Brazil Makes ISSB-aligned Sustainability Reporting Voluntary

Brazil has removed the planned mandatory phase for ISSB-aligned sustainability reporting by public companies, leaving the regime voluntary but subject to formal filing, standards compliance and explanation requirements.

Brazil’s securities regulator, the Securities and Exchange Commission of Brazil (CVM), has amended its sustainability reporting rule, CVM Resolution 193, through CVM Resolution 244, which was published in Brazil’s Official Gazette on 1 June 2026.

The amendment removes the planned mandatory phase for sustainability-related financial reporting by Brazilian public companies for financial years beginning on or after 1 January 2026, while retaining the framework based on standards issued by the Brazilian Sustainability Pronouncements Committee (CBPS) and the International Sustainability Standards Board (ISSB) for entities that choose to report.

The change shifts the regime from compulsory adoption by public companies to voluntary filing, with a “pratique ou explique” market communication requirement from 2027.

A Voluntary Regime With Conditions

Before the amendment, voluntary reporting had been available to public companies, investment funds and securitisation companies for financial years beginning on or after 1 January 2024, while public companies were expected to move into mandatory reporting from 2026. CVM Resolution 244 removes that mandatory phase and keeps sustainability-related financial reporting voluntary for the entities covered by CVM Resolution 193.

CVM describes the change as a refinement of voluntary adoption. The regulator says the aim is to provide greater flexibility within the CBPS- and ISSB-based reporting regime while preserving transparency and comparability. It also refers to the ability of entities to assess expected costs and benefits when deciding how to allocate investor resources.

Voluntary reporting remains subject to conditions. Entities that publish sustainability-related financial information must make an explicit and unreserved declaration of compliance with standards issued by the CBPS (CBPS 01, CBPS 02) and ISSB (IFRS S1, IFRS S2). From 1 January 2027, a public company that chooses not to file a sustainability report must justify that decision through a market notice, describing management’s reasons by the annual financial statement filing date.

The continuity rule has also changed. The former text made the first voluntary report trigger reporting throughout the voluntary adoption period. The revised rule requires at least three consecutive financial years of reporting. An entity that later stops publishing must announce that decision by the annual financial statement filing date for the year preceding the discontinuation of reporting.

Filing Mechanics Remain Formal

The report remains tied to the financial reporting calendar. In the first filing year, opt-in entities must submit it on the same date as the Reference Form (FRE). From the second filing year onwards, the deadline is within three months of year-end or the date annual financial statements are submitted, whichever comes first.

CVM Resolution 193 also sets presentation requirements. The report must be clearly identified and presented separately from other information and from financial statements. It must be prepared on the basis of the consolidated reporting entity or, where there is none, the individual entity.

Assurance remains part of the opt-in route. The report must be assured by an independent auditor registered with CVM, under standards issued by the Federal Accounting Council (CFC). CVM Resolution 193 provides for reasonable assurance for financial years beginning on or after 1 January 2026.

The Reporting Architecture Stays in Place

For corporate sustainability reporting, the amendment changes regulatory pressure rather than the reporting architecture. CVM retains the CBPS and ISSB framework for entities that report while removing automatic compulsion for public companies.

The decision to report remains significant. Voluntary adoption still requires a multi-year commitment, adherence to recognised standards, compliance with filing deadlines and external assurance.

The international dimension also remains relevant. CVM continues to position ISSB-based reporting as a means of supporting comparability, interoperability and access to international capital markets.

Focus Areas for Sustainability Reporting Teams

The first decision is whether to report. A public company that does not report will need to explain that choice through a market notice from 2027, while a company that opts in commits to at least three consecutive years of reporting.

Preparers must also assess whether they can meet the practical requirements of the regime, including compliance with CBPS and ISSB standards, separate presentation of the report and assurance by a CVM-registered independent auditor. Filing deadlines remain linked to the FRE and the annual financial reporting calendar.

The amendment gives companies greater discretion over whether to report, but leaves the underlying reporting framework unchanged. The key question is no longer whether reporting is mandatory, but whether the organisation is prepared to produce a sustainability report on a consistent, standards-based and assured basis.