In more detail

On 29 September 2025, National Monetary Council (CMN) Resolution 5,252/2025 was published, establishing accounting concepts and criteria to be observed in the measurement, recognition, write-off and disclosure of sustainability assets and liabilities by financial institutions and other institutions authorized to operate by the Central Bank of Brazil.

Highlights of the new standard:

1. Does not apply to consortium administrators, payment institutions, securities brokerage firms, securities distribution companies and foreign exchange brokerage firms, which must comply with the regulations issued by the Central Bank of Brazil, in the exercise of its legal powers.
2. As main concepts, it defines:
   1. Sustainability asset - an intangible non-financial asset without physical substance; transferable separately in a negotiation; and originated with the objective of promoting social, environmental or climate sustainability, including the asset intended to prevent, control, reduce or remove greenhouse gas emissions.
   2. Sustainability liability - a non-financial liability arising from a legal or non-formalized obligation, as defined in specific regulations, which arises from a commitment related to social, environmental or climate sustainability, including the obligation to carry out actions aimed at preventing, controlling, reducing or removing greenhouse gas emissions; and may be settled with sustainability assets.
3. Provides that sustainability assets should only be recognized when granted by a government body; or certified by (a) an entity that uses an accredited methodology, when provided for in specific regulations; or (b) an independent qualified entity, in other cases.
4. On initial recognition, sustainability assets should be measured by: (a) cost, including the costs incurred in the certification process, in addition to any others that may be incurred until they are made available for the use intended by the institution, in the case of originated assets; (b) cash acquisition price, plus transaction costs, in the case of acquired assets; or (c) fair value, determined in accordance with specific regulations, on the date of recognition, in the case of sustainability assets received from a government agency.
5. On initial recognition, sustainability assets should be classified in the following categories: (a) retirement, destined for the sustainability asset that the institution will probably use to fulfill the obligation assumed related to sustainability; e (b) trading, intended for sustainability assets that the institution intends to sell in the future and generate profits from based on variations in their market prices.
6. In the event of a change in the purpose of sustainability assets, the reclassification must be made on the first day of the period following the calculation of the accounting result.
7. Documents must be kept which clearly and objectively show the criteria used to measure sustainability assets, for at least five years, counted from the measurement date, or for a longer period, as a result of legal or regulatory determination.
8. The effects of any adjustments resulting from the initial application of the accounting criteria established by this standard should be recorded against the retained earnings or losses account at the amount net of tax effects.

It will come into force on 1 January 2027.

* * * * *

Trench Rossi Watanabe and Baker McKenzie have executed a strategic cooperation agreement for consulting on foreign law.