clauses and covenants, reflecting the allocation of sustainability-related risks. Additionally, private equity and institutional investors are increasingly incorporating ESG compliance undertakings and reporting obligations into shareholders’ agreements and financing documents.

Regulatory developments, including CVM Resolution No. 59/2021, as amended by CVM Resolution No. 168/2022, and BACEN’s sustainability governance rules, further reinforce the need to integrate ESG criteria into transaction planning. Although ESG remains partly driven by market practice rather than hard law, it now plays a central role in assessing long-term value and reputational resilience, making it an essential component of both legal risk management and deal strategy in Brazilian M&A.

In Brazil, certain types of companies and/or entities are required to disclose ESG-related information, as follows:

• Public companies and mixed-capital companies are required to annually disclose an integrated or sustainability report and a gender equality policy, which must include information on gender diversity within the company (Federal Law No. 13,303/2016, as amended by Federal Law No. 15,177/2025).
• Corporations (both listed and unlisted) must disclose information on gender diversity in their annual management report, which must be made available at least one month prior to the annual general shareholders’ meeting (Federal Law No. 6,404/1976, as amended by Federal Law No. 15,177/2025).
• Publicly traded companies are required to annually submit a Reference Form (Formulário de Referência), which contains a wide range of corporate disclosures, including ESG-related information such as the company’s sustainability report, materiality indicators, diversity within the company, and risk factors associated with ESG aspects (CVM Resolution No. 59/2021). Starting in 2027, with respect to the 2026 fiscal year, publicly held companies will be required to prepare and disclose a Sustainability-Related Financial Information Report, in accordance with the IFRS S1 and IFRS S2 standards, as internalised by the CBPS and approved by the CVM (CVM Resolution No. 193). Also, publicly traded companies (excluding CVM Category B issuers, small-sized companies, tax-incentivised entities and sponsored BDR issuers) are required to adopt ESG-related governance measures set forth in the Issuers Regulation of B3, including diversity in the board of directors and officers, and performance indicators linked to ESG topics in variable compensation. Alternatively, companies that do not implement these measures must provide explanations in their Reference Form.
• Financial institutions and other entities authorised to operate by BACEN are required to annually prepare and disclose a Report on Social, Environmental and Climate Risks and Opportunities (pursuant to BACEN Resolution No. 139/2021 and Normative Instruction No. 153/2021), and to prepare and disclose a Social, Environmental and Climate Responsibility Policy (pursuant to CMN Resolution No. 4,945/2021).
• Insurance companies, open pension entities, capitalisation companies and local reinsurers must comply with the sustainability requirements established under SUSEP Rule No. 666/2022. These requirements include preparing and disclosing a sustainability policy, a materiality assessment for risk management and an annual sustainability report.

Federal Law No. 15,042/2024 established the SBCE, aimed at reducing and eliminating national GHG emissions fairly and cost-effectively, with a view to promoting sustainable development and climate equity. Operators of facilities and emission sources located in Brazilian territory (excluding primary agricultural production and its directly associated infrastructure) that emit:

• 10,000 tonnes of CO₂ equivalent per year are required to prepare a monitoring plan and submit emission reports; and
• 25,000 tonnes of CO₂ equivalent per year are required to prepare a monitoring plan, submit emission reports and periodically reconcile their obligations.

The SBCE managing authority will be responsible for reviewing, monitoring plans, GHG emission reports and periodic reconciliation reports of obligations.

Furthermore, under CVM Resolution No. 193/2022, the report by publicly traded companies must be conducted in accordance with the IFRS S1 and IFRS S2, as internalised by the CBPS).

In particular, IFRS S2 recommends disclosing information on climate transition plans that companies may have, action plans to achieve them, their associated risks, and the strategies defined to meet the proposed climate targets.

As noted in 5.1 Key Requirements, the adoption of IFRS sustainability standards by publicly traded companies will become mandatory for the 2026 fiscal year, starting in 2027.

In Brazil, ESG matters are regulated and supervised through a decentralised institutional framework involving multiple governmental agencies and entities at different levels. Within this context, various authorities issue regulations establishing ESG-related requirements, including those governing the promotion and advertisement of sustainability practices. Consequently, several legal instruments regulate this subject.

