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[null,"Prepared By:","Contributors:"]
[null,"Demarest Advogados","Fernanda Stefanelo"]
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[]
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["ESG Latin America & the Caribbean Guide 2024 | Charting Sustainable Futures"]
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["Report Generated: 5/2/2025"]
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["Question","Brazil"]
["Social"]
["ESG Regulation related to stakeholder well-being and social impact."," Laws/regulations concerning stakeholder well-being and social impact include: \n \n Federal Resolution CMN 4945 of 2021 Makes necessary the elaboration of a Social, Environmental, and Climate Responsibility Policy - PRSAC, a set of ESG principles to be observed in the conduct of the institution's business, activities, and processes, as well as in its relationship with stakeholders. The Central Bank of Brazil (\" BCB \")'s CMN Resolution 4.945 , enacted in 2021, stands as a pivotal moment in promoting Environmental, Social, and Governance (ESG) principles within the Brazilian financial sector. The resolution, which came into effect in phases between July and December 2022, encompasses all financial institutions authorized to operate under the BCB 's supervision and establishes a comprehensive framework of guidelines and principles to guide their practices related to social, environmental, and climate considerations. The key requirements and contributions of the Resolution are (i) Social, Environmental, and Climate Responsibility Policy (\" PRSAC \"): The resolution mandates that all financial institutions establish and implement a PRSAC aligned with the resolution's principles and guidelines. The PRSAC must be publicly disclosed and outline concrete actions to ensure its effectiveness; (ii) Governance: The resolution clearly defines responsibilities for various positions within financial institutions, including the approval and review of the PRSAC by the board of directors and the creation of a social, environmental, and climate responsibility committee; (iii) Transparency: Financial institutions are required to disclose information about their PRSAC , including their objectives, goals, performance indicators, and implemented actions. This disclosure must be made in a clear, concise, and accessible manner to the public. (iv) Comprehensive Approach: The resolution considers the diverse social, environmental, and climate impacts of financial institutions' activities, encompassing their products, services, investments, operations, and stakeholder relationships. \n \n The scope of the application is Federal. "]
["ESG Regulation concerning non-discrimination."," Laws/regulations concerning non-discrimination include: \n \n Federal Law 9029 of 1995 Prohibits companies from taking any discriminatory practice of any kind as to hiring or dismissing employees. Based on the law, any discriminatory practice shall entitle the individual to payment of compensation for pain and suffering as well as pecuniary fines equivalent to 10 times the employee's salary, in addition to prohibitions to obtain loans before financial institutions. \n Federal Law 14611 of 2023 Provides for equal pay remuneration criteria for women and men, as well as obligations for companies with 100+ employees to disclose reports about gender pay gaps. According to the law, the reports must be published every six months, allowing the comparison between remuneration paid to men and women, as well as the proportion of men and women occupying management positions. The failure to disclose the report exposes the company to penalties of up to 3% of its total payroll. The law also brings provisions determining the implementation of action plans to mitigate salary discrepancies between men and women, with the participation of the labor union. \n Federal Decree 11795 of 2023 Provides for regulation on the provisions of Law 14611 as to equal pay and remuneration criteria for women and men, and gender pay-gap report. Federal Law No. 14,133 of 2021 , the new Procurement Law, aimed to incorporate the best practices of the Public Administration and adapt its terms to the ESG agenda. Based on the law, the bidding notice may, as provided for in the applicable regulations, require that a minimum percentage of the labor force is composed of women victims of domestic violence, and people released from prison. The law includes, among the tie-breaker criteria,: (i) the development of equity actions between men and women in the workplace; (ii) the development of an integrity program; and (iii) environmental impact mitigation practices. \n \n The scope of the application is Federal. "]
["ESG Regulation pertaining to the prevention of modern slavery."," Laws/regulations concerning the prevention of modern slavery include: \n \n Federal Resolution CNDH 5 of 2020 Resolution No. 5/2020 of the National Human Rights Council establishes the National Guidelines for a Public Policy on Human Rights and Business. Resolution No. 5/2020 of the National Human Rights Council (\" CNDH \"), in response to Decree No. 9,571/18, which established guidelines for the National Human Rights and Business Policy, aims to strengthen the protection of human rights and promote more responsible practices on the part of companies. The resolution reaffirms the primacy of human rights as the basis for any public policy related to business activity, recognizing the role of the State as guarantor and protector of these rights. In this sense, it adopts the principle of the centrality of the victim's suffering as a guide for conflict resolution, ensuring the active participation of affected communities in the construction of reparation and prevention mechanisms. Furthermore, the resolution recognizes the disparity of power between companies and affected communities and requires companies to prevent human rights violations throughout the production chain, imposing responsibility for the rapid and full repair of any damage caused. Finally, the resolution recognizes the need for an intersectoral and intercultural approach to the effective protection of human rights, taking into account gender, race and class, and the specificities of indigenous peoples and quilombola communities. \n Federal Ordinance Labor Ministry 4 of 2016 Provides for regulation on the \"dirty list\" of employers who submit individuals to working conditions similar to slavery. The regulation sets forth conditions for the inclusion of employers in the list, as well as the necessary procedures and timeframe to leave the list. \n Federal Ordinance Labor Ministry 671 of 2021 Provides for the definition of work under conditions similar to slavery for the purpose of inclusion in the \"dirty list\", comprising conducts such as submission to (i) forced work; (ii) exhaustive working schedule; (iii) degrading work conditions; (iv) restriction, by any means, of locomotion due to a debt contracted with the employer or representative thereof, at the moment of the hiring or in the course of the employment relationship; or (v) retention in the workplace due to (a) curtailment of the use of any transportation means, (b) submission to ostensible vigilance, (c) misappropriation of personal documents or objects. \n \n The scope of the application is Federal. "]
["ESG Regulation regarding Diversity, Equity, and Inclusion - DEI."," Laws/regulations concerning DE&I include: \n \n Federal Decree 143 of 2002 Brazil ratified ILO Convention 169, which states that governments shall assume responsibility for developing, with the participation of the peoples concerned, coordinated and systematic action to protect the rights of these peoples and to ensure respect for their integrity. \n Federal Law 14611 of 2023 Provides for equal pay remuneration criteria for women and men, as well as obligations for companies with 100+ employees to disclose reports about gender pay gaps. According to the law, the reports must be published every six months, allowing the comparison between remuneration paid to men and women, as well as the proportion of men and women occupying management positions. The failure to disclose the report exposes the company to penalties of up to 3% of its total payroll. The law also brings provisions determining the implementation of action plans to mitigate salary discrepancies between men and women, with the participation of the labor union. \n \n The scope of the application is Federal. "]
