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Brazilian Sustainability Initiatives

With an abundance of natural resources and a diverse population, Brazil is well-placed to lead ESG initiatives and could be uniquely positioned to propel sustainable practices in the region. As an increasing—though still relatively small—set of rules are being issued, both private and governmental entities have begun to explore the ESG market by employing new financial instruments as well as rules and regulations that aim to advance sustainable practices.

Green Bonds

Brazilian companies have issued green bonds for some time, though the trend gained greater traction in 2020. Following suit, on September 5, 2023, the Brazilian government launched its plan to issue Brazilian Sustainable Sovereign Bonds, which aim to issue an estimated $2 billion to fund sustainable projects throughout Brazil.

The Sovereign Sustainable Bond Framework is very much in line with the country's public policy. The fundamentals of the framework rely on the country's commitments to financing eligible environmental and social projects. The proceeds of the bonds will be used to cover expenses related to sustainable activities, including, but not limited to:

  • Development, construction, installation, operation and maintenance of renewable energy sources, and the production of biofuels;
  • Sustainable management of living and natural resources and land use, including sustainable agriculture practices and smart farming:
  • Social-economic development and empowerment, focusing on combating poverty; and
  • Providing food security and sustainable food systems, from the encouragement of agro-ecological food production in urban and semi-urban areas, to the purchase and distribution of food to vulnerable populations. 

The inaugural sustainable sovereign bond is expected to be issued before the end of 2023, although specific details, such as interest rate and maturity, have yet to be confirmed.  

Securities Initiatives

The rise of ESG initiatives in Brazil spans the Brazilian financial market. The Brazilian Association of Entities of the Financial Market ("ANBIMA"), the Brazilian Securities and Exchange Commission ("CVM"), the Brazilian Central Bank, and the Brazilian Stock Exchange ("B3") have all published rules and guidelines regarding the implementation of ESG initiatives.

  • ANBIMA. In January 2022, ANBIMA issued a set of rules and criteria to enable the proper identification of sustainable funds (to be labeled "IS Funds") which have specific ESG risks and opportunities, and to distinguish funds that incorporate ESG commitments—even if not their primary goal—from those that do not. The requirements should be met by funds with names that include "ESG," "Green," "Impact," and other such terms. As defined by ANBIMA, an "IS Fund" must: (i) have in its bylaws a summary of its sustainable investment goals; (ii) be able to demonstrate the portfolio's alignment with such goals; and (iii) deploy an investment strategy and methodology, data, and tools for achieving the fund's objectives. A fund that takes ESG issues into consideration but does not meet all of the requirements to be an "IS Fund" must also follow certain rules and can include in its marketing materials that the fund "integrates ESG issues in its management." 
  • CVM. CVM Resolution No. 59 adopts a "comply or explain" model, requiring companies to indicate whether ESG information is present in their annual reports and, if so, to describe the methodology and parameters. Companies are required, for example, to indicate whether: (i) the report follows the TCFD recommendations or recommendations by any other climate-related organizations; (ii) the report discloses key ESG indicators, including greenhouse gas emissions and objective policies for the reduction of emissions; and (iii) the report considers the UN's Sustainable Development Goals. For companies authorized to negotiate securities in regulated securities markets, disclosure of details with respect to human resources, including the number of employees based on diversity indicators, is required. Companies that do not divulge ESG information must explain their reasoning for nondisclosure and for not adopting key ESG performance indicators.
  • B3. In line with the rules issued by CVM, B3 has developed its own set of ESG rules, which also adopt a "comply or explain" model and which are currently subject to public consultation. B3 is expected to issue these rules before the end of 2023. The rules focus mainly on diversity in company management and include the following requirements: (i) the appointment of at least one woman and one person from an underrepresented minority to the board of directors or executive committee; and (ii) the inclusion of diversity criteria in the procedure for appointing members of the board of directors. 


Although Brazil was not among the earliest adopters of ESG regulations, Brazilian companies have shown increasing focus on ESG issues, and the government—at federal, state, and municipal levels—is placing increasingly greater weight on sustainability as part of public policy. If the initiatives are efficiently implemented, Brazil may become a key player in transforming markets with sustainable economic growth. 

Read the full Climate Report.

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