The recent decision by Brazil’s Securities and Exchange Commission (CVM) to revoke the future mandatory adoption of IFRS S1 and S2 climate disclosures for publicly traded companies generated significant discussion within the Brazilian market.
Through CVM Resolution 244, published in May 2026, sustainability-related financial disclosures shifted away from a mandatory framework and toward a voluntary “comply or explain” approach. This change affects Brazil’s regulatory pace, but it may not alter the direction of the global market.
And that distinction is important.
Over the past few years, IFRS S1 and S2 standards, developed by the International Sustainability Standards Board (ISSB), have become central to the international corporate transparency agenda. The purpose of these standards was never simply to expand ESG reporting.
Their objective was to integrate sustainability into corporate financial logic, allowing investors, banks, and markets to better understand climate risks, financial impacts, and transition strategies associated with business activities.In practice, carbon is no longer treated solely as an environmental variable.
It is increasingly being treated as an economic variable. And perhaps that is exactly why the CVM’s decision generated so much discussion.
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GLOBAL PRESSURE FOR CLIMATE TRANSPARENCY CONTINUES TO GROW
Although the CVM argued that the change provides companies with greater flexibility to evaluate the costs and benefits of adopting climate disclosures, international economic pressure for climate transparency continues to advance at a significant pace.
The European Union continues expanding the requirements established under the CSRD.
The Carbon Border Adjustment Mechanism (CBAM) continues incorporating emissions as a commercial variable.
Institutional investors continue demanding climate disclosure.
International banks continue integrating environmental risks into credit and financing analyses.
Global supply chains increasingly require detailed information regarding emissions, traceability, and decarbonization plans.
In other words, even though local regulatory requirements have become more flexible, global economic pressure continues to intensify.
And perhaps the actions taken by Brazilian companies themselves help demonstrate this reality more clearly.
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LEADING COMPANIES ARE CHOOSING TO CONTINUE REPORTING
Just days after the publication of the new resolution, companies such as Vale and Lojas Renner publicly stated that they would continue publishing IFRS S1 and S2 disclosures voluntarily.
According to reporting from Reset, both companies, pioneers in adopting the standards in Brazil, believe that these disclosures contribute to transparency, trust, and the quality of sustainability-related information.
Subsequently, companies such as B3 and Natura also indicated that they intend to maintain climate reporting aligned with international standards.
This movement may reveal one of the most important transformations occurring in the current stage of the market.
Companies with greater exposure to international markets are no longer discussing only regulatory obligations.
They are discussing access to capital, competitiveness, reputation, and trust.
CARBON IS NO LONGER JUST AN ENVIRONMENTAL VARIABLE. IT IS AN ECONOMIC VARIABLE.
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CLIMATE INFORMATION IS BECOMING PART OF BUSINESS VALUE
The advancement of the global climate agenda is producing a structural transformation in how markets operate.
Information related to emissions, climate risks, environmental impacts, and transition strategies is increasingly influencing:
- Valuation
- Cost of capital
- Risk perception
- Access to financing
- Participation in global supply chains
- Investor relations
Within this context, climate transparency is gradually evolving from a regulatory obligation into a competitive advantage. And this discussion is directly connected to the evolution of the carbon market itself.
Because:
- There is no robust carbon market without robust data.
- There are no reliable credits without traceability.
- There is no climate integrity without governance.
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THE CARBON MARKET DEPENDS ON INFORMATION QUALITY
As regulated and voluntary carbon markets mature, the need for increasingly sophisticated monitoring, reporting, and verification structures continues to grow.
The advancement of the Brazilian Emissions Trading System (SBCE) itself is expected to accelerate demand for more consistent, auditable, and comparable information.
International discussions surrounding carbon are no longer centered solely on the number of credits available.
They are increasingly focused on the quality of assets and the credibility of the information supporting those assets.
This movement is likely to benefit organizations that are already developing stronger climate governance structures, reliable emissions inventories, clear decarbonization strategies, and trustworthy traceability mechanisms.
COMPANIES MAY STOP REPORTING BY REGULATION. THEY WILL NOT STOP BEING ASKED FOR INFORMATION.
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THE MARKET CONTINUES TO DEMAND CLIMATE ACCOUNTABILITY
Perhaps there is an important lesson here for the Brazilian market.
Companies may no longer be required to disclose climate information by regulation. However, they are unlikely to stop being challenged by the market.
This is because the advancement of the low-carbon economy is not being driven solely by local regulations. It is being driven by global investors, international supply chains, climate finance, reputational expectations, and the growing integration between climate issues and the financial system.
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