["Regulation on ESG-linked compensation."," Laws/regulations concerning ESG-linked compensation include: \n \n Federal Interministerial Ordinance 419 of 2011 Interministerial Ordinance No. 419/2011, published on October 26, 2011, regulates the actions of bodies and entities of the Federal Public Administration in environmental licensing under federal jurisdiction. The Ordinance presents the following measures and principles: (i) Environmental Protection: The Ordinance requires the assessment of the socio-environmental impacts of the activity or enterprise in the licensing phase, among the procedures carried out in the process of environmental studies is an environmental, economic and social diagnosis, characterizing the physical, biotic and socio-economic environments of the indigenous land; (ii) Social Responsibility: The ordinance recognizes the rights of indigenous and quilombola peoples, requiring consultation and free and informed consent from these groups before installing any activity or enterprise on their lands, moreover, projects that impact Indigenous Lands (IL), such as transportation infrastructure projects, require environmental compensation, with the National Indian Foundation (\" FUNAI \") as the intervening agency; and lastly (iii) Provides measures to minimize the social impacts of the activity or enterprise, such as generating employment and income for local communities; (iv) Encourages the participation of the local community in the environmental licensing process. \n \n The scope of the application is Federal. "]
["ESG Regulation for the protection of vulnerable or minority communities."," Laws/regulations concerning the protection of vulnerable or minority communities include: \n \n Federal Law 6001 of 1973 Provides for the Indian Statute. Regulates the legal situation of Indians and indigenous communities, with the aim of preserving their culture and integrating them progressively and harmoniously into the national community. The Statute recognizes the permanent possession of lands occupied by indigenous people, ensuring their right to exclusive enjoyment of natural resources and environmental preservation. Furthermore, it determines that the exploitation of subsoil wealth in indigenous lands must be carried out in a sustainable manner, with respect for the environment and indigenous communities. Finally, it recognizes that indigenous cultural heritage, its artistic values and means of expression are protected by law, guaranteeing the preservation of the cultural identity of indigenous peoples. Furthermore, with regard to the social aspects of Law No. 6,001/1973 , the law recognizes and values the cultural diversity of indigenous peoples, guarantees access to quality health and education for indigenous people and criminalizes acts of violence against indigenous people and their culture, ensuring protection against discrimination and racism. \n Federal Law 8213 of 1991 Provides for the fulfillment of mandatory quota for companies with 100+ employees to hire people with disability. Companies must engage from 1% to 5% of its workforce with employees with disability, depending on the total number of employees. This has been a hot topic in Brazil in the last years since the Labor Prosecutor's Office has strengthened the inspections involving compliance with the legal quota, imposing relevant fines. \n Federal Decree 9400 of 2018 Establishes the National Forum of Human Rights. Decree 9,400/2018 , published on June 4, 2018, established the National Forum of Human Rights Ombudsmen (\" FNO \") within the scope of the Ministry of Human Rights (MDH). The Forum aims to promote the articulation and strengthening of human rights ombudsman offices across the country, with a focus on defending and protecting fundamental human rights. The decree is responsible for the creation of the National Forum of Human Rights Ombudsmen (\" FNO \"): The FNO serves as a space for dialogue and collaboration between human rights ombudsman offices, enabling the exchange of experiences, the development of good practices and the search for joint solutions to the challenges faced in defending human rights. This forum is made up of ombudsmen from various bodies and entities of the Union, States, Federal District and Municipalities, covering a wide range of thematic areas, such as children's and adolescents' rights, rights of people with disabilities, rights of elderly people, rights of LGBTQIA+ community, youth rights, rights of indigenous peoples, women's rights, among others. This diversity of representation ensures that the FNO has a comprehensive view of the reality of human rights in Brazil and can formulate more effective public policies. The main responsibilities of the FNO are: (i) Promote the recognition of human rights ombudsman activities; (ii) Establish procedures for forwarding complaints between ombudsman offices; (iii) Suggest parameters and instruments for monitoring human rights violations; (iv) Propose measures to improve ombudsman offices; (v) Offer suggestions for the institutional improvement of public bodies in the promotion and protection of human rights. \n Federal Decree 4887 of 2003 Decree No. 4,887/2003 , promulgated on November 20, 2003, is a fundamental legal framework for the recognition and protection of the rights of the remaining quilombo communities in Brazil. The decree regulates the procedure for the identification, recognition, delimitation, demarcation and titling of lands occupied by remnants of quilombo communities. The decree presents the most consensual definition of remaining quilombo communities, recognizing them as \"ethnic-racial groups, according to criteria of self-attribution, with their own historical trajectory, endowed with specific territorial relationships, with a presumption of black ancestry related to resistance to oppression historical suffering\". This comprehensive definition ensures that the rights of quilombola communities are recognized and protected. Furthermore, the decree assigns the Palmares Cultural Foundation (\" FCP \") responsibility for certifying communities that define themselves as quilombo remnants. Certified communities are registered in a General Register, which serves as the basis for the recognition and protection of their rights. Lastly, the decree guarantees the remaining quilombo communities the right to legal assistance to defend the possession of traditionally occupied territories against expropriation and disturbances. This measure is essential to guarantee the legal security of communities and the realization of their rights. \n Federal Ordinance 111 of 2021 Normative Instruction 111/2021 of the National Institute for Colonization and Agrarian Reform (Incra) , provides for the administrative procedures to be observed by the National Institute for Colonization and Agrarian Reform in environmental licensing processes for works, activities or undertakings that impact quilombola lands. In order to preserve the rights of quilombola communities, IN 111/2021 determined the following measures and principles: (i) requires hearing from quilombola communities in all phases of the licensing process, ensuring their informed participation in decision-making; (ii) Incra must issue conclusive statements on the entrepreneur's studies and reports, ensuring accountability and monitoring of the process; (iii) The assessment of socio-environmental, economic and cultural impacts on quilombola lands contributes to the identification and mitigation of social and environmental risks. Furthermore, IN recognizes the territorial and cultural rights of quilombola communities, seeking to avoid negative impacts on their quality of life. The analysis of these socioeconomic impacts aims to ensure that the projects bring benefits to quilombola communities, such as income generation and local development opportunities. As well, it seeks to identify and mitigate the negative effects of projects on the environment, preserving biodiversity and natural resources. From this perspective, the IN also provides compensatory measures to repair the environmental impacts caused by the projects, ensuring environmental sustainability. \n \n The scope of the application is Federal. "]
["ESG Regulation for economic development of vulnerable or minority communities or groups."," Laws/regulations concerning the economic development of vulnerable or minority communities or groups include: \n \n Federal Decree 7747 of 2012 The National Policy for Territorial and Environmental Management of Indigenous Lands , with the aim of ensuring and promoting the protection, restoration, conservation and sustainable use of the natural resources of indigenous territories and ensuring their integrity, respecting socio-cultural autonomy and improving the quality of life and the full physical and cultural reproduction of indigenous peoples. The decree establishes a cornerstone policy for Brazil: the National Policy for Territorial and Environmental Management of Indigenous Lands (\" PNGATI \"). This framework serves as the legal foundation for protecting and fostering sustainable development in indigenous territories. The policy’s key goals are: (i) Securing Indigenous Lands: The PNGATI prioritizes recognizing and demarcating indigenous lands. This bolsters protection against invasions and illegal resource exploitation; (ii) Enhancing Quality of Life: The policy aims to improve access to education, healthcare, infrastructure, and essential services for indigenous communities; (iii) Sustainable Development: The PNGATI encourages economic activities that are compatible with environmental preservation and respect indigenous culture; and (iv) Respecting Autonomy: The policy emphasizes strengthening indigenous participation in land management and decision-making processes. \n \n The scope of the application is Federal. "]
