The end of declaratory sustainability

2025 should be considered a year of consolidation for environmental and sustainability matters, in the sense that many positions that were previously regarded as aspirational goals for senior leadership planning have turned into a “to do”! In this context, the corporate world felt the need to look inward to ensure that communications regarding climate targets, or even projects in which their products or services were labeled sustainable, would deliver the promised results.

Stakeholders began to demand greater consistency between corporate environmental discourse and practice (accountability), and the Judiciary has positioned itself favorably toward legal theses that, directly or indirectly, address climate and sustainability topics, with heightened attention to duties of diligence, the duty to inform, and liability for unfounded claims of environmental performance (greenwashing).

The Voluntary Carbon Market is already a reality for several economic sectors in Brazil and is gaining technical and legal depth through discussion of criteria for integrity, additionality, and project monitoring, alongside the advancement of debate on the Regulated Carbon Market, driven by specific legislative proposals and by the holding of climate conferences in Brazil (COP), which reinforce the need for a clear regulatory framework, especially with regard to issuing carbon credits in protected areas and the sharing of benefits. On the international stage, the environmental agenda has taken center stage in trade policy design, for example with the European Union regulating the entry of products into its territory with an environmental slant — CBAM, the Deforestation-Free Products Regulation, and the Green Taxonomy — as well as the WTO — World Trade Organization — integrating this theme into its positions, which pressures Brazilian supply chains to prove socio-environmental compliance and to review contracts, due diligence policies, and traceability mechanisms. Another point of attention is the repositioning of the United States on the climate and trade agenda, which adds a significant layer of geopolitical risk, since potential course changes in decarbonization policies, green subsidies, or trade barriers can, in a short time, alter the pattern of competitiveness and regulatory requirements applicable to Brazilian companies.

A trend observed in both the environmental and regulatory spheres is the implementation of public policies in which the Brazilian Government and International Organizations assign private actors in the supply chain the obligation of internal self-control (the private actor’s capacity to implement, execute, monitor, verify, and correct procedures, production processes, and distribution of its products to ensure identity, quality, and safety), as well as external control, which is nothing more than the rigorous selection of their business partners. This movement by regulatory agencies significantly raises the burden and responsibility of private activity, because the burden of proving regulatory compliance now falls directly on companies, increasing the risk of divergent understandings by oversight bodies, administrative penalties, and reinforcing the need for robust environmental compliance programs, contracts with clear risk allocation clauses, and chain-wide audit mechanisms.

2026 begins with high expectations in the productive sector regarding: (i) the effective structuring of the Regulated Carbon Market in Brazil, with the definition of measurement, reporting, and verification criteria and of responsibilities among the regulator, sectoral agents, and project developers; (ii) the legal impact of climate change on commercial contracts and agricultural production, from the perspective of climate risk allocation, contractual review, and insurance; (iii) the increase in lawsuits involving climate change and greenwashing risks; (iv) the incorporation of innovative technologies that enable cleaner and more efficient industrial production; (v) the growing internalization of the sustainability agenda by the financial market, with the use of methodologies to quantify energy transition risks and the integration of ESG criteria in credit analyses, financings, and labeled instruments. In the realm of sustainability, artificial intelligence, new data analysis technologies, and satellite inspections tend to redefine how companies, governments, suppliers, and consumers handle environmental and regulatory data, enabling more rational and strategic decisions, as well as risk mitigation and the identification of new opportunities.

However, it is essential that senior leadership remain attentive to the legal dimension of this transformation, in order to implement efficient solutions for value chain oversight, avoiding exposure to economic, administrative, and criminal sanctions and reputational impacts, which involves reviewing internal governance, reporting flows, data use policies, and contracts with third parties. Thus, 2026 represents less a rupture and more the consolidation and maturation of topics already developed in 2024 and 2025, imposing on companies the obligation to demonstrate clear, effective, and measurable results, through indicators recognized by the market, in the sustainability and climate change agendas. There is a sense of urgency in mitigating transition risks and physical risks, materialized by the new environmental scenario stemming from the climate crisis, such as scarcity of natural resources, water crises, solid waste management, consumer demands for products with a smaller environmental footprint, the impacts of deforestation on international trade, and the protection of biodiversity. HOOK In the 2026 regulatory chessboard, those who cannot prove the environmental integrity of their own value chain cease to be merely an ‘ESG risk’ and become a concrete legal problem.

AUTHOR:  Luciana Camponez Pereira Moralles

HOOK

In the 2026 regulatory landscape, companies that cannot demonstrate the environmental integrity of their own value chain stop being just an “ESG risk” and become a concrete legal problem.