One such instrument is the Consumer Protection Code, which sets out consumer rights and the obligations of manufacturers, distributors and sellers of goods and services – including the duty to provide truthful information regarding a company’s practices. Accordingly, a company may not advertise social or environmental (“sustainable”) practices that are not genuine. If misleading advertising is published, the company will be held liable and subject to sanctions (eg, fines) imposed by the competent authorities.

In the field of advertising, any entity intending to promote its sustainability practices must comply with the rules established in Annex U of the Brazilian Advertising Self-Regulation Code issued by the National Council for Advertising Self-Regulation (Conselho Nacional de Autorregulamentação Publicitária – CONAR). Annex U requires that any advertisement related to sustainability be clear, precise and concrete, based on practices already implemented.

In summary, both the Consumer Protection Code and Annex U aim to prevent greenwashing practices, protect the public from false or misleading information, and preserve fair competition in the marketplace.

Regarding ESG labels, in Brazil, these refer to the criteria and standards used to assess a company’s ESG performance, indicating its commitment to sustainability and responsible business practices. Such labels are applied to various financial products and corporate reports to demonstrate alignment with the United Nations Sustainable Development Goals and to attract investors who prioritise ESG factors.

In Brazil, an ESG label applies only to companies that meet the legal requirements established under Federal Decree No. 12,063/2024, which created the Brazilian Green Seal Programme to certify products and services that comply with predefined sustainability standards.

In Brazil, the ESG transition is promoted, regulated and supervised through a decentralised institutional framework involving multiple governmental agencies and entities at different levels. Each authority operates within its respective area of competence, issuing regulations applicable to the entities and/or sectors under its jurisdiction.

Nevertheless, the main regulators overseeing the disclosure of ESG-related information in Brazil are the CVM, B3, BACEN and SUSEP.

Under Federal Law No. 15,042/2024, the SBCE managing authority is responsible for reviewing, monitoring plans, GHG emission reports, and periodic reconciliation reports of obligations within the scope of the SBCE.

Pursuant to Federal Decree No. 12,063/2024, which implemented the Green Seal Programme to certify products and services that meet predefined sustainability requirements, the green seal will be granted by conformity assessment bodies accredited by the National Institute of Metrology, Quality and Technology (Instituto Nacional de Metrologia, Qualidade e Tecnologia– INMETRO) to products and services that comply with the sustainability criteria set forth in Brazilian technical standards issued under the Green Seal Programme.

Regarding sustainability marketing claims, any party intending to promote its sustainability practices must comply with the rules set forth in Annex U of the Brazilian Advertising Self-Regulation Code issued by CONAR.

According to Annex U, sustainability claims, statements or advertisements must: (i) correspond to concrete practices actually adopted, avoiding vague concepts that may lead to misleading or overly broad interpretations of the advertised conduct; (ii) be truthful, verifiable, and supported by evidence of the social and environmental benefits claimed; (iii) present accurate and precise information expressed clearly and objectively; (iv) be substantiated by supporting data and external sources that endorse – or even take responsibility for – the social and environmental information communicated; (v) be significant in terms of the overall impact that the company and its brands, products and services exert on society and the environment throughout their entire life cycle, from production and commercialisation to use and disposal; (vi) avoid communicating claims of absolute or unbeatable superiority; and (vii) clearly identify the cause(s) and the official or third-sector entity(ies) involved in any partnership with the company or its brands, products or services.

From a legal perspective, there is a long way ahead for Brazilian legislation to integrate ESG matters, and, for that reason, there are still few entities capable of sanctioning companies for false or misleading ESG-related disclosures.

Under the new CVM regulations and interpretations, any misleading or false information arising from corporate disclosures by Listed Companies relating to ESG matters may be subject to administrative enforcement proceedings and penalties.

Other authorities are trying to implement new forms of monitoring and sanctioning companies that do not comply with this new global scenario, such as CONAR and the Consumer Protection and Defence Foundation (Fundação de Proteção e Defesa do Consumidor – PROCON), which are currently strong advocates for ESG matters.