["Regulation on Personal Data Protection, concerning data usage transparency, limits on data usage to prevent discrimination issues, and corporate digital responsibility."," Laws/regulations concerning Personal Data Protection include: \n \n Federal Law 13709 of 2018 Provides for the processing of personal data, including digital data, by natural persons or by legal entities governed by public or private law, with the aim of protecting the fundamental rights of freedom and privacy and the free development of the personality of natural persons. The General Data Protection Law (\" LGPD \"), enacted in 2018 and in force since 2020, represents a fundamental milestone in the protection of privacy and personal data in Brazil. Inspired by the European Union's General Data Protection Regulation (\" GDPR \"), the LGPD establishes a comprehensive set of principles and guidelines for the collection, storage, use, processing and disposal of personal data by companies and public bodies. The main objectives and provisions of the LGPD are: (i) Ensuring the protection of personal data: The LGPD aims to protect personal data against unauthorized access, misuse, discrimination and other violations; (ii) Promote transparency: Companies and public bodies must be transparent regarding the way they collect, store and use personal data; (iii) Empower data subjects: Individuals have the right to know what personal data is stored about them, how this data is used and to request correction, updating or deletion of their data; (iv) Encourage information security: Companies and public bodies must implement appropriate security measures to protect personal data against loss, theft or damage. In addition, the LGPD establishes the following rights for holders of personal data: (i) Consent: The consent of the holder of personal data is necessary for the collection and processing of their data, except in the cases provided for by law; (ii) The right of access: The holder of personal data has the right to know what personal data is stored about him, how this data is used and request a copy of his data; (iii) The right to rectification; (iv) The right to erasure: The holder of personal data has the right to request the deletion of their personal data if they are no longer necessary for the purposes for which they were collected or if the processing was carried out in non-compliance with the LGPD ; (v) The right to portability; (vi) The right to object; (vii) The right not to make automated decisions. \n \n The scope of the application is Federal. "]
["Environmental"]
["ESG Regulation related to climate change prevention or mitigation, specifically concerning carbon footprint or pollution measurement, decarbonization strategies, and/or mandates and strategies to achieve local carbon neutrality commitments"," Laws/regulations concerning climate change prevention or mitigation include:  \n \n Federal Law 12187 of 2009 \n Federal Law 11284 of 2006 \n Federal Decree No. 9,578 of 2018 \n Federal Law No. 14,590 of 2023 \n State | Law 12187 of 2009, establishing the National Climate Change Policy (\" PNMC \") Provides the main guidelines and public policies aimed at tackling climate change at the national level, such as sectoral plans for mitigation and adaptation, and the National Climate Change Plan . What is more, voluntary carbon market transactions have increased in Brazil, which is considered one of the countries with the highest potential to generate carbon credits. As determined by the Brazilian National Policy on Climate Change (\"PNMC\") , the following sectors are to be within the scope of the Sectoral Plans , as outlined by Decree No. 9,578/2018, which consolidates the PNMC: the generation and distribution of electric power; urban public transportation and interstate passenger and cargo transportation systems; the transformation and durable consumer goods industry; the fine and base chemical industries; the paper and cellulose industry; mining; the civil construction industry; health services; farming; and agriculture and steel. \n State | Law 11284 of 2006, modified by Federal Law No. 14,590 of 2023 Institutes the Public Forest Management Law , is an important instrument to foster the conservation of public forests, in addition to improving the quality of life of the population that resides around these areas. The Public Forest Management Law enables private companies to enter public procurement processes; assume the maintenance of forest areas in Brazil; extract timber and non-timber products; and offer touristic services in specific areas. In addition to ensuring the maintenance and preservation of Brazilian flora and fauna, concessions play a key role in preventing and combating illegal practices, such as deforestation, mining, illegal fires and even land grabbing. Companies interested in obtaining a forest concession must enter a bidding process involving the assessment of technical documents and financial proposals, in return for the rights to manage the forest area. The law enables the inclusion of a provision for the transfer of ownership of carbon credits in the concession contract, even transferring the right to trade certificates representing carbon credits and associated environmental services. During the term of the concession contract, the concessionaire can trade the products resulting from management and restoration activities, and the exploitation of products and services, including carbon credits and non-timber forest services. The Brazilian National Supplementary Health Agency (\" ANS \") Administrative Resolution No. 82/2023 provides for its Integrated Policy of Governance and Socio-environmental Responsibility. This resolution introduces normative provisions and defines ESG factors in programs, projects, processes, activities, and tasks conducted by the ANS . Normative Resolution No. 518/2022 provides for the adoption of minimum corporate governance practices, and the creation of regulatory incentives, such as the “ New Operators Accreditation Program ”, which encourages the adoption of good practices for organizational management and health management. \n \n The scope of the application of these laws is Federal. "]
["ESG Regulation regarding energy transition (requirements or promotion and use of new second-generation renewable energy sources such as solar, wind, tidal, H2, geothermal, among others).\n"," Laws/regulations concerning energy transition include: \n \n Federal Law No. 13,576 of 2017 Federal Law No. 13,576/2017 , which established the National Biofuels Policy - RenovaBio, providing for decarbonization goals for such industry, methods for the certification of biofuels production and the possibility of issuance and commerce of decarbonization credits - CBIOs. As part of RenovaBio program, fuel distributors must comply with mandatory individual targets to reduce carbon emissions, through the purchase of CBIOs. Wind and solar sources are already consolidated in the Brazilian electricity matrix, with no regulatory incentives in place for these sources. According to data from the National Electric System Operator ( Operador Nacional do Sistema Elétrico ), solar and wind sources represent 19% of the installed capacity of the Brazilian system in 2024. By 2028, it is expected that these two sources will represent 22% of the installed capacity. \n \n \n Federal Decree 10527 of 2020 \n Federal MCTI Ordinance 7678 of 2023 \n Federal CMN/BACEN Resolution 5095 of 2023 \n Federal CNPE Resolution 7 of 2021 Offshore technology is under development. Currently, Decree No. 10,946, of 2022 , provides for the granting of the use of physical spaces and the exploitation of natural resources in inland waters under the domain of the Union, in the territorial sea, in the exclusive economic zone and on the continental shelf for the generation of electricity from offshore projects. The decree establishes the rules for the concession of offshore exploration areas and the main clauses that must be included in the concession contracts. The provisions of the decree, however, are being revised through a bill, still under discussion. The legal framework for low-carbon hydrogen which will bring incentives for the production