Brazil’s Draft Sustainable Taxonomy Action Plan (the Action Plan), prepared by the Ministry of Finance, is currently undergoing public consultation and receiving contributions and comments to improve it. The deadline for participation in the public consultation is October 20, 2023.
The development of a sustainable taxonomy aims to address Brazil’s main environmental and social challenges, taking into account its commitments, objectives and priority plans. Taxonomies consist of a classification system that scientifically defines activities, assets and/or categories of projects that contribute to climate, environmental and/or social objectives and provide a common terminology for companies, financial institutions and investors to manage investments decisions, but also for regulators, governments and other stakeholders to develop government policy. They are also essential for increasing the transparency of information on sustainable economic and financial activities. According to the International Capital Market Association (ICMA), they provide specific criteria and indicators that make it possible to assess whether an activity contributes to sustainability and/or the transition to a sustainable economy.
The action plan covers several topics:
- discusses the landscape of sustainable finance in the world, with an emphasis on international obligations;
- lists domestic and international taxonomy initiatives;
- explains the strategic, environmental and social objectives intended for the Brazilian taxonomy;
- presents the international obligations and national legislation related to the taxonomy; And
- emphasizes the design of the taxonomy by explaining how its objectives are formulated and the principles and definitions used for its construction.
The Action Plan is of particular interest to the private sector as it includes, among other things, climate change mitigation and adaptation and covers the following sectors:
- agricultural industry;
- extractive industries;
- electricity and gas;
- water, sanitation, waste management and disinfection;
- transport and storage; And
- social services.
The ongoing public consultation is an opportunity for stakeholders, including businesses, financial institutions, investors and society at large, to contribute with suggestions and feedback on the action plan, to help shape the guidelines that are expected to drive investments and policies will send in Brazil. forward, to influence regulations and to better understand sustainability criteria. Furthermore, alignment with the taxonomy creates opportunities for companies to attract investments, improve market competitiveness, reduce legal risks and improve sustainable transparency practices.
Tauil & Checker’s Environmental Practice is here to help you if you need any help or advice in participating in the public consultation process.