BRAZIL Trends and Developments Contributed by: Ralph Melles Sticca, Passos e Sticca Advogados Associados
Introduction ESG (environmental, social, and governance) has been at the forefront of governmental and regula - tory discussions in several countries, both developed and developing, as well as in bilateral and multilat - eral agreements aimed at standardising practices and actions along the lines originally proposed by the publication “Who Cares Wins”, produced in 2004 by the UN Global Compact, in partnership with the World Bank. “E” for Environmental With regard to the “E” (environmental) pillar, in Novem - ber 2025 Brazil hosted the UN Climate Change Con - ference, or the 30th Conference of the Parties, known as the “Amazon COP”, where topics covered included the transition in the energy, industrial and transport sectors; the sustainable management of forests, oceans and biodiversity; the transformation of agri - culture and food systems; the building of resilience in cities, infrastructure, and water; and the promotion of human and social development, together with ena - blers such as financing and technology. In addition to overseeing and preserving the world’s largest tropical rainforest, the Amazon, Brazil has strin - gent and up-to-date environmental rules (eg, Law No 12,651/2012, the “Brazilian Forest Code”) that ensure the preservation of native and permanent protection areas within rural properties. These rules, combined with cutting-edge technology used in agricultural pro - duction and an energy matrix focused on hydroelec - tric plants, solar power and biomass, result in one of the world’s most sustainable production systems. Brazil is also a pioneer in initiatives to reduce carbon emissions, having enacted Law No 14,119 in 2021 on the National Policy on Payment for Environmental Ser - vices ( Política Nacional de Pagamento por Serviços Ambientais – PNPSA), which regulates voluntary financial mechanisms to remunerate rural producers, traditional communities or indigenous peoples for conserving or restoring ecosystems – in other words, those who protect springs, forests and biodiversity receive money or technical support for generating essential benefits for society.
In the same context, in 2024 the Future Fuel Law (Law No 14,993) was enacted, boosting decarbonisation by regulating and encouraging sustainable alternatives designed to replace petroleum derivatives and reduce gas emissions, namely: (i) ethanol, a traditional fuel already widely used for motor vehicles in Brazil; (ii) green diesel (HVO), produced from vegetable oils and animal fats; (iii) biomethane, a 100% renewable gas purified from biogas obtained through the decompo - sition of organic waste; (iv) sustainable aviation fuel (SAF), produced from biomass and oils; and (v) green hydrogen, produced using clean energy (solar or wind) to separate hydrogen from water. More recently, in 2024, discussions began in the National Congress (Bill No 2,780) regarding the National Policy on Critical and Strategic Minerals ( Política Nacional de Minerais Críticos e Estratégicos – PNMCE), which establishes government guidelines to ensure national sovereignty, industrial supply, and progress in the energy transition, prioritising local val - ue addition, discouraging the export of raw minerals, and stimulating domestic processing. “S” for Social With regard to the “S” (social) pillar, Brazil has one of the most comprehensive public systems of health - care, social security and social assistance. This is financed by the federal government, as well as by companies through social contributions levied on rev - enue, payroll and profits, and by citizens themselves through payroll withholdings and voluntary payments, funding the Unified Health System ( Sistema Único de Saúde – SUS), social security, and welfare benefits such as unemployment insurance and free subsidies for food security ( Bolsa Família ), buying gas cylinders (Vale Gás), and awarding scholarships (Pé-de-Meia), among others. Additionally, to reduce the impact of income tax on the population, as of 2026 (Law No 15,270), the federal government exempted monthly income up to BRL5,000; reduced taxation on income up to BRL7,350; while maintaining the progressive income tax system for citizens earning above that threshold, with rates that reach 27.5% of gross income.
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