and application of this gas as an energy source, should be approved by the Chamber of Deputies soon. On the other hand, certain Biofuels such as Biomethane, Biodiesel, Ethanol and Aviation biofuels, are already regulated by the National Agency for Petroleum, Natural Gas and Biofuels. The two main liquid biofuels used in Brazil are ethanol obtained from sugar cane and, on an increasing scale, biodiesel, which is produced from vegetable oils or animal fats and added to petroleum diesel in varying proportions. \n \n \n Federal Law No. 14,134/2021 and Decree nº 10,712/2021 The New Gas Law and Gas Decree also played a role in boosting investments in renewable sources, by allowing biomethane and other interchangeable gases to have regulatory treatment equivalent to that given to natural gas. This allows biomethane to be considered fungible and can be injected into the national pipeline. The Brazilian Government has encouraged the promotion of biomethane, through programs such as Zero Methane ( Ordinance MMA 71/2022 ), the Fuel of the Future Program and the Federal Strategy to Incentive the Sustainable Use of Biogas and Biomethane - Decree 11.003/2022 . Investments in biomethane production projects were also included in the Special Incentive Regime for Infrastructure Development (\" REIDI \"), which aims to relieve the implementation of infrastructure projects by suspending the incidence of contributions to PIS (1.65% ) and COFINS (7.6%) for the acquisition of machinery, construction materials, equipment, among other components. The Decree 10527 of 2020 , amended by Decree No. 11,902 of 2024, establishes the Social Biofuel Seal and provides for the coefficients for reducing the rates of the Contribution for the Social Integration Program and for the Public Servant Asset Formation Program and the Social Contribution for the Financing of Social Security , incidents in production and commercialization of biodiesel, and on the terms and conditions for the use of differentiated rates. \n State MCTI Ordinance 7678 of 2023 Regulates the Brazilian Hydrogen Initiative (\" IBH2 \"). It aims to create, integrate and strengthen government actions on the subject of Hydrogen and its applications, with a focus on technological development and the promotion of innovation and entrepreneurship. \n State CMN/BACEN Resolution 5095 of 2023 Regulates the financing using resources from the National Climate Change Fund (\" FNMC \"). It is a fund of an accounting nature, linked to the Ministry of the Environment, with the aim of guaranteeing resources to support projects or studies and financing projects that aim to mitigate climate change. \n State CNPE Resolution 7 of 2021 Establishes the Fuel for the Future Program , and creates the Fuel for the Future Technical Committee, with the aim of proposing measures to increase the use of sustainable, low-carbon fuels and intensity fuels, as well as national vehicle technology, with a view to decarbonizing the national transportation energy matrix. \n \n The scope of the application is Federal. \n Reference: \n \n https://www.planalto.gov.br/ccivil_03/_ato2019-2022/2022/Decreto/D10946.htm   \n https://www.planalto.gov.br/ccivil_03/_ato2023-2026/2024/decreto/d11902.htm   \n https://www.planalto.gov.br/ccivil_03/_ato2015-2018/2017/lei/l13576.htm   \n https://www.planalto.gov.br/ccivil_03/_ato2019-2022/2020/decreto/d10527.htm   \n https://www.camara.leg.br/proposicoesWeb/prop_mostrarintegra?codteor=2329290&filename=PL%204516/2023   \n https://sintse.tse.jus.br/documentos/2021/Mai/17/para-conhecimento-geral/conselho-nacional-de-politica-energetica-resolucao-no-7-de-20-de-abril-de-2021-institui-o-programa-combustivel-do-futuro-cria-o-comite-tecnic   \n https://www.bcb.gov.br/estabilidadefinanceira/exibenormativo?tipo=Resolu%C3%A7%C3%A3o%20CMN&numero=5095   \n https://antigo.mctic.gov.br/mctic/opencms/legislacao/portarias/Portaria_MCTI_n_7678_de_17112023.html   \n https://www.planalto.gov.br/ccivil_03/_ato2019-2022/2021/lei/l14134.htm   \n https://www.planalto.gov.br/ccivil_03/_ato2019-2022/2021/decreto/D10712.htm   \n https://www.in.gov.br/en/web/dou/-/portaria-mma-n-71-de-21-de-marco-de-2022-387378473   \n https://www.planalto.gov.br/ccivil_03/_ato2019-2022/2022/decreto/d11003.htm   \n "]
["ESG Regulation concerning electricity markets, carbon markets, or similar.\n"," Laws/regulations concerning electricity markets, carbon markets, or similar include:  \n \n Federal Law 12,187 of 2009 Law 12,187 of 2009 establishes the National Climate Change Policy (\" PNMC \") and provides for the main guidelines and public policies aimed at tackling climate change at the national level, such as sectoral plans for mitigation and adaptation, and the National Climate Change Plan . – it officializes Brazil's voluntary commitment to the United Nations Framework Convention on Climate Change . The policy establishes that there should be gradual, quantifiable and verifiable targets for reducing anthropogenic emissions, considering various sectors such as electricity generation and distribution, urban public transport, industry, health services and agriculture, taking into account the specificities of each sector. It also created the Brazilian Market for Emission Reduction (“ MBRE ”), which is still pending regulation. \n Federal Law No. 13,576 of 2017 Federal Law No. 13,576/2017 , amended by Decree No. 9,888 of 2019, establishes the National Biofuels Policy - RenovaBio, and the possibility of issuance and commerce of decarbonization credits - CBIO s. As part of RenovaBio program, fuel distributors must comply with mandatory individual targets to reduce carbon emissions, through the purchase of CBIO s. CBIO is an asset issued by plants (producers or importers of biofuels certified by the Brazilian National Agency for Petroleum, Natural Gas and Biofuels (\" ANP \") and traded on the Brazilian stock market “B3”. Each CBIO issued by a biofuel producer or importer corresponds to a ton of carbon that is no longer released into the atmosphere. \n Federal Decree No. 9,888 of 2019 \n Federal Bacen Instruction 325 of 2022 Bacen Instruction 325 of 2022 allocates a specific accounting subtitle for the registration of assets related to socio-environmental and climate sustainability mechanisms, such as Carbon Credit and Decarbonization Credit (“ CBIO ”) certificates. These assets can be acquired by financial institutions and other institutions authorized to operate by Bacen for the purpose of future sale and profit generation based on price variations in the market or for use in their activities. Bacen innovated by clarifying that any liabilities arising from legal or non-formalized obligations related to socio-environmental and climate sustainability mechanisms must be recognized in the accounting headings intended to record the provision for contingencies. It began to be observed in accounting documents drawn up from January 2023. \n "]
["ESG Regulation in the realm of green or sustainable financing, including taxonomies, provisions for mandatory reporting of material financial information on environmental or social matters, as prerequisites for issuing thematic bonds (green, sustainable, social, etc.), mechanisms to promote sustainable financial products and services, etc.\n"," Laws/regulations concerning the realm of green or sustainable financing include: \n \n Federal Law 12,431 of 2011 \n Federal Decree 10,387 of 2020 \n Federal I SUSEP Circular No. 666 of 2022 \n Federal Resolution CMN 4944 of 2021 \n Federal Resolution BACEN 151 of 2021 \n Federal Resolution BACEN 140 of 2021 \n \n The framework of ESG bond classification can be linked to innovation in Brazilian legislation – the “incentivized bonds\". Law 12,431 of 2011, enacted by the Federal Government, is the regulatory milestone that sets forth incentivized bonds and provides that, once the requirements to be observed in bond offerings are met, there will be an exemption or reduction of the income tax rate for investors, with tax advantages over conventional fixed-income investments. The requirements include the need for the offers to be related to fundraising with the objective of implementing investment projects in the area of infrastructure, or to an economic production in research, development, and innovation, considered as priorities in the terms regulated by the Federal Executive Authority. \n Incentivized bonds have a strong connection with the ESG agenda, given that in 2020, the Federal Government published Decree 10,387 of 2020 , extending the tax benefits provided in Law 12,431 of 2011 to infrastructure projects with positive socio-environmental impacts. Currently, there are already precedents in the Brazilian capital market for ESG bonds, supported by Law 12,431 of 2011. \n Brazil’s Superintendency of Private Insurance (“ SUSEP ”) is responsible for determining the ESG guidelines for