Halting Deforestation through Finance: Regulatory Mapping of the Central Bank of Brazil

The report examines how the Central Bank of Brazil (BCB) is leveraging its regulatory authority to align the national financial system with environmental goals. It details the BCB's 'BC# Sustainability Agenda', which introduces risk management requirements for social, environmental, and climate risks, and mandates disclosures based on TCFD recommendations. A significant portion of the analysis focuses on rural credit, where