Introduction
As European companies expand their global operations, it is crucial to be aware of Brazil’s environmental regulations, as the country hosts one of the world’s largest biodiversity and natural resources. Brazil offers significant opportunities for sustainable investments but also presents risks associated with complying with the country’s stringent environmental regulations. Adherence to these regulations not only minimizes legal and reputational risks but also enables companies to leverage sustainable development opportunities and position themselves favorably in a market increasingly focused on ESG (Environmental, Social, and Governance) practices.
32.2 Environmental
32.2.1. ESG
Adopting ESG criteria (Environmental, Social, and Governance) has become essential for companies seeking to operate in global markets, including Brazil. These criteria respond to local regulatory demands and serve as a strategy to align with international sustainability standards. Companies that integrate ESG practices demonstrate a commitment to risk management, opportunity identification, and the longevity of their business operations.
The three pillars of ESG can be detailed as follows:
a) Environmental: This pillar focuses on managing the ecological impacts of business operations, including reducing carbon footprint, efficient use of natural resources, waste management, and biodiversity protection. Companies adopting strong environmental practices not only meet Brazilian legal requirements but also position themselves favorably to attract investors who prioritize sustainability.
b) Social: This relates to the impact of companies on their stakeholders, including employees, consumers, suppliers, and communities. Practices such as promoting diversity and inclusion, respecting labor rights, and ensuring responsible supply chain management are fundamental. Companies with strong social performance are viewed as more resilient and better equipped to handle regulatory challenges.
c) Governance: This involves leadership structures and the ethical conduct of business, including transparency in management practices, anti-corruption policies, protection of shareholder rights, and compliance with internal controls. Companies with robust governance are more attractive to international investors, as they ensure ethical and secure practices aligned with the stringent compliance requirements of the global market.
Implementing ESG practices aligned with global standards can enhance the competitiveness of companies in Brazil, offering benefits such as increased stakeholder trust, risk mitigation, operational efficiency, and cost reduction.
Challenges in ESG Implementation
Despite growing awareness of the ESG agenda, implementation still faces challenges in Brazil, such as adapting to new international regulatory frameworks and effectively integrating these practices into daily business operations. Effective implementation typically involves the following steps:
- Knowledge and Commitment: A detailed understanding of the ESG pillars and commitment from top management to integrate these practices into corporate strategies.
- Assessment and Planning: Conducting a materiality analysis to identify the most relevant issues and set clear objectives.
- Integration and Implementation: Developing policies and procedures that incorporate ESG practices, training employees, and implementing systems for monitoring and management, ensuring compliance with international standards.
- Monitoring and Evaluation: Establishing mechanisms for continuous monitoring of ESG performance, sustainability reporting, and impact assessment.
- Engagement and Continuous Improvement: Maintaining ongoing dialogue with stakeholders and being prepared to adapt and improve ESG practices based on feedback, regulatory changes, and global market expectations.
Adopting an ESG approach is a strategy that goes beyond regulatory compliance, contributing to the long-term sustainability and success of companies. By integrating these principles, companies not only comply with Brazilian regulations but also align with international requirements, positioning themselves as reliable and committed partners in the global sustainability landscape.
Brazilian Sustainable Taxonomy
Between December 2024 and March 2025, the Ministry of Finance conducted a public consultation to discuss the Brazilian Sustainable Taxonomy (BST). The objective is to establish clear criteria to identify sustainable activities, facilitating the direction of investments aligned with Brazil’s national and international sustainable development commitments.
With the adoption of the BST, Brazil will join the group of nations with an official framework to promote the green economy, following the example of the European Union, which already uses a similar model. The first definitive version is expected to be published in August 2025.
In general, the BST will serve to classify and guide economic activities and financial operations contributing to environmental, climate, and social goals, including: (a) Investments and financing: banks, funds, and investors will be able to identify “green” or “sustainable” projects in a standardized way; (b) Issuance of green bonds/sustainability-linked bonds; (c) Economic activities: sectors such as renewable energy, infrastructure, construction, sanitation, transportation, sustainable agriculture, and circular economy may be identified as contributing to climate mitigation/adaptation or reducing socioeconomic inequalities; (d) Basis for mandatory ESG reporting, especially for companies, demonstrating that their operations meet sustainability criteria, thereby attracting credit and investments; (e) Public policies and incentives: serving as a basis for allocating public funds and credit lines to projects aligned with the green economy.
32.2.2. Key Environmental Legislation
Environmental regulation in Brazil is robust and grounded in the Federal Constitution of 1988, which guarantees the right to an ecologically balanced environment for all, imposing responsibilities on both public authorities and society. Several specific laws complement this protection, setting clear standards for business operations, which can provide legal certainty for foreign investors.