insurance companies, open supplementary private pension entities, capitalization companies, and local reinsurers, called “supervised entities” as a group. Through SUSEP Circular No. 666/2022, ESG must be incorporated by supervised entities in accordance with four sustainability guidelines: a) Definition of Sustainability Risk; b) Sustainability Risk Management; c) Sustainability Policy; and e) Sustainability Report. Sustainability Risk includes not only the events that affect the supervised entity itself, but also its interested parties, including potential risks that could impact the operations, affect the demand for its products or services or result in unfavorable variations in the value of its assets or liabilities, according to criteria that the supervised entity itself will establish. \n Federal Law No. 14,133 of 2021, the new Procurement Law , aimed to incorporate the best practices of the Public Administration and adapt its terms to the ESG agenda. In contracting for works, supplies, and services, including engineering ones, a variable compensation may be set according to the contracted party’s performance, based on goals, quality standards, environmental sustainability criteria, and delivery times as defined in the tender documentation and the contract. The law includes, among the tie-breaker criteria,: (i) the development of equity actions between men and women in the workplace; (ii) development of an integrity program; and (iii) environmental impact mitigation practices. \n National Monetary Council (\" CMN \") Resolution No. 4,945/2021 and BCB Resolution No. 331/2023 sets out the principles and guidelines for the establishment and implementation of the Social, Environmental and Climate Responsibility Policy (\" PRSAC \") and management of socio-environmental risks by financial institutions and other institutions authorized to operate by the Central Bank of Brazil (\" BACEN \"). BCB Resolution No. 331/2023 also deals with PRSAC . \n The Central Bank of Brazil ( BACEN ) Resolution No. 4,557 as of 2017 provides for a risk management structure (including socio-environmental risks) that must be implemented by certain institutions authorized to operate by BACEN , considering the different structures defined according to the framework of the respective financial institution, or equivalent institutions. In September 2021, through CMN Resolution No. 4,943 , such further resolution was amended, aligning the Brazilian banking practices with those that institutions at the global level have been conducting and detailing the need and form of identification, measurement, classification, evaluation, monitoring, control, and mitigation of social, environmental, and climate risks, among others. CMN Resolution No. 4,943/2021 provides a more comprehensive approach, and, in turn, CMN Resolution No. 4,944/2021 refers to a simplified risk management structure applicable in certain contexts. \n CVM Resolution No. 175/2022 provides for the creation, operation, and disclosure of information on investment funds, applied to all categories of funds governed in the resolution, but goes into certain specific issues concerning ESG, especially regarding information transparency. Among the provisions, CVM establishes what an issuer must comply with for the qualification of an asset as “green”, “social”, “sustainable”, or other related terms. The Resolution defines two views of ESG: the strict concept, which requires funds to seek to originate socio-environmental benefits, and the broad concept, which allows the integration of ESG factors into risk and return assessment, without necessarily seeking direct socio-environmental benefits. In addition, it requires funds that call themselves ESG under the strict concept to have an investment policy that seeks to originate socio-environmental benefits. This policy must be detailed in the fund's regulations and the descriptive annex of the class of quotas, including: (i) Expected socio-environmental objectives; (ii) Methodologies and principles used; (iii) Entity responsible for certification or opinion; and (iv) Results report. Finally, the resolution also requires greater transparency from ESG funds, with the aim of combating greenwashing. This includes (i) Clear information on the adopted ESG vision; and (ii) Disclosure of detailed information on the investment policy and methodologies used. \n Brazilian Association of Financial and Capital Market Entities (\" ANBIMA \"), as a self-regulatory agency representing the institutions of the Brazilian capital markets, is one of the main parties responsible for the adoption of good practices by institutions that are part of the financial sector. In its actions on ESG practices, part of its initiative is the disclosure of parameters and conduct to be followed by regulated entities through guidelines and codes of self-regulation, to which the entities are able to adhere. ANBIMA´s ESG Guideline I (2020) brought introductory concepts and guidelines on the implementation of sustainable investment policies, for example, the issues that can be considered in each ESG factor. ANBIMA ´s ESG Guideline II (2021) supports a fund’s management in understanding the identification rules for sustainable funds, which are part of ANBIMA 's self-regulation. The main requirements are related to (1) Commitment to Sustainability; (2) Continuous Actions; and (3) Transparency. "]
["ESG Regulation for preventing greenwashing."," Laws/regulations concerning the prevention of greenwashing include: \n \n Federal Brazilian Self-regulation Advertising of 1980 The code also sets out the principles for advertising environmental information: Veracity, Accuracy, Relevance and Relevance. In addition, in 2011, the code embraced socio-environmental issues, listing new advertising principles for socio-environmental responsibility and sustainability.\n Through its Code of Advertising Self-Regulation and specific annexes, CONAR establishes guidelines and principles to ensure that advertising claims related to sustainability are accurate, verifiable, and not misleading. CONAR defines ESG advertising as any communication that promotes responsible and sustainable practices by companies, their brands, products, and services. This includes both direct communication about the company's ESG efforts and indirect messaging that highlights the sustainability attributes of its products or services. Moreover, the code outlines several principles that must be adhered to when making ESD claims in advertising: a. Specificity; b. Veracity c. Accuracy and Clarity; d. Substantiation and Sources e. Relevance; f. Significance; g. No Absolutes or unbeatable superiority; and h. Cause-Related Marketing. CONAR has also adopted and adapted the WFA Global Guide on Sustainability Claims in Marketing and Communication , providing further guidance to advertisers and marketing professionals. Lastly, CONAR 's guidelines provide a valuable framework for crafting truthful, transparent, and ethically sound sustainability messaging. By adhering to these guidelines, companies can avoid the pitfalls of greenwashing, build trust with stakeholders, and enhance their reputation as responsible corporate leaders in the pursuit of a sustainable future. \n \n Federal CVM Resolution 175 of 2022 CVM Resolution 175/2022 tackles dispelling the green and social washing phenomena, through which a company masks its negative impacts on the environment and society through false, misleading, or incomplete information, establishing that in order to use “ESG”, “environmental”, “green”, “social”, “sustainable”, or other similar denominators in a fund's regulation or the descriptive annex of its share class, a company must determine: the expected ESG benefits and how the investment policy seeks to effect them; the methodologies, principles, and guidelines followed for the qualification of the fund or class, as the case may be; the entity responsible for certification or providing a second opinion on the qualification, as well as its independence from the fund; and the form, content, and frequency of ESG disclosures achieved by the investment policy. The Third-Party Assets Management Code (2022) from the Brazilian Association of Financial and Capital Market Entities (\" ANBIMA \"), in addition to its ESG Guideline II, sets principles and rules for activities related to the administration of assets. The fund management companies adhering to the Third-Party Assets Management Code , which has a sustainable development purpose, must observe the rules for the recognition of investment funds fully dedicated to the sustainable development purpose. It regards a naming method to correctly classify funds according to their investment portfolio, which proves to the investor the proper destination of the investments. Moreover, ANBIMA ´s Guide to ESG Bond Offerings is an advisory document to guide financial institutions in presenting the best practices for the public offering of fixed-income securities related to sustainable finance. Also, the guidelines provided aim to mitigate, even if indirectly and non-exhaustively, the risk of incidence of greenwashing, by adopting international best practice references for the ESG bonds market and defining obligations related to the disclosure of information. By means of ANBIMA ´s Guide to ESG Bond Offerings (2022), issuers must disclose certain mandatory documents containing the information necessary for due transparency about the issuance characteristics. \n \n The scope of the application is Federal. \n Reference: \n \n http://www.conar.org.br/pdf/codigo-conar-2021_6pv.pdf   \n https://www.in.gov.br/en/web/dou/-/resolucao-bcb-n-140-de-15-de-setembro-de-2021-345119695   \n https://conteudo.cvm.gov.br/legislacao/resolucoes/resol175.html#:~:text=Disp%C3%B5e%20sobre%20a%20constitui%C3%A7%C3%A3o%2C%20o,revoga%20as%20normas%20que%20especifica.&text=ALTERADA%20pelas%20Resolu%C3%A7%C3%B5es%20181%2F23,%2F23%20e%20187%2F23 .  \n "]
