BRAZIL Trends and Developments Contributed by: Thaís Vasconcellos de Sá and Ana Julia Grein Moniz de Aragão, Bermudes Advogados
The 2025–26 Action Plan builds on these results with 14 new initiatives, focusing on consolidation, monitor- ing, and regulatory refinement. Priorities include: • supervising the implementation of ISSB standards (CVM 193); • evaluating assurance reports prepared by inde- pendent auditors; and • improving the analytical capacity of the regulator through data integration and technology. The plan also encompasses: • capacity-building measures; • the development of a database for sustainable finance instruments; and • technical studies on carbon markets and Brazil’s recently issued sustainable taxonomy. It further reinforces the CVM’s co-operation with initia- tives such as the National Strategy Against Corruption and Money Laundering (ENCCLA) and the Interinstitu- tional Committee on Sustainable Taxonomy. Together, the two plans represent the transition from the design and regulation of sustainable finance to its operational consolidation. The CVM’s framework now moves from voluntary reporting to mandatory super- vision, establishing the institutional foundations for a transparent and resilient sustainable capital market in Brazil. Tax Reform Brings Environmental Criteria Into the Fiscal Framework Recent reforms have also extended the climate and sustainability agenda into Brazil’s fiscal architecture, using taxation as a tool to discourage high-emission activities and reward low-carbon investments. Under Complementary Laws No 214/2025 and No 68/2024, environmental performance now influences the inci- dence or reduction of the new VAT structure (CBS and IBS) and the Selective Tax (IS), linking fiscal policy to sustainability goals. The Selective Tax applies to goods and services with negative environmental or health impacts, such as fossil fuels, mineral extraction and high-emission vehicles, while providing reduced or zero rates for
cleaner technologies. It introduces a fiscal mechanism to internalise environmental costs and encourage effi- ciency and innovation, with implementation scheduled for 2027. The reform extended reduced rates of 60% for ser- vices related to forest restoration, sustainable man- agement, and biodiversity conservation. Biofuels and low-carbon hydrogen will also benefit from preferential rates, between 40% and 90% of those applied to fos- sil fuels, reinforcing Brazil’s decarbonisation strategy and supporting the transition to a low-carbon energy matrix. There are also incentives for circular economy. Com- panies purchasing recyclable materials from co- operatives are now entitled to presumed tax credits, formalising recycling chains and promoting social inclusion. Urban rehabilitation projects enjoy lower tax rates, encouraging the recovery of degraded areas. The reform preserved special regimes such as REIDI for renewable-energy infrastructure and created regional sustainability funds in the Amazon to support green investments and diversification of local econo- mies. Sectoral Measures on Climate and Energy Transition Brazil has also advanced a set of sector-specific measures to decarbonise its economy and align industrial policies with climate objectives. Discussion will now highlight the following initiatives that focus on strategic sectors such as fuels, energy, mineral resources and circular economy. Fuel of the Future Law and its regulation Sanctioned in October 2024, Law No 14,993/2024 (the “Fuel of the Future Law”) created a comprehen- sive framework to promote sustainable fuels in Brazil, including: • renewable diesel; • sustainable aviation fuel; and • biometane. The law adjusted blending mandates for biofuels: ethanol between 22% and 35% in gasoline and bio- diesel increasing by one percentage point per year
33 CHAMBERS.COM
Powered by FlippingBook