Brazil's new ESG regulatory frontier: BACEN, PREVIC, and SUSEP

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The sectoral regulatory environment for sustainability, climate, and ESG risks sees new advancements in Brazil, despite a controversial retreat still under discussion by the CVM.

Dear readers,

If in recent years the ESG (Environmental, Social, and Governance) agenda has matured in corporate discourse, moving away from the mere realm of voluntarism and philanthropy, September 2026 marked a definitive turning point in the regulation of the Brazilian national financial system. Within a few weeks, the Central Bank of Brazil (BACEN), the National Superintendency for Pension Funds (PREVIC), and the Superintendency of Private Insurance (SUSEP) took decisive steps to standardize, deepen, and align sustainability, climate, and ESG risk obligations with global best practices.

The message from most regulators is unanimous: the management of climate, environmental, and social risks and opportunities has ceased to be a voluntary “best practice” to become a structural pillar of governance, compliance, and risk management. Below, I share the main impacts of these important regulatory innovations and a reflection on a recent disconnect in our capital market.

The Central Bank and the new GRSAC Report

The Central Bank of Brazil published BCB Resolution No. 586 on September 3, 2026. The new rule obligates financial institutions categorized in Segments S1 through S4 to annually disclose the Social, Environmental, and Climate Risks and Opportunities Report – GRSAC Report.

The major innovation lies in the requirement for granular data through fixed and flexible format tables, ranging from governance and strategy to rigorous metrics for physical and transition climate risks (such as exposure to drought events and heavy rainfall). The standard, which will come into effect on January 1, 2027, requires that data also be made available in an open format, ushering in a new era of comparability in the sector.

Another innovative detail is sectoral standardization: counterpart classification will strictly follow IBGE's CNAE codes, ensuring uniformity. In addition, the rule formally introduces the requirement for a Transition Plan, demanding that the institution detail its strategies and targets with a defined timeframe for reducing greenhouse gas (GHG) emissions. And there is no room for outdated data: the identification of any inconsistency requires the immediate update and republication of the report on the institution's website, where it must remain accessible for at least five years.

PREVIC and the Double Materiality paradigm

In the field of pension funds, PREVIC published Ordinance No. 728 on September 16, 2026, requiring the evaluation and monitoring of ESG risks in the investments of closed supplementary pension entities (EFPC) through the creation of an ESG Plan.

The highlight of this regulation is the formal adoption of the concept of double materiality. Entities must not only assess how climate and social factors affect the financial return of their assets (financial materiality), but also how their investments positively or negatively impact society and the environment (impact materiality). Implementation will be phased, with the ESG Plan required to be approved by June 2027 for segments S1 and S2, and by March 2028 for S3 and S4.

Also innovating in investment chain governance, PREVIC's rule establishes that, if asset management is delegated to third parties, the entity must ensure in contractual instruments that these external managers adopt ESG integration practices compatible with the guidelines of the ordinance. The rule also provides an exhaustive illustrative list of risk events that must be prevented, encompassing everything from financing activities involving slave-like labor conditions and disrespect for traditional communities to deforestation, non-compliance with environmental licensing conditions, and corporate governance failures.

SUSEP and alignment with IFRS and ISSB standards

The insurance market is also undergoing an extremely relevant enhancement. The Superintendency of Private Insurance (SUSEP) launched a public consultation (No. 05/2026) on a proposal to revoke and replace Circular No. 666/2022. The focus is to update the regulatory framework in line with new international sustainability disclosure standards (IFRS S1 and IFRS S2, from the ISSB), adapted to Brazil by CBPS Pronouncements 01 and 02.

The proposed regulation deepens the Sustainability Report tables, adding mandatory climate scenario analysis as a strategic planning tool for supervised entities in segments S1 and S2. In addition to physical and transition risks, the draft also explicitly provides for litigation climate risk—losses resulting from direct lawsuits or claims stemming from failures in climate management.

It is worth highlighting the expansion of the regulatory scope, which now explicitly includes insurance cooperative societies. A notable operational advance in the draft is the requirement to integrate sustainability risks into pricing and underwriting policies themselves: insurers must consider a client's track record and their capacity to mitigate ESG risks before accepting business terms. The new rule extends this assessment lens to the selection of financial assets, suppliers, and service providers. This is an indisputable step toward the maturation of ESG regulation.

The CVM disconnect: a step in the wrong direction?

While CMN/BCB, PREVIC, and SUSEP advance in consolidating a robust and binding framework for corporate sustainability and ESG risks in Brazil, it is troubling to note the recent disconnect from the Securities and Exchange Commission of Brazil (CVM). With the issuance of CVM Resolution 244/2026, the regulatory agency backtracked by removing the mandatory disclosure of reports based on the IFRS S1 and S2 standards.

This move goes in the diametrically opposite direction of the rigorous standardization effort adopted by the rest of the financial system. Instead of converging toward systemic transparency and ESG data systematicity, CVM's retreat creates a dangerous information asymmetry, weakening climate integrity precisely in the capital market, where resource allocation should be most sensitive to these risks.

Regulatory integration is the only way forward

What do these regulations reveal when analyzed together? Despite CVM's localized setback, Brazilian regulatory architecture, for the most part, is attempting to shield the financial system against climate and ESG risk inertia. By standardizing concepts, BCB, PREVIC, and SUSEP are pushing companies and market participants toward a standard of rigorous due diligence—which, in climate terms, aligns precisely with the understanding recently established by advisory opinions from international courts (ICJ, IACtHR, and ITLOS), making it a duty for both the State and economic actors to act in the face of climate change risks and impacts.

Adaptation will demand resources, governance restructuring, and substantial technical planning. But, as we have already seen in recent climate tragedies, the cost of regulatory prevention is infinitely smaller than the price of institutional omission.

How is your organization preparing for BACEN's GRSAC Report, PREVIC's ESG Plan, or SUSEP's new requirements? Will current governance, risk, and compliance structures be able to handle regulatory fragmentation while meeting this new frontier of obligations? If dealing with a publicly traded company in Brazil, the confusion and uncertainty in light of the CVM are immense!

And people say ESG is dead!

Until the next edition!

Author: Bruno Teixeira Peixoto

Article originally posted on LinkedIn.