Brazilian Sustainable Taxonomy: the new milestone of the ESG agenda in the country

Author: Fernanda Rios Soares – Head of ESG at DD&L

Introduction

Brazil has taken a decisive step toward a green, inclusive, and regenerative economy. With the creation of the Brazilian Sustainable Taxonomy (BST), the country now has an official system that scientifically, technically, and transparently defines which economic activities can be considered sustainable. Inspired by the European Union’s Green Taxonomy and the recommendations of the International Capital Market Association (ICMA, 2021), the BST brings security and credibility to the financial market and to companies committed to the ESG (Environmental, Social, and Governance) agenda.

ESG and Taxonomy

The Brazilian Sustainable Taxonomy is more than a technical document. It represents a turning point for corporate ESG, as it establishes objective and measurable criteria that allow the identification of activities with a truly positive impact. While ESG defines how to act, the taxonomy defines what is sustainable, creating a solid foundation for the development of sustainable finance in Brazil.

Strategic Importance

The BST is a strategic instrument for national development, with direct impacts on the business environment, access to credit, international investments, and public policies. Among its benefits are transparency and credibility, risk and greenwashing reduction, access to green financing, international integration, and the strengthening of ESG governance.

Strategic Pillars

The BST is based on three major strategic objectives:

1. Mobilize and redirect investments toward activities with positive environmental, climate, and social impacts.

2. Promote innovation and sustainable technological development focused on productivity and competitiveness.

3. Ensure transparency and integrity in sustainable finance, establishing a reliable foundation of ESG indicators.

   
   

Objectives of the Taxonomy

The objectives of the BST are organized into eleven broad themes, divided among the environmental, social, and governance dimensions. The environmental ones include climate change mitigation and adaptation, protection of biodiversity and ecosystems, sustainable use of land and forests, circular economy, and pollution control. Regarding social and governance aspects, key themes include decent work, reduction of inequalities, promotion of quality of life, and the strengthening of institutions.

Governance

The BST structure is coordinated by the Interinstitutional Committee of the Brazilian Sustainable Taxonomy (CITSB), which brings together ministries, public agencies, and representatives of civil society. It also includes Sectoral and Thematic Technical Groups (GTs) and a Consultative Committee (CC) with participation from academia, the productive sector, and financial institutions. This plural governance ensures transparency, scientific legitimacy, and alignment with the principles of the “G” in ESG.

Impacts and Conclusion

For Brazilian companies, especially those connected to the Manaus Industrial Hub and complex production chains, the BST will be both a competitive and reputational differentiator. It will enable them to demonstrate, through evidence, the positive impact of their operations and projects, strengthening ESG reports and attracting new investors. The Brazilian Sustainable Taxonomy is an essential tool for transforming the country’s potential into global leadership in sustainable finance, connecting science, capital, and purpose. With it, Brazil shows that development and sustainability can move forward together, grounded in transparency, inclusion, and responsible governance.