The CVM’s Sustainable Finance Action Plan, launched at the beginning of October, aims, among other things, to improve and draw up specific rules on sustainable finance, combat greenwashing and promote transparency in sustainable initiatives.
As a pioneer, the CVM issued Resolution 193, which deals with the preparation and disclosure of financial information reports related to sustainability, following the international standard issued by the International Sustainability Standards Board (ISSB).
In 2023, the ISSB issued two sustainability standards: (i) IFRS S1, which sets out the requirements for preparing and disclosing financial information related to sustainability, and (ii) IFRS S2, which establishes climate-related disclosures.
CVM Resolution 193 incorporates the international standards into the Brazilian legislative environment, and stipulates that publicly traded companies, securitization companies and investment funds will have the option of adopting, initially, the preparation and disclosure of financial information reports related to sustainability from the fiscal years beginning on or after 1 January 2024, along the lines of the ISSB standard.
Publicly traded companies will be required to prepare and disclose the report in accordance with ISSB standards as of fiscal years beginning on or after 1 January 2026.
This means that companies that choose to present the report voluntarily will be able to benefit from certain flexibilities established in the standards until the first fiscal year of mandatory adoption, as long as they explicitly and unreservedly declare their adherence.
The report must be presented separately from the company’s other information and must be prepared by an independent auditor, registered with the CVM, in accordance with the rules issued by the Federal Accounting Council.