The National Monetary Council (CMN) approved, on this date, Resolution CMN No. 5,185, which requires larger financial institutions to prepare and disclose, together with their financial statements, a report on financial information related to sustainability, in accordance with the pronouncements IFRS S1 – General Requirements for Disclosure of Sustainability-related Financial Information and IFRS S2 – Climate-related Disclosures, issued by the International Sustainability Standards Board (ISSB) and approved by the Brazilian Committee for Sustainability Pronouncements (CBPS).
The preparation and disclosure of the report is mandatory for all institutions that currently disclose consolidated annual financial statements adopting international accounting standards in accordance with the pronouncements issued by the International Accounting Standards Board (IASB), which are institutions incorporated as publicly traded companies or that are leaders of a prudential conglomerate classified in segments S1, S2 or S3. In addition, institutions that voluntarily publish their consolidated financial statements in accordance with the international standard must also disclose the sustainability report. The measure also determines that the report must be subject to reasonable assurance by an independent auditor. In order to avoid information asymmetry between financial institutions and entities regulated by the Securities and Exchange Commission, the provisions of the standard are aligned with the requirements of CVM Resolution No. 193 of 2023.
By providing investors with comparable and reliable financial information on sustainability-related risks and opportunities, the measure allows this information to be considered when making decisions related to the provision of resources to the entity, thus encouraging more sustainable and balanced economic development.
In order to allow time for adaptation to the new requirements, the mandatory disclosure of the report will occur from the fiscal year 2026, for institutions registered as publicly-held companies or that are part of segments S1 or S2. For institutions in segment S3 and institutions that voluntarily publish consolidated financial statements adopting the IFRS standard, this obligation will occur from the fiscal year 2028, but early voluntary adoption is permitted.
The CMN Resolution also provides that institutions that choose to voluntarily disclose their sustainability report must also fully adopt the ISSB international standard.
The Resolution comes into force on January 1, 2025, to enable institutions that so wish to prepare and disclose, in advance, the report of financial information related to sustainability in accordance with international standards.
Source: Communications from the Central Bank of Brazil