["Regulation on ESG Due Diligence applicable to value chains (MRV protocols to ensure the environmental integrity of products and services, etc.).\n"," Laws/regulations concerning ESG Due Diligence applicable to value chains include: \n \n Federal Resolution CVM 193 of 2023 \n Federal Resolution CVM 59 of 2023 \n State Resolution CVM 193 of 2023 Guides the preparation and disclosure of sustainability information reports based on the international standards (IFRS S1 and S2) issued by the International Sustainability Standards Board (\" ISSB \"). The Resolution mandates the adoption of the ISSB 's IFRS S1 and IFRS S2 frameworks, which provide a standardized approach to disclosing sustainability-related risks and opportunities. The implementation of Resolution 193 follows a phased approach, with the reporting of sustainability-related financial information becoming mandatory for certain entities starting from January 1, 2026. Until then, companies can voluntarily adopt the ISSB standards and publish sustainability reports from the fiscal years commencing on or after January 1, 2024. Initially, the obligation to comply with Resolution 193 is limited to publicly traded companies. Investment funds and securitization companies are not currently mandated to issue sustainability reports. However, they can still choose to do so voluntarily, adhering to the ISSB standards. Therefore, Resolution 193 aligns Brazil with the guidelines of the International Organization of Securities Commissions (\" IOSCO \"), demonstrating the country's commitment to promoting global harmonization of ESG reporting practices. \n State Resolution CVM 59 of 2023 A standard establishing the practice or explaining the principle in ESG reporting. This resolution aims to enhance transparency and combat greenwashing by mandating the disclosure of ESG-related information by publicly traded companies. The resolution introduces several key requirements for companies regarding ESG disclosure: (i) disclosure of ESG-related data; (ii) adoption of ESG-oriented practices; (iii) integration of ESG factors into risk assessment: Companies must consider ESG factors when evaluating potential risks that could influence investment decisions; (iv) alignment of ESG considerations with corporate Governance; (v) companies must establish internal communication channels for ESG-related issues to reach the board of directors. (vi) ESG-related indicators should be considered in the calculation of compensation for members of the board of directors. Investors are increasingly demanding ESG-related information from companies, and large asset managers are playing a crucial role in driving ESG adoption. BlackRock's CEO has emphasized the importance of \"stakeholder capitalism\" and aligning profit-seeking with sustainable strategies. Resolution CVM 59 adopts a pragmatic approach that recognizes the importance of ESG practices while also acknowledging the challenges of standardization. It allows companies to explain why they may not disclose certain information or adopt specific practices, further promoting transparency. The Brazilian Association of Technical Standards (\" ABNT PR 2030 \") – ESG, from December 14, 2022 , recommends practice to any organization, public or private company, government entity, or non-profit organization, regardless of its size or activity sector. The ABNT PR 2030 emphasizes the importance of extending ESG practices beyond the company's operations to encompass its entire supply chain, thus, larger companies are encouraged to stimulate and assist their smaller suppliers in adapting to the parameters, interconnecting the value chain in favor of ESG. This voluntary framework, while not legally binding, serves as a valuable tool for businesses seeking to align their activities with sustainable practices and enhance their overall impact. It defines ESG Concepts and Principles and establishes a structured framework for ESG implementation within companies. The guideline outlines seven key steps: a. Understanding ESG concepts and principles; b. Establish a clear commitment to integrating ESG into the company's strategy; c. Diagnosis; d. Planning; e. Implementation; f. Measurement and Monitoring; and g. Reporting and Communication. \n \n The scope of the application is Federal. "]
["Regulation in the field of circular economy.\n"," Laws/regulations concerning the field of circular economy include: \n \n Federal Law 12305 of 2010 \n Federal Decree 10,936 of 2022 \n Federal Decree 11,300 of 2022 \n Federal Decree No. 11,413 of 2023 \n \n The National Policy on Solid Waste Management (Federal Law 12,305 of 2010 amended by Federal Decree 10,936 of 2022) consolidates a set of principles, tools, goals and actions aiming at an integrated management of solid waste. In addition, such federal regulation establishes the liability of manufacturers, importers, distributors/wholesalers, and retailers, among others, regarding certain products classified as generators of significant environmental impact through relevant post-consumption waste, such as tires, batteries, medicines, electronics, lubricant oils, packaging and fluorescent lamps. Moreover, Federal Decree 11,300 of 2022 establishes a glass packaging reverse logistics system. \n Certain states have enacted more strict regulations, which condition the implementation of reverse logistics systems to the issuance or renewal of projects’ environmental licensing, as well they have included additional products to the ones obliged to implement tack-back schemes. \n Federal Decree No. 11,413 of 2023 establishes three reverse logistics credit certificates at the federal level: the Reverse Logistics Recycling Credit Certificate (\" CCRLR \"), the Certificate of Structuring and Recycling of Packaging in General (\" CERE \") and the Future Mass Credit Certificate. \n Issued by the management entity, CCRLR proves the return to the production cycle of the equivalent mass of products and/or packaging subject to reverse logistics. It may be acquired by manufacturers, importers, distributors and traders for purposes of proving compliance with reverse logistics goals. \n CERE , in its turn, certifies the company as the holder of a structuring project in the recovery of recyclable materials and proves the return to the production cycle of the equivalent mass of the products or packaging subject to reverse logistics and recycling. \n The Future Mass Credit Certificate allows the company to earn in advance the fulfillment of its reverse logistics goal, referring to the mass of recyclable materials that will be reintroduced into the production chain in subsequent years. "]
["Governance"]