32.2.2.1. Forest Code
The Brazilian Forest Code, governed by Federal Law No. 12,651/2012, is a key legal framework for the protection of forests and other native vegetation. It defines guidelines for sustainable management, restoration of degraded areas, and environmental compliance for properties, recognizing forests and native vegetation as assets of common interest. Adhering to these guidelines is crucial for companies wishing to operate sustainably in Brazil, ensuring compliance with international environmental expectations.
32.2.2.2. Water Resources Law
Federal Law No. 9,433/1997 establishes the National Water Resources Policy, ensuring the availability and quality of water as a public and economically valuable resource. This legislation promotes the rational and sustainable use of water, aligning with international principles of decentralized and participatory natural resource management.
32.2.2.3. Solid Waste Law
The Solid Waste Law (Federal Law No. 12,305/2010) establishes the National Solid Waste Policy, which promotes the proper management of solid waste through guidelines for reduction, reuse, and recycling. The shared responsibility in the product life cycle and the implementation of reverse logistics systems reflect a commitment to sustainable practices that resonate with globally promoted circular economy policies.
32.2.2.4. Biodiversity Law
The Biodiversity Law (Federal Law No. 13,123/2015) regulates access to genetic resources and associated traditional knowledge, setting rules for sustainable exploitation and benefit-sharing. Compliance with this law is essential for companies wishing to explore natural resources in Brazil ethically and legally, ensuring alignment with international norms on bioprospecting and fair trade.
32.2.2.5. Environmental Crimes Law
The Environmental Crimes Law (Federal Law No. 9,605/1998) sets out stringent penalties for activities that harm the environment, including pollution and illegal deforestation. This legislation not only protects the environment but also promotes corporate accountability, reinforcing legal certainty for companies operating in compliance. Brazilian legislation is compatible with international environmental governance standards, facilitating the integration of ESG practices for foreign companies.
32.2.2.6. New Federal Legal Framework for Environmental Licensing
Brazil is undergoing a regulatory transition with the new legal framework for environmental licensing, which, although not yet in force, signals a clear movement toward simplifying, standardizing, and increasing the predictability of processes. For foreign companies, this represents a strategic opportunity to prepare their operations for a more competitive and less bureaucratic business environment.
Currently, Brazil’s environmental licensing is fragmented, with rules varying by state and municipality, resulting in legal uncertainty, high compliance costs, and lengthy review periods. The new framework aims to correct these issues by creating differentiated licensing models, such as single licenses and self-declared licenses for low- and medium-impact projects, thereby reducing steps and timelines.
The new framework also seeks to standardize criteria and procedures nationally, eliminate regional discrepancies, and facilitate multiregional projects. It promotes greater digitalization and integration of environmental review systems, increasing transparency and reducing bureaucracy.
Furthermore, it aims to streamline environmental studies and prior certifications in line with international standards, enabling synergies with global operations. As such, the new legal framework is expected to strengthen integration with sustainability and ESG policies, creating a regulatory environment aligned with investor and international fund expectations.
Even before its enactment, the new framework should be seen as a catalyst for improving the business environment, reducing entry barriers, and accelerating strategic projects in Brazil, making them more predictable and aligned with global sustainability best practices.
32.2.3. European Union Deforestation Regulation (EUDR)
The European Union Deforestation Regulation (EUDR) is a new EU regulation aimed at restricting, as of the end of 2025, the entry of products associated with deforestation and forest degradation into the European market — regardless of the legality of the deforestation in the country of origin. The regulation applies to products produced on land that was deforested after December 31, 2020.
The measure directly impacts supply chains of soy, beef, timber, coffee, cocoa, and other commodities. Companies exporting these products to the EU will be required to prove, through mandatory due diligence, that their goods are not linked to land deforested after the cut-off date and comply with the laws of the country of production.
To meet the regulation’s requirements, documents such as the following may be required: a formal no-deforestation declaration, geolocation data of the production area, public records, audits, and sector-specific documentation to demonstrate traceability and legal compliance of the production.
As one of the world’s largest exporters of agricultural commodities, Brazil is at the center of attention under this regulation. Brazilian companies will need to enhance their traceability systems and strengthen controls over suppliers, including audits and document verification.
The regulation is also expected to influence the contractual dynamics between EU operators and their suppliers, requiring specific clauses on traceability, liability, and risk mitigation.
Despite the technical and operational challenges, the EUDR also represents a strategic opportunity for companies to stand out through strong sustainability and governance practices, adding value and legal certainty to their products in the European market.
While some aspects of the regulation’s implementation are still under discussion, it is essential for companies to prepare in advance through a thorough analysis of their operations and supply chains, and to engage early in active dialogue with stakeholders and regulatory authorities.
Authors: Pedro Szajnferber de Franco Carneiro e Fernanda Martins de Azevedo Reis
SPLAW – Spiewak e Carneiro Advogados
Al. Campinas, 1.077 – 12º andar
Jardim Paulista
BR-01404-001 São Paulo – SP
Phone: (11) 2039 0130