In the coming years, Brazilian companies are expected to make significant progress regarding ESG reporting obligations. The current administration has promoted policies that have resulted in notable advances in the ESG regulatory landscape. At the same time, market pressure and increasing investor demand for transparency are expected to drive companies towards higher reporting standards. The growing adoption of international frameworks, such as the ISSB standards and the European Union’s Corporate Sustainability Reporting Directive, will further influence local practices, potentially fostering greater alignment between Brazilian and global disclosure requirements.

Despite these advances, several challenges remain:

• Capacity constraints for small and medium-sized enterprises (SMEs): Many SMEs lack the financial and technical resources to comply with evolving ESG reporting requirements, which may overlap across different jurisdictions. Access to qualified professionals is limited and costly, while implementing reporting systems and collecting and verifying ESG data can be prohibitively expensive.
• Political and regulatory uncertainty: Rising political tensions, both nationally and internationally, have made it difficult to pass and enforce consistent ESG regulations, creating additional complexity and unpredictability for companies.
• Data quality and integration: Ensuring the accuracy and completeness of ESG data, particularly regarding indirect impacts such as Scope 3 emissions and supply chain practices, remains a significant challenge. Companies must integrate ESG data across multiple departments and systems to produce reliable reports.

ESG-related litigation in Brazil can be initiated through a broad range of judicial and/or administrative mechanisms, depending on the matters effectively involved or alleged. These mechanisms are available to both public authorities and private individuals or entities, and may include court proceedings, administrative investigations, or enforcement actions before regulatory bodies.

From a legal perspective, access to the judiciary is notably extensive in Brazil, as several actors are granted standing to initiate ESG-related claims. These include the Public Prosecutor’s Office (Ministério Público Federal – MPF), civil society organisations, non-governmental entities, professional associations, and even citizens acting in defence of collective or diffuse interests (ie, public interest).

In the judicial sphere, the primary legal mechanism is the class action (ação civil pública), a specific type of lawsuit designed to protect collective rights in areas such as environmental protection, labour conditions and consumer relations. Constitutional review actions (ações do controle concentrado de constitucionalidade), which challenge the validity of laws or regulations that conflict with ESG or sustainability principles, also serve as important judicial instruments. Other available actions include popular Aactions (ações populares) and ordinary individual lawsuits, depending on the nature of the affected right or alleged harm. Criminal lawsuits may also apply when the conduct in question constitutes an environmental crime, as defined by the Environmental Crimes Law (Federal Law No. 9,605/1998).

Administratively, ESG-related issues may be pursued before the relevant regulatory or supervisory authorities through formal submissions, complaints or petitions for investigation. In cases involving greenwashing, for instance, consumers may file complaints against a brand or company before PROCON, CONAR or the MPF. Depending on the case, such complaints may lead to investigative or enforcement proceedings, potentially resulting in administrative sanctions, compliance orders or formal recommendations.

In Brazil, greenwashing practices fall within the scope of the Consumer Protection Code, which prohibits misleading or abusive advertising and protects consumers from deceptive marketing practices, including those relating to environmental or sustainability claims.

Non-governmental organisations (NGOs) and activists are increasingly influential in shaping Brazil’s ESG agenda. In recent years, their engagement has evolved beyond traditional advocacy and public awareness campaigns towards more strategic, institutionalised forms of action, particularly through public-interest litigation aimed at compelling public authorities and private entities to comply with environmental, social and climate-related obligations.

Within this context, NGOs have emerged as leading plaintiffs in lawsuits seeking to enforce environmental and labour legislation and to ensure the implementation of public policies relating to sustainability and social justice. A notable example is Class Action No. 5157467-55.2024.8.21.0001, filed in July 2024 against the State of Rio Grande do Sul, in which an NGO seeks to compel the state government to adopt a just energy transition plan. Another significant case is the judicial interpellation on carbon offset transparency (IDEC v GOL Airlines), further described in 6.3 Greenwashing, which illustrates the growing use of legal instruments by civil society organisations (including NGOs and consumer associations) to promote transparency and accountability in corporate sustainability claims.

As a growing wave of ESG-related judicial and administrative claims gains momentum in Brazil, civil society organisations have become stakeholders in enforcement and accountability. Moreover, as ESG regulations continue to expand nationwide and cases become more complex and legally sophisticated, NGOs are consolidating their position as critical actors of the ESG practices adopted by both public authorities and private companies, while simultaneously influencing corporate behaviour and the formulation of more structured and coherent public and private policies aimed at strengthening sustainability and climate governance across the country.

