Brazil's Mandatory ISSB Reporting: Lessons From the First CVM Filing Cycle

There was no first mandatory cycle. That is the finding, and it is more instructive than any analysis of filing quality would have been.

Brazil was the first country in the world to write the ISSB standards into binding capital markets regulation. CVM Resolution 193, issued in October 2023, made sustainability reporting voluntary for financial years beginning on or after 1 January 2024 and mandatory for financial years beginning on or after 1 January 2026. Reports on that first mandatory year would have been filed during 2027.

They will not be. On 27 May 2026 the Brazilian securities regulator approved Resolution CVM 244, issued on 29 May and published in the Official Gazette on 1 June, revoking the mandatory phase before it ever took effect. Sustainability reporting in Brazil is voluntary again, on a comply-or-explain footing.

The country that went first has stepped back while the UK, Australia, Japan, Korea, Singapore, Malaysia and others move forward. Understanding why is the most valuable thing an emerging market regulator or a Brazilian issuer can take from this.

What Actually Happened

The sequence is short and worth setting out precisely, because a great deal of published material still describes Brazil as moving into mandatory ISSB reporting from 2026.

October 2023. Resolution CVM 193 establishes the framework. Reporting is based on standards issued by the Brazilian Sustainability Pronouncements Committee, known as CBPS, comprising CBPS 01 and CBPS 02, which align with IFRS S1 and IFRS S2 respectively.

Financial years from 1 January 2024. Voluntary adoption opens to public companies, investment funds and securitisation companies.

Financial years from 1 January 2026. Mandatory reporting was scheduled to begin for publicly held companies.

27 to 29 May 2026. Resolution CVM 244 revokes the mandatory phase. The framework survives for entities that choose to report.

From 2027. Companies that choose not to report face new disclosure obligations of their own.

Note the timing. The reversal came roughly five months into the first mandatory financial year, and after Brazil had hosted COP30. This was not a quiet technical adjustment made years in advance.

Why The Voluntary Phase Underperformed

This is the part other jurisdictions should study, because the diagnosis is specific rather than a general story about market readiness.

The original Resolution 193 contained a perpetual reporting obligation. Any entity that voluntarily adopted sustainability disclosure in a given fiscal year was required to continue doing so indefinitely. There was no exit.

CVM itself identified this as a barrier to experimental voluntary adoption. A company considering a trial run under the voluntary phase was not evaluating a trial. It was evaluating a permanent commitment, made on the basis of an untested framework, with no ability to withdraw if the exercise proved unmanageable.

Predictably, few companies volunteered. By April 2025, only a handful had opted to report early, and research before the reversal suggested a large majority of Brazilian companies were not ready to implement IFRS S1 and S2.

So the regulator arrived at the start of the mandatory phase with almost no cohort of experienced reporters, no body of domestic practice to point to, and a market that had signalled unreadiness by declining to participate. Resolution 244 responded to that, and it also fixed the design flaw: the perpetual obligation is gone, replaced by a minimum commitment of three consecutive fiscal years.

The lesson is not that Brazilian companies were unwilling. It is that the voluntary phase was structured in a way that made volunteering irrational, and the regulator then read low uptake as evidence of unreadiness.

What Resolution 244 Requires Now

Voluntary does not mean unregulated, and the comply-or-explain mechanism has real content.

If you do not report, you must issue a formal market announcement explaining that decision. This obligation begins from 2027, timed to the filing of annual financial statements. Opting out is a public, reasoned act rather than silence.

If you do report, you must use CBPS and ISSB-based standards. You commit to reporting for a minimum of three consecutive fiscal years. And if you subsequently decide to stop, you must communicate that decision in advance, in the fiscal year before you cease.

Assurance requirements remain for entities on the reporting route, performed by an auditor registered with CVM under standards from the Federal Accounting Council.

The three-year minimum is a sensible compromise. It prevents one-off reporting for reputational purposes while removing the permanent lock-in that suppressed participation in the first place.

What Survived

Brazil did not dismantle its ISSB implementation, and this distinction matters for anyone assessing the country's position.

CBPS 01 and CBPS 02 remain in force as the applicable standards for entities that report. The technical infrastructure, the local standard setter and the alignment with IFRS S1 and S2 are all intact.

The framework for funds and securitisation companies is unchanged, and the amendment in fact aligns the listed company regime with the treatment those entities always had, since no mandatory requirement ever applied to them.

A separate financial sector track exists. Brazil's central bank operates its own sustainability disclosure timetable for supervised institutions, with the first group covering institutions registered as public companies and leaders of prudential groups in the largest segments, reporting on financial years beginning in 2026. Financial institutions should confirm their position under that regime rather than assuming the CVM reversal releases them, because it does not.

So the accurate description of Brazil today is not that it abandoned ISSB reporting. It is that it retained the standards, retained a financial sector mandate, and removed the general listed company obligation.

Lessons For Other Emerging Markets

Five transferable conclusions, and the first is the most important.

