Brazil Reopens Debate on Mandatory ISSB Sustainability Reporting
Brazil is reassessing its approach to ISSB-aligned reporting following the removal of mandatory requirements earlier this year. The review will examine reporting costs, investor needs and possible regulatory options.
Brazil’s securities regulator, the Comissão de Valores Mobiliários (CVM), has launched a call for evidence to assess the country’s sustainability-related financial reporting regime, including whether reporting based on International Sustainability Standards Board (ISSB) standards should again become mandatory for publicly held companies.
Announced on 29 October 2026, the initiative follows CVM’s decision in May to remove the planned mandatory reporting phase under Resolution 193 through Resolution 244, while retaining voluntary adoption. The regulator is now seeking evidence on how that framework serves investors and whether alternative approaches would offer benefits that justify their costs.
Why CVM Is Reviewing the Reporting Framework
The review follows a change in Brazil’s reporting requirements that has yet to be assessed through a formal Regulatory Impact Analysis (RIA). CVM is now seeking empirical evidence to compare the costs and benefits of voluntary and mandatory disclosure.
In its Call for Evidence ASA/CVM No. 02/26, published on 29 October, the regulator explains that the information needed for this assessment is held by different market participants, including companies, investors, auditors and data providers. It has therefore invited these groups, alongside researchers and industry associations, to submit evidence on the effects of the reporting regime.
A central question is whether the voluntary regime provides investors with sufficient coverage, comparability and reliability of material sustainability-related financial information.
CVM is also assessing the economic case for mandatory disclosure. One hypothesis is that standardised reporting could reduce information asymmetry between companies and investors, potentially lowering companies’ cost of capital. The regulator is seeking evidence on whether such benefits would exceed the additional compliance costs.
Reporting Costs and Barriers to Voluntary Adoption
CVM is investigating the cost of ISSB-aligned reporting and whether smaller companies face proportionately higher expenses. The call for evidence requests information on expenditure associated with data collection, reporting systems, personnel, external advisers and independent assurance.
The regulator is also examining whether conditions attached to voluntary adoption discourage participation. These include reasonable assurance, an explicit declaration of full compliance with standards issued by the Brazilian Sustainability Pronouncements Committee (CBPS), and a minimum commitment to report for three consecutive financial years.
To assess the effects of the May amendments, CVM is requesting information about companies’ reporting decisions for the 2026 financial year, including whether they intend to publish a report and which factors influenced their choice.
Respondents are encouraged to distinguish expenditure and decisions already recorded from estimates of future costs and benefits, supported by identifiable data and methodologies.
Regulatory Predictability After the May Amendments
CVM is also assessing the consequences of changing reporting requirements after companies had been given a timetable for mandatory adoption in 2026.
The regulator wants to establish whether businesses incurred expenditure under the original requirements that they can no longer recover or use following the transition to voluntary reporting.
Investors are being asked whether the regulatory changes affected their assessment of Brazilian securities, investment mandates or due diligence requirements. Companies are also invited to explain how the amendments influenced internal planning and investment decisions.
The call for evidence considers mechanisms that could make future regulatory changes more predictable, including advance implementation schedules, phased requirements and predetermined review dates.
What Regulatory Options Are Being Considered?
The official call for evidence presents alternatives ranging from retaining the current voluntary regime to introducing mandatory reporting requirements.
Under the voluntary model, CVM is considering whether to reduce assurance requirements, shorten minimum reporting commitments or permit companies to adopt individual standards instead of the complete framework.
Mandatory reporting could be introduced gradually according to company size, with transitional relief and a progressive move from limited to reasonable assurance. Other options include setting a uniform future implementation date or applying requirements only to companies that meet specified quantitative thresholds.
One alternative would make CBPS 02 (the Brazilian equivalent of IFRS S2) mandatory, excluding Scope 3 emissions, while temporarily applying a comply-or-explain approach to CBPS 01 (the Brazilian equivalent of IFRS S1) and Scope 3 emissions.
CVM is also examining whether selected sustainability disclosure requirements could be integrated into the existing Reference Form (Formulário de Referência) instead of requiring a separate report. Other approaches include self-regulation.
The regulator is seeking evidence from jurisdictions that have introduced, postponed or modified ISSB-aligned reporting requirements to assess which approaches could be appropriate for Brazil.
What Happens Next?
The current voluntary regime remains in force. The October initiative is a preliminary evidence-gathering exercise rather than a consultation on draft regulations, and no timetable has been established for reinstating mandatory reporting.
CVM is accepting submissions until a deadline in February 2027, according to its official announcement.