Legal Recommendation for the Suspension of Carbon Credits Projects in the Brazilian Amazon

In August 2024, the MPF issued Legal Recommendation No. 01/2024, recommending the suspension of all ongoing carbon projects within indigenous and traditional territories located in the Brazilian Amazon that are legally designated as specially protected areas under applicable environmental law. The recommendation was grounded on alleged irregularities in projects developed under the Reducing Emissions from Deforestation and Forest Degradation mechanism (REDD+), supported by studies and assessments conducted among indigenous peoples and traditional communities, including riverine and extractivist populations, who reported that their representative leaders had not been duly consulted. According to the MPF, the lack of consultation constitutes a breach of the right to free, prior and informed consent established under International Labour Organization Convention No. 169, ratified by Brazil. The recommendation drew significant national and international attention and prompted responses from private entities, governmental bodies and civil society organisations active in Amazon-related initiatives. In November 2024, given diverging interpretations and institutional positions, the matter was brought before the judiciary through Class Action No. 1040956-39.2024.4.01.3200, filed by the MPF against the State of Amazonas and the National Foundation for Indigenous Peoples (FUNAI). No judicial ruling has been rendered yet.

Operation Greenwashing

In 2024, the Federal Police advanced with Operation Greenwashing, an ongoing investigation into the illegal commercialisation of carbon credits generated from unlawfully occupied federal lands in the Amazon. It was conducted across six states (Rondônia, Amazonas, Mato Grosso, Paraná, Ceará and São Paulo), with support from the National Institute for Colonisation and Agrarian Reform (INCRA), the Federal Revenue Service (RFB), the National Civil Aviation Agency (ANAC) and the Brazilian Institute of Environment and Renewable Natural Resources (IBAMA). The fourth phase of the operation, launched in December 2024, targeted deforestation and other environmental crimes, including illegal wildlife hunting, within the Iquiri National Forest (Porto Velho/Rondônia).

Judicial Interpellation on Carbon Offset Transparency: IDEC v GOL Airlines

In January 2025, the Brazilian Institute for Consumer Protection (IDEC) filed a judicial interpellation against GOL Linhas Aéreas S.A., alleging misleading environmental claims related to the company’s voluntary carbon offset programme, “Meu Voo Compensa”. The proceeding forms part of a broader set of actions brought by IDEC targeting alleged greenwashing practices and questioning the veracity of GOL’s statements on GHG neutrality and the integrity of the carbon credits used and promoted as sustainable. In March 2025, in its defence (March 2025), GOL denied any greenwashing practices, asserting that its sustainability initiatives are transparent, independently audited and based on internationally recognised methodologies, including the GHG Protocol and Verra-certified credits. The company further emphasised that its sustainability reports are verified by Ernst & Young and that its communications seek to inform consumers and reaffirm its commitment to ESG principles and voluntary emissions reduction. It is worth noting that IDEC is a nonprofit consumer protection organisation that has advocated for stricter greenwashing regulation in Brazil, underscoring the growing influence of civil society associations and NGOs in shaping and enforcing the ESG agenda nationwide.

In Brazil, proceedings involving ESG matters still occur in limited numbers. Nonetheless, recent research indicates a shifting landscape, particularly regarding climate-related litigation, as evidenced by data from the Panorama of Climate Litigation in Brazil report (2024), prepared by researchers at the Pontifical Catholic University of Rio de Janeiro (PUC-Rio).

This shift can be associated with the gradual strengthening of Brazil’s regulatory landscape over the past few years, as ESG issues have gained increasing importance within the country’s well-established legal framework.

Despite the expected rise in ESG-related proceedings in the coming years, such cases are likely to remain significantly less representative when compared to the volume of the ‘traditional litigation’ already consolidated over decades. Nevertheless, ESG-related issues are gaining in importance within the scope of this ‘traditional litigation’, serving as guiding or supplementary elements to initiate discussions or raise legal arguments, as well as to support judicial reasoning by Brazilian courts, alongside legal provisions not directly related to ESG matters, for example.