By Simone Kuperchmit, with information from the IFRS Foundation
Social Communication
The Brazilian Ministry of Finance and the Securities and Exchange Commission (CVM) announced, through CVM Resolution No. 193, of October 20, 2023, that the IFRS Sustainability Disclosure Standards of the International Sustainability Standards Board (ISSB, in its acronym in English) will be incorporated into the Brazilian regulatory structure, establishing a schedule for the adoption of these standards to go from voluntary use, starting in 2024, to mandatory use on January 1, 2026.
These public authorities signaled that ISSB standards (IFRS S1 and IFRS S2, already published) can help strengthen Brazilian capital markets, to increase transparency in relation to risks and opportunities related to sustainability and facilitate the attraction of capital and global investments by companies. Brazil has required the use of IFRS accounting standards since 2010.
The announcement coincided with the IFRS Foundation trustees’ meeting, held from October 17 to 19, in Panama City, where IFRS Foundation trustees and staff met with representatives of the region’s key stakeholders.
The Inter-American Development Bank and Latinex (Panama Stock Exchange) organized an event focusing on the role that IFRS Foundation Accounting Standards and Sustainability Disclosure Standards can play in creating a more resilient, sustainable and competitive financial sector in the region, so that it can face the challenges of the future.
The Chairman of the Board of Directors of the IFRS Foundation, Erkki Liikanen, was present at the event. In his speech, he highlighted that this is a reminder of the urgency of the work to promote climate-related disclosures, given the growing risk it poses to the region’s capital markets.
Emmanuel Faber, president of the ISSB, met, on October 18th, with the Bank of the Americas Supervisors Association. On the occasion, they discussed how improving sustainability-related disclosures, through ISSB standards, would benefit the banking sector by providing more reliable and comparable data on emerging risks and opportunities.
Last month, the IFRS Foundation published the Spanish translation of IFRS S1 so that companies across Latin America can start using the standard, and IFRS S2 in Spanish will be published soon. The translation into Portuguese is also expected in the coming months.
Latin American jurisdictions are at the forefront of requiring sustainability-related financial disclosures. Both Chile and Colombia have mandated the use of the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) and the Sasb Standards, on which the ISSB standards are based. Mexico’s national standards bodies are also publicly discussing plans to use ISSB standards.
Reflecting on the announcements, ISSB President Emmanuel Faber stated that “We continue to hear strong support for ISSB standards from regulatory bodies around the world, and I commend the Brazilian Ministry of Finance and the Securities and Exchange Commission Mobiliários do Brasil for clarifying companies and investors in Brazil, establishing a clear timeline for mandatory adoption.”
CFC shares
The Federal Accounting Council (CFC) approved, this Wednesday (25), the adoption of Brazilian Standards for the Preparation and Assurance of Sustainability Reports converged with international standards. CFC Resolution No. 1,710/2023 was approved during the 1,101st Plenary Meeting and should soon be published in the Official Gazette of the Union (DOU).