IFRS S1 & S2 and Novo Mercado: What Brazilian Listed Companies Must Prepare for Now

Beginning in 2027, companies listed on the Novo Mercado segment of B3 will be required to publish sustainability disclosures aligned with standards issued by the International Sustainability Standards Board (ISSB): IFRS S1 and IFRS S2.

While 2027 may seem distant, preparation is already underway.

For Investor Relations, Sustainability and Finance teams, the implications are strategic — not merely technical.

What Are IFRS S1 and IFRS S2?

IFRS S1 establishes general requirements for sustainability-related financial disclosures.

IFRS S2 focuses specifically on climate-related disclosures.

Together, they create a global baseline for reporting how sustainability risks and opportunities affect a company’s:

• Governance

• Strategy

• Risk management

• Metrics and targets

  
  

The framework is designed for capital markets. It is investor-focused. It connects sustainability directly to enterprise value.

Why Novo Mercado Companies Are Directly Affected

Novo Mercado represents the highest corporate governance standard on B3.

With international investors increasingly allocating capital based on climate and ESG performance, alignment with ISSB standards reinforces:

• Transparency

• Comparability

• Market credibility

• Access to global capital

Brazilian issuers are deeply integrated into global markets. Many already maintain Level I or Level II ADR programs or actively engage foreign institutional investors. English-language disclosure is no longer optional — it is expected.

The Practical Implications for Companies

IFRS S1 and S2 go beyond narrative sustainability reporting.

They require:

• Clear linkage between sustainability risks and financial performance

• Disclosure of climate scenario analysis

• Governance oversight transparency

• Quantitative metrics tied to strategy

• Consistency across financial statements and ESG reporting

This increases the complexity of reporting — and the importance of precise language.

Why the English Version Matters

For most Novo Mercado companies, the Portuguese version will be the statutory filing.

But the English version will be read by:

• International investors

• Global banks

• Rating agencies

• ESG analysts

• Cross-border partners

  
  

If terminology is inconsistent, unclear or overly literal in translation, credibility suffers.

Capital markets are sensitive to nuance.

Language signals governance quality.

A sustainability report that reads like a translation can weaken impact — even when the underlying data is strong.

Early Preparation Is a Strategic Advantage

Many companies are beginning parallel reporting in 2026 to ensure smooth implementation.

Early preparation allows:

• Terminology alignment across departments

• Development of internal review protocols

• Testing of climate scenario disclosures

• Harmonization between sustainability and financial reporting teams

Companies that treat IFRS S1 and S2 as a strategic communication exercise — not just a compliance obligation — will stand out.

How Dashltda Supports IFRS Reporting in English

Dashltda specializes in high-level corporate reporting translation for Brazilian listed companies.

Our IFRS S1 & S2 English service focuses on:

• Technical accuracy in sustainability terminology

• Alignment with IFRS language conventions

• Investor-grade American business English

• Consistency across Annual Reports and ESG disclosures

• Confidential, deadline-driven execution

Our objective is simple:

To ensure your English report reads as if originally written for global capital markets.

Final Thought

IFRS S1 and S2 mark a structural shift in how sustainability is reported in Brazil.

For Novo Mercado companies, this is not only about compliance.

It is about positioning.

The companies that communicate climate and sustainability risk clearly — in both Portuguese and English — will be better understood, better compared and better valued.