There was no new fact that could justify reversing course so abruptly
The CVM revoked Resolution 193 in May, making climate risk reporting voluntary instead of mandatory for listed companies starting 2027. The revocation surprised the market and government, with Finance Minister Durario Durigan requesting the new CVM president review or replace the measure.
- CVM revoked Resolution 193 on May 29, replacing mandatory climate disclosure with voluntary reporting
- Finance Minister Dario Durigan publicly pressed the new CVM president to reconsider or propose an alternative
- The decision was made with a depleted board—only two sitting directors and one substitute—days before interim president Accioly's departure
- New CVM president Otto Lobo was officially named six days after the revocation vote
Brazilian NGOs filed a civil lawsuit against the CVM's decision to revoke mandatory climate and sustainability reporting requirements for public companies, arguing the move lacked legal justification and proper procedure.
Two Brazilian civil society organizations filed suit against the country's securities regulator in early June, challenging a decision made just days before to strip away mandatory climate and sustainability reporting requirements for publicly traded companies. The Instituto de Direito Coletivo and SIS (Soluções Inclusivas Sustentáveis) argue that the CVM—Brazil's Securities Commission—acted without legal justification when it revoked Resolution 193 on May 29, replacing it with a voluntary disclosure framework that lets companies simply explain why they choose not to report.
The move caught nearly everyone off guard. The CVM's own board had deliberated on the same rule just months earlier, in December, and voted to keep it in place despite pressure from Abrasca, the association representing Brazil's publicly listed companies. That organization itself expressed surprise when the revocation was announced. The timing raised immediate questions: the decision came during the final days of interim president João Accioly's tenure, with the board operating below full strength—only two sitting directors and one substitute present. Six days later, Otto Lobo was officially named as Accioly's permanent successor, having been confirmed by the Senate in May.
Luciane Moessa, a legal scholar and founder of SIS, framed the challenge plainly: there was no new economic or legal fact that could justify reversing course so abruptly. The organizations contend the process itself violated basic administrative procedure. Under the new voluntary framework, companies can simply decline to disclose climate risks and sustainability information, provided they offer an explanation—a practice-or-explain model that essentially guts the original mandate.
The revocation created friction within Brazil's government. Finance Minister Dario Durigan publicly pressed the new CVM president to either reconsider the decision or propose an alternative regulation. The discomfort extended beyond the substance of the rule change; officials were troubled by how the process unfolded, with procedural corners cut and proper protocols bypassed. The interim president had assembled a minimal quorum to vote, including Tiago Chaves, the superintendent of institutional relations, who was called in as a substitute director. Chaves's regular role involves managing relationships with market actors like Abrasca—the very organization that had requested the revocation months before.
One director, Marina Copola, voted to preserve Resolution 193, though she supported some technical adjustments the regulatory staff had proposed, including extended timelines for debt-issuing companies to comply. But her position was outvoted. Accioly, an attorney with libertarian leanings who favors minimal state intervention and free-market principles, has been openly skeptical of ESG-focused regulation. He was appointed to the CVM in 2022 by Paulo Guedes, the economy minister under Jair Bolsonaro, and his term runs through the end of 2026.
The lawsuit now forces a reckoning over whether a financial regulator can simply erase a disclosure requirement without explanation, and whether the procedural shortcuts taken—the depleted board, the substitute director with institutional ties to interested parties, the speed of execution—constitute a violation of administrative law. The case will test whether Brazil's courts view climate and sustainability reporting as a settled matter of investor protection, or whether they defer to the regulator's authority to reshape its own rules.
Notable Quotes
There was no new economic or legal fact that justified the change of understanding— Luciane Moessa, legal scholar and founder of SIS
The Hearth Conversation Another angle on the story
Why does it matter whether companies have to disclose climate risks or can just explain why they don't?
Because investors need to know what they're actually buying into. If a company operates in a flood-prone region or depends on water-intensive processes, that's material to its financial future. Making disclosure voluntary means the riskiest companies can simply stay silent.
But didn't the CVM have the authority to change its own rules?
Technically yes, but administrative law requires you to show your work. You can't just reverse a major policy without explaining why. The NGOs are arguing there was no new fact, no changed circumstance—just a different board with different ideology.
The interim president was about to leave anyway. Why would he push this through?
That's the puzzle everyone's asking. Some see it as settling a score before the door closes. Others think it was coordinated—get it done while the board is weak, before the new president arrives and might resist.
What does the Finance Minister actually want?
He wants the rule back, or something like it. He's signaling that the government views climate disclosure as important policy, even if the CVM's board doesn't. It's a rare moment of public friction between institutions.
If the NGOs win the lawsuit, what happens?
The court could order the CVM to reinstate Resolution 193, or at minimum to redo the decision with proper procedure and justification. Either way, it buys time and forces the regulator to defend its reasoning in public.
Does this affect what companies actually do in the meantime?
For now, they're in limbo. The rule was supposed to take effect in 2027. Some companies are probably still preparing to comply, unsure whether to trust the voluntary framework or expect the mandate to return.