Design the voluntary phase for experimentation, not commitment. Brazil's perpetual obligation converted a trial into a permanent choice and suppressed the participation the regulator needed. A voluntary phase exists to build capability and generate domestic practice. If the terms of entry are onerous, it does neither. Malaysia's approach of climate-first reporting with defined transition reliefs, and New Zealand's proposal of a long dual-standard runway, both permit genuine testing without lock-in.

Low voluntary uptake predicts a mandate in trouble. Brazil's handful of early adopters was a leading indicator that went unheeded until the mandatory year began. Regulators phasing in disclosure requirements should treat voluntary participation rates as a readiness signal and act on them well before the compliance date, either by extending timelines or by increasing support.

Capability building matters more than deadlines. Malaysia paired its framework with a national capacity programme covering policy, assumptions, calculators and education. Singapore launched a sustainability assurance body of knowledge and worked with training providers. Both recognised that a market cannot report to a standard it lacks the skills to apply. A deadline without capability support produces either non-compliance or poor-quality compliance.

Comply-or-explain is a legitimate landing point, not a failure. The UK has taken the same route on Scope 3 and on transition plans. India uses it for BRSR value chain reporting. It preserves transparency, forces a public decision, and allows capability to build. Brazil arriving here after attempting a full mandate is a reasonable outcome, even if the route was uncomfortable.

Watch the international current, but do not assume it flows one way. Brazil reversed in the same period that the EU cut CSRD scope by roughly 80 per cent through Omnibus, the SEC proposed rescinding its climate rule, and Canada paused its own project. Simultaneously the UK, Australia, Japan, Korea, Singapore, Malaysia, Hong Kong and Qatar moved forward. An emerging market regulator can point to precedent for almost any position, which places more weight on domestic readiness assessment than on international peer pressure.

What This Means For Brazilian Companies

Reporting is now a commercial decision rather than a compliance one, and the commercial case has not weakened. International investors with Brazilian exposure still want the information. Lenders still ask. EU customers subject to CSRD still need value chain data from suppliers regardless of what CVM requires, and the EU's value chain protections for smaller suppliers explicitly exclude greenhouse gas emissions.

Opting out is visible. From 2027, the decision not to report requires a public explanation filed alongside annual financial statements. Investors will read those explanations comparatively, and a thin one will stand out against peers who either report or explain well.

The three-year commitment changes the calculus favourably. Under the old perpetual obligation, adopting was a permanent decision. Under Resolution 244 it is a three-year one. For a company that was deterred before, the terms are now materially better.

Capability built is not wasted. Companies that prepared for the 2026 mandate hold an asset. CBPS 01 and CBPS 02 remain the standards, the financial sector track is live, international investor expectations persist, and there is no reason to assume Brazil will never revisit a mandate. Dismantling a reporting function built at cost, in response to a rule change that kept the underlying standards in place, would be a decision to reverse later.

What Investors Should Watch

The reversal raises a genuine question about comparability and coverage across the Brazilian market, since voluntary regimes produce self-selected disclosure. Three things will indicate how this settles.

How many companies opt to report under the three-year commitment, which is the first real test of whether the design fix worked. The quality of the explanations filed by those opting out from 2027, which will reveal whether the comply-or-explain mechanism has teeth. And whether investor pressure fills the gap the regulator vacated, which is the explicit expectation now that CVM has stepped back.

Practical Checklist

1. Note that no mandatory CVM reporting cycle occurred, since Resolution 244 revoked the mandate in May 2026 before the first mandatory year completed.

2. Disregard published material describing Brazil as moving all public companies into mandatory ISSB reporting from 2026, which describes the superseded position.

3. Confirm whether you fall under the separate central bank sustainability reporting timetable for supervised financial institutions, which the CVM reversal does not affect.

4. If choosing not to report, prepare the formal market announcement explaining that decision, required from 2027 alongside annual financial statements.

5. If choosing to report, use CBPS 01 and CBPS 02 and commit to a minimum of three consecutive fiscal years.

6. If you later intend to stop reporting, communicate that in the fiscal year before you cease.

7. Arrange assurance by an auditor registered with CVM under Federal Accounting Council standards if you take the reporting route.

8. Assess the commercial case separately from the compliance case, given investor, lender and EU customer expectations.

9. Retain capability built for the abandoned mandate rather than dismantling it, since the standards remain in force.

10. For regulators in other emerging markets, design voluntary phases with genuine exit routes rather than perpetual obligations.

11. Treat voluntary uptake rates as a readiness indicator and act on weak participation before the mandatory date.

12. Pair any mandate with capability building, following the Malaysian and Singaporean examples.

Position as of September 2026. Resolution CVM 244 was approved on 27 May 2026, issued on 29 May and published on 1 June 2026. The separate sustainability reporting timetable applicable to institutions supervised by Brazil's central bank operates independently and should be confirmed directly. Confirm current requirements against CVM and take professional advice for your circumstances.

Sources

Comissao de Valores Mobiliarios, IFRS Foundation, Cascione Advogados, Verdantix, ESG News, ESG Times, Reporting Academy, The Planet Brief, OneStop ESG

This article is intended for general professional information and does not constitute legal, financial, or investment advice.