From 2026, public companies in Brazil will need to submit mandatory sustainability and climate-related reports as part of the country’s Ecological Transformation Plan.
The requirements for these disclosures follow standards set by the IFRS Foundation’s International Sustainability Standards Board (ISSB), which was launched at the 2021 COP26 climate conference. Created in response to pressure from regulators, governments, businesses and investors, the IFRS Global Sustainability and Climate Reporting Standards aim to make company reports more transparent, consistent, and measurable.
Brazil joins the UK and Australia in adopting the new guidelines, and as the largest economy in Latin America (LATAM), we will likely see ripple effects throughout the region in the coming years.
This all sounds very positive on a national level. But what does Brazil’s new sustainability legislation mean for companies looking for executive talent?
Here, we’re going to address seven ways this new landscape will re-calibrate leadership qualities in the LATAM region.
1. Companies must embrace sustainability reporting
The introduction of mandatory sustainability and climate-related disclosures from 2026 sets a new standard for corporate governance — one that companies will quickly have to familiarise themselves with.
This transformative move requires executive leaders to digest the ISSB guidelines and integrate them into the heart of their business operations.
Under the new sustainability measures, executives who tackle their responsibilities head-on will be better poised to use them as a competitive advantage. On the other hand, those who shy away from more sustainable practices and reports will show a lack of commitment to transparency and environmental stewardship.
Brazilian public companies have been able to file reports voluntarily since the start of 2024. Perhaps that is an avenue worth exploring for companies who want to hit the ground running in 2026.
2. Transparency and stakeholder confidence will become essential
The shift towards mandatory sustainability reporting signifies an era where transparency is paramount. For executive leaders in companies under ISSB guidelines, this means they must get serious about their climate impacts and sustainability practices.
Previous environmental reporting initiatives have been plagued with greenwashing loopholes, such as “bogus” carbon credits. The IRFS (International Financial Reporting Standards) aims to close these loopholes to strengthen trust among investors, customers, and the wider community.
With vast natural resources, biodiversity, and the Amazon’s carbon storage ability, Brazil and Latin America as a whole are perfectly poised to lead the way in global sustainability efforts. What’s more, it is one of the most climate-aware regions of the world, with over 90% of its population seeing climate change as a serious threat to humanity.
To instill confidence in stakeholders, companies would be wise to prioritise sustainability-minded profiles not just in their Corporate Sustainability Officers, but right across the C-suite.
3. Businesses need to adjust their strategic planning
Producing robust, reliable reports on sustainability isn’t an overnight fix — it requires strategic adjustments at the executive level. Leaders must now embed environmental and social governance (ESG) factors into the core strategic planning of their organisations.
This includes setting long-term sustainability goals, developing actionable plans to achieve them, and integrating ESG considerations into everyday business decisions.
The challenge for executives is to align these sustainability initiatives with the company's broader business objectives, ensuring that they contribute to both environmental stewardship and their financial success.
This strategic pivot not only meets legislative demands but also positions companies as leaders in the global transition towards a sustainable economy.
4. Risk management will go through a mini-revolution
Brazil’s ISSB guidelines will push companies into rethinking their risk management approach, especially on environmental and sustainability risks.
Executives are tasked with developing sophisticated frameworks to identify, assess, and mitigate these risks. This involves not just complying with new reporting standards but also taking a proactive stance in addressing potential challenges such as sourcing a series of compliant suppliers and bolstering supply chains.
Leaders who excel in this area will need a solid understanding of climate impacts and the potential pitfalls of new strategies.
5. Investor relations will be front and centre
The new legislation is more than an ethical initiative, as ISSB Chair, Emmanuel Faber, explained. “For me, ISSB is providing a global baseline which is investor-focused, which any jurisdiction or any company might build on.”
In this new regulatory context, the relationship between companies and their investors is fundamentally evolving. Unable to hide behind greenwashing claims, leaders must communicate their sustainability efforts wisely, as they significantly influence investor perceptions and decisions.
There is an exciting opportunity here, of course. By transparently showcasing efforts towards environmental sustainability, CFOs can attract and retain more forward-thinking investors.
This dynamic underscores a long-overdue shift in capital allocation, favouring businesses that not only comply with sustainability mandates but also proactively contribute to a greener future.
6. Leaders must balance new costs and opportunities
Companies under ISSB will likely be faced with initial financial implications involved with the reporting itself and operational adaptations.
While this transition may present upfront costs, including investment in new technologies and training, it also opens doors to long-term savings and efficiencies.
Energy-efficient office equipment can help to reduce company overheads, especially in the context of unpredictable fossil fuel prices. Similarly, adopting elements of the circular economy can help to reduce waste and uncover new revenue streams.
Striking the cost-opportunity balance is sure to be one of the greatest challenges for businesses to stay competitive in this rapidly evolving market.
7. Sustainability will occupy the core of leadership and company culture
The last impact in our list is perhaps the most difficult for companies to adapt to.
Businesses can no longer pay lip service to ESG requirements. To enact real, consistent change, leaders are now tasked with embedding sustainability into the DNA of their organisations. With a climate-first mindset, organisations create a space where every decision and operation reflects a common goal.
This requires a leadership style that not only prioritises environmental responsibility but also inspires and mobilises the entire organisation towards better practices. Successful executives will be those who can lead by example, driving their teams to innovate and operate within a framework that values sustainability as a core business objective.
Key takeaways:
Companies need leaders who can build road maps to truly climate-friendly practices.
Sustainability can no longer be contained in one silo — it needs to permeate the entire business, starting at the executive level.
Sustainable transformation is more than an ethical imperative, it’s a competitive advantage.
For organisations seeking to navigate these changes successfully, Eunity Partners offers boutique executive search services tailored to find leaders who can meet these challenges head-on.
Contact us today to ensure your leadership is prepared to lead in Latin America’s green economy.
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