23 October 2023

Brazil to mandate ISSB standards from 2026

Brazil has adopted the ISSB's inaugural sustainability standards (IFRS S1 and IFRS S2) for voluntary reporting from the start of next year and will make ISSB-aligned disclosures mandatory for all listed companies from 1 January 2026.

The Brazilian Securities Commission (CVM) and Ministry of Finance both announced at the end of last week (20 October) that the two standards will be incorporated into the country's regulatory framework.

CVM has issued Resolution 193, which will allow listed companies and investment funds to disclose sustainability-related information using the standards from 2024.

In a statement, CVM President João Pedro Nascimento said: "Resolution 193 is a milestone for CVM and for Brazil. We are the first regulator and country in the world to adopt sustainability reporting rules, following IFRS S1 and S2 standards. We are starting with voluntary disclosure of sustainable aspects by issuers, with greater transparency, standardization and comparability."

Once the standards become mandatory in 2026, reasonable assurance will be required on ISSB-aligned sustainability reports.

Speaking at the IFRS Sustainability Standards Advisory Forum (SSAF) meeting in Frankfurt today (23 October), Vania Borgerth, member of the Brazilian Committee of Sustainability Pronouncements (CBPS), said the transition period from 2024 was intended to give companies time to prepare for both the reporting and assurance requirements.

"We decided to give this period until 2026 because we want the whole package. We do not only want the reports but we want the assurance as well, that's our intention," she said.

The CBPS was created last year to mirror the work of the Brazilian Accounting Pronouncements Committee (CPC), which has required disclosures under IFRS Accounting Standards since 2010. It has established working groups for sector specificities and an educational working group to implement the ISSB's capacity building program in Brazil.

The English versions of both standards will be adopted for the first year of voluntary reporting whilst the ISSB finishes the Portuguese translations, which are expected to be completed in the coming months.

The ISSB has hailed Brazil's regulator and government for taking this step towards adoption, with vice-chair Sue Lloyd saying it showed "great leadership" for the region at the SSAF meeting.

Meanwhile, in a statement, chair Emmanuel Faber said: "I commend the Brazilian Ministry of Finance and [CVS] for providing clarity to companies and investors in Brazil by setting out a clear roadmap towards mandatory adoption."