["ESG Regulation regarding the integration of the board of directors, board of trustees, or management body of the company (minimum participation/representation of women or minority groups, guidelines on the composition of board members with expertise in ESG matters, etc.).\n"," Laws/regulations concerning the integration of the board of directors, trustees, or management body of the company include: \n \n Federal Resolution CVM 198 Establishes the obligation, as of January 2, 2025, to include information on the total number of people with disabilities and members grouped by other diversity attributes that the issuer deems relevant. The main innovation of the Resolution lies in the obligation for companies to present, in the Reference Form (\" FRE \"), specific information about the representation of minority groups in their structure. This measure aims to: (i) increase transparency; promote accountability; and combat prejudice. From the effective date of the Resolution, affected companies will need to: (i) collect data on diversity and inclusion in their workforce, such as the number of people with disabilities, gender, race, sexual orientation, etc.; (ii) analyze this data and identify areas for improvement; (iii) define goals and actions to promote diversity and inclusion in the company; (iv) disclose this information in the FRE, in a clear and objective manner. \n State no binding | Annex ESG Proposed by the Brazilian Stock Market to encourage diversity in the top leadership of listed companies. By 2026, companies at all levels of the stock exchange will have to have at least one woman and one member of an \"underrepresented community\" on the board of directors or statutory board. The Brazilian National Supplementary Health Agency (\" ANS \") Administrative Resolution No. 82/2023 provides for its Integrated Policy of Governance and Socio-environmental Responsibility . This resolution introduces normative provisions and defines ESG factors in programs, projects, processes, activities, and tasks conducted by the ANS . Normative Resolution No. 518/2022 provides for the adoption of minimum corporate governance practices, and the creation of regulatory incentives, such as the “ New Operators Accreditation Program ”, which encourages the adoption of good practices for organizational management and health management. \n \n The scope of the application is Federal. "]
["Regulation on fiduciary responsibility and administrators' roles in environmental and social risk management (standards or interpretations regarding the scope of fiduciary responsibility or administrator's duty concerning the company's social purpose, based on its typology).\n"," Laws/regulations concerning fiduciary responsibility and administrators' roles in environmental and social risk management include: \n \n Federal Law 6938 of 1981 and Law 9605 of 1998 Law No. 6.938/1981 , which instituted the National Environmental Policy, and Law No. 9.605/1998 , which provides for criminal and administrative sanctions arising from conduct harmful to the environment, are examples of rules that deal with corporate environmental liability in Brazil. Corporate environmental liability can be divided into three main categories: civil liability, administrative liability and criminal liability. \n The Third-Party Assets Management Code (2022) from the Brazilian Association of Financial and Capital Market Entities (\" ANBIMA \"), in addition to its ESG Guideline II , sets principles and rules for activities related to the administration of assets, such as fiduciary administration and management of third-party resources in investment vehicles \n \n The scope of the application is Federal. "]
["ESG Regulation concerning corporate purpose.\n","Not applicable.\n"]
["Regulation on types of Benefit and Collective Interest Companies (certifications like B Corps, specific regulations for BIC companies).\n"," Laws/regulations concerning types of Benefit and Collective Interest Companies include: \n \n Federal Law 9790 of 1999 Provides for the qualification of non-profit legal entities under private law as Civil Society Organizations of Public Interest establishes and regulates the Partnership Agreement, and makes other provisions. Law 9790/1999 represented a historic milestone for CSOs in Brazil, as it established a specific legal framework for CSOs, recognizing their role in society. furthermore, it simplified qualification processes and access to public resources, strengthened the autonomy and independence of CSOs and encouraged the participation of civil society in the formulation and implementation of public policies. To qualify as a Public Interest CSO, entities must meet the following requirements: (i) be in operation for at least 3 years; (ii) have as a social objective one of the areas provided for in the law; (iii) have a statute that meets the principles of legality, impersonality, morality, publicity, economy and efficiency; and (iv) provide accounts in a transparent and detailed manner. Qualification as a Public Interest CSO brings several benefits to entities, such as: (i) Access to public resources via Partnership Terms with Public Authorities; (ii) Greater visibility and recognition of the organization; (iii) Facilitation of partnerships with companies and other sectors of society; (iv) Greater capacity for action and social impact. \n \n The scope of the application is Federal. "]
["ESG Regulation regarding supply chains from the perspective of ESG risk governance.\n"," Laws/regulations concerning supply chains from the perspective of ESG risk governance include: \n \n Federal Law No. 14,133 of 2021 The new Procurement Law, aimed to incorporate the best practices of the Public Administration and adapt its terms to the ESG agenda. In contracting for major works, services, and supplies, the procurement documentation must set forth the winning supplier’s obligation to implement an integrity program within six (6) months of execution of the contract. The law includes, among the tie-breaker criteria,: (i) the development of equity actions between men and women in the workplace; (ii) the development of an integrity program; and (iii) environmental impact mitigation practices. Save if required for entering government contracts as provided for by the Federal Law No. 14,133 of 2021 , the new Procurement Law, companies are not required to implement a compliance program, thus having a third-party evaluation system is not mandatory in Brazil. Despite not being mandatory, companies are encouraged to adequately manage third parties, which includes their supply chains, and conduct risk-based third-party due diligence, in particular, due to the strict liability foreseen by the Federal Law No 12,846 of 2013 , the Clean Company Act, for companies in case third parties and/or intermediaries carry out wrongful acts in their benefit or interest ( Art. 5, III ). This is one of the components of an effective compliance program pursuant to Federal Decree No. 11,129 of 2022 ( Art. 57, III ), and, as such, it will be considered by authorities when evaluating the effectiveness of a compliance program and calculating penalties for violations of the Federal Law No 12,846 of 2013. \n Federal Law No 12,846 of 2013 \n Federal Decree No. 11,129 of 2022 \n \n The scope of the application is Federal. "]
["ESG Regulation in the context of M&A (ESG due diligence).\n","Not applicable.\n"]
["ESG Regulation related to Corporate Digital Responsibility.\n"," Laws/regulations concerning Corporate Digital Responsibility include: \n \n Federal Law 13709 of 2018 Provides for the processing of personal data, including digital data, by natural persons or by legal entities governed by public or private law, with the aim of protecting the fundamental rights of freedom and privacy and the free development of the personality of natural persons. The General Data Protection Law (\" LGPD \"), enacted in 2018 and in force since 2020, represents a fundamental milestone in the protection of privacy and personal data in Brazil. Inspired by the European Union's General Data Protection Regulation (\" GDPR \"), the LGPD establishes a comprehensive set of principles and guidelines for the collection, storage, use, processing and disposal of personal data by companies and public bodies. The main objectives and provisions of the LGPD are: (i) Ensuring the protection of personal data: The LGPD aims to protect personal data against unauthorized access, misuse, discrimination and other violations; (ii) Promote transparency: Companies and public bodies must be transparent regarding the way they collect, store and use personal data; (iii) Empower data subjects: Individuals have the right to know what personal data is stored about them, how this data is used and to request correction, updating or deletion of their data; (iv) Encourage information security: Companies and public bodies must implement appropriate security measures to protect personal data against loss, theft or damage. In addition, the LGPD establishes the following rights for holders of personal data: (i) Consent: The consent of the holder of personal data is necessary for the collection and processing of their data, except in the cases provided for by law; (ii) The right of access: The holder of personal data has the right to know what personal data is stored about him, how this data is used and request a copy of his data; (iii) The right to rectification; (iv) The right to erasure: The holder of personal data has the right to request the deletion of their personal data if they are no longer necessary for the purposes for which they were collected or if the processing was carried out in non-compliance with the LGPD; (v) The right to portability; (vi) The right to object; (vii) The right not to make automated decisions. \n \n The scope of the application is Federal. "]
["Disclosure"]
