ESG Disclosure by Brazilian Public Companies

Objective: The objective of this study is to investigate ESG disclosure by Brazilian publics companies with the aim to understand issues regarding the standards used by companies, main risks reported, the auditing companies, emission of greenhouse gases etc. Theoretical Framework: In 2021, the Brazilian Securities and Exchange Commission (CVM) issued Resolution No. 59 requiring listed companies to disclose ESG information in their Reference Form in the model of “disclose or explain”. This new regulation makes Brazil an excellent laboratory to investigate the disclosure of sustainability informations. Method: A metric was developed, based on CVM Resolution No. 59/21, which deals with ESG disclosures in the Reference Form. The disclosures made in the financial year 2022 were analyzed using the content analysis technique. The study sample consisted of the 81 companies that made up the Ibovespa portfolio in the period September-December 2023. Results and Discussion: (i) 78 companies published reports with sustainability information; (ii) the GRI was the most widely used disclosure standard; (iii) about 74% of the disclosures had a Limited Assurance Report from an independent firm, mostly one of the “Big 4” companies; (iv) 78 companies used the UN SDGs in their reports; (v) 51 companies took into account the TCFD recommendations in their climate-related disclosures; (vi) 67 companies carried out a full GHG emissions inventory. Research Implications: There is a need to improve disclosures, focusing on the information needs of shareholders and creditors, and that the requirement for reasonable assurance will tend to require improvements in sustainability-related practices and policies, as well as in internal controls. Originality/Value: ESG disclosure is growing around the word as sustainability issues became more important to investors around de world. Brazil is home to the world’s largest environmental asset, the Amazon rainforest, and has already developed a number of sustainable finance initiatives. In fact, the country is poised to become a global leader in the corporate sustainability movement. In the sense this study wishes to contribute to existing literature on the topic as well as practitioners and regulators.