Brazil’s Sustainable Taxonomy Action Plan enters public consultation
Brazil’s draft Sustainable Taxonomy Action Plan (the Action Plan), prepared by the Ministry of Finance, is currently under public consultation and receiving contributions and comments for its improvement. The deadline for taking part in the public consultation is October 20, 2023.
The development of a sustainable taxonomy seeks to address Brazil’s main environmental and social challenges, taking into account its commitments, objectives and priority plans. Consisting of a classification system that defines, on a scientific basis, activities, assets and/or categories of projects that contribute to climate, environmental and/or social objectives, taxonomies provide a common terminology for companies, financial institutions, and investors to manage investment decisions, as well as for regulators, governments, and other stakeholders to develop public policies. Also, they are essential for increasing 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 addresses several topics:
- discusses the landscape of sustainable finance in the world, with a focus on international commitments;
- lists domestic and international taxonomy initiatives;
- explains the strategic, environmental and social objectives intended for the Brazilian taxonomy;
- presents the international commitments and national legislation linked to the taxonomy; and
- highlights the design of the taxonomy by explaining how its objectives are articulated and which principles and definitions are used for its construction.
The Action Plan is particularly important to the private sector, as it includes, among other objectives, climate change mitigation and adaptation covering the following sectors:
- agribusiness;
- extractive industries;
- industries;
- electricity and gas;
- water, sanitation, waste management and decontamination;
- construction;
- transport and storage; and
- social services.
The ongoing public consultation is an opportunity for stakeholders, including companies, financial institutions, investors, and society in general, to contribute with suggestions and feedback on the Action Plan, to help shape the guidelines that are expected to steer investments and policies in Brazil going forward, to influence the regulations, and to better understand sustainability criteria. In addition, for companies, alignment with the taxonomy creates potential to attract investments, improve market competitiveness, reduce legal risks and enhance sustainable transparency practices.
Tauil & Chequer’s Environmental Practice is ready to help should you need any assistance or advice in taking part in the public consultation process.
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