["Specific mandates related to national alignment with specific reporting standards."," Specific mandates related to national alignment with specific reporting standards include: \n \n National Monetary Council (CMN) Resolution No. 4,945 of 2021 National Monetary Council (CMN) Resolution No. 4,945/21 sets out the principles and guidelines for the establishment and implementation of the Social, Environmental and Climate Responsibility Policy (\" PRSAC \") and management of socio-environmental risks by financial institutions and other institutions authorized to operate by the Central Bank of Brazil (“ BACEN ”). Resolution No. 4,945/2021 addresses transparency and information disclosure, making it mandatory to release the PRSAC and its actions, among other information, to the external public. \n BACEN Resolution No. 139 of 2021 In addition, BACEN Resolution No. 139/2021 and BACEN Normative Instruction No. 153/2021 determine the annual disclosure of the Social, Environmental, and Climate Risks and Opportunities Report (\" GRSAC Report \"), which is mandatory for certain financial institutions. \n BACEN Normative Instruction No. 153 of 2021 \n BACEN Resolution No. 151 of 2021 BACEN Resolution No. 151/2021 defines the obligation of certain institutions to send to BACEN certain information related to the assessment of social, environmental, and climate risks in the context of their exposures in credit operations and securities, and their respective debtors. The main objective of the resolution is to improve the management of social, environmental and climate (ESG) risks by financial institutions. The information collected will help BACEN monitor the performance of institutions in this area and identify potential systemic risks. The institutions covered by the resolution must send BACEN detailed information about their ESG risks in credit and securities operations. The information must be calculated every six months, based on the outstanding balances on June 30th and December 31st. The director responsible for each institution's social, environmental and climate responsibility policy (\" PRSAC \") is responsible for providing the information. The respective data must be registered and updated in the BACEN system. \n Brazil's Securities and Exchange Commission (CVM) Resolution No. 14 of 2020 Brazil's Securities and Exchange Commission (\" CVM\" ) Resolution No. 14/2020 defines the requirement for publicly traded companies that decide to prepare and publish an Integrated Report to include in such document information related to sustainability reports, among other types of information, to ESG considerations. The concept referred to by the CVM as ‘practice-or-explain’ was adopted. In other words, those who do not promote ESG practices will need to explain the reason for this absence. As such, when applicable, the CVM requires an explanation for the failure to disclose ESG information; adopt a materiality matrix; adopt ESG key performance indicators; audit or review disclosed ESG information; conduct greenhouse gas emission inventories; and comply with certain international standards, including climate issues and the Sustainable Development Goals (\" SDGs \"). \n CVM Normative Instructions 80 of 2022 and 81 of 2022 CVM Normative Instructions 80/2022 and 81/2022 , in accordance with CVM Resolutions 59/2021 and 87/2022 , address the rules on disclosure of information by issuers of securities related to ESG and sustainability issues. The main changes regarding the disclosure of information are: (i) Obligation to communicate corporate demands: Companies must now disclose information about arbitration, judicial or administrative proceedings involving the issuer or its subsidiaries, even if confidential; (ii) Information to be disclosed: The information to be disclosed includes parties involved, amounts, assets or rights in dispute, main facts of the dispute, requests, arbitration decisions, agreements, among others; (iii) Deadline for disclosure: Communication must be made within 7 working days of the company becoming aware of the information; (iv) Form of disclosure: Disclosure must be made through the CVM's Empresas.NET System, in the category \"Communication on Corporate Demands\". The measure aims to increase companies' transparency and facilitate investors' access to information relevant to their investment decisions. Companies will need to adapt to the new rules and evaluate what additional information should be disclosed, in addition to that expressly required by the CVM. \n CVM Resolutions 59 of 2021 and 87 of 2022 \n CVM Resolution No. 175/2022 CVM Resolution No. 175/2022 provides for the creation, operation, and disclosure of information on investment funds, applied to all categories of funds governed in the Resolution, but goes into certain specific issues concerning ESG, especially regarding information transparency. The Resolution applies to all investment funds constituted, managed and/or distributed in Brazil, including quota investment funds (\" FICs \"), credit rights investment funds (\" FIDC \") and equity investment funds (\" FIPs \"). Its main objective is to improve the legal framework for investment funds, making it more modern, efficient and in line with best international practices. Among the main changes are: (i) New Classification and Segregation: The resolution establishes a new classification of investment funds, based on three criteria: type, category and subcategory; (ii) Greater Transparency: the resolution expands the information that investment funds must disclose to their shareholders; (iii) Robust Corporate Governance: The resolution reinforces the corporate governance mechanisms of investment funds; (iv) Greater Protection for Investors. \n BACEN Instruction 325 of 2022 Moreover, BACEN Instruction 325/2022 allocates a specific accounting subtitle for the registration of assets related to socio-environmental and climate sustainability mechanisms, such as Carbon Credit and Decarbonization Credit (“ CBIO ”) certificates. The Instruction applies to all financial institutions authorized to operate by the Central Bank of Brazil, including banks, insurance companies, investment funds, private pension companies and other entities. The instruction mainly aims to: (i) Promote transparency; (ii) Combat greenwashing; and (iii) Encourage sustainable investments. Furthermore, BCB Normative Instruction 325/2022 establishes specific accounting requirements for sustainability assets, including (i) Recognition: Sustainability assets must be recognized in the balance sheet of financial institutions in accordance with generally accepted accounting principles (\" PCGA\" ) ; (ii) Measurement: The carrying value of sustainability assets must be measured based on criteria that faithfully reflect their real value; (iii) Disclosure: Financial institutions must disclose detailed information about their investments in sustainability assets in financial statements and specific reports. Finally, instruction also defines guidelines for the disclosure of information about sustainability assets, with the aim of ensuring that the information is clear, accurate and comparable. \n \n The scope of the application is Federal. "]
["Standards regarding the scope and frequency of such reports."," Standards regarding the scope and frequency of such reports include: \n \n ABNT PR 2030 - ESG The Brazilian Association of Technical Standards (\" ABNT \"), seeking to standardize the metrics and guidelines for reporting ESG information, published ABNT PR 2030 - ESG on December 14, 2022. Considering the disparity of ESG metrics adoption between large and small companies, ABNT joined efforts to apply the recommended practice to any organization, public or private company, government entity, or non-profit organization, regardless of its size or activity sector. This is not a series of entirely new standards, but a compilation of existing metrics and best practices already accepted by the national and international markets. Thus, the most common and recurring themes that converged from national parameters, such as the B3 Sustainability Index, and international ones, such as the International Organization for Standardization (\" ISO \") and Task Force on Climate-related Financial Disclosures (\" TCFD \") standards , are integrated into a single document. \n Brazil's Securities and Exchange Commission (CVM) Resolution No. 193 of 2023 Brazil's Securities and Exchange Commission (\" CVM \") Resolution No. 193/2023 expands the integration of ESG practices in the Brazilian Capital Market, aligning Brazil with the global standards established by the International Sustainability Standards Board (\" ISSB \"). Such resolution determines that the financial information report related to sustainability, based on the ISSB standard, must be objectively identified, and presented separately from the entity's other information. \n \n The scope of the application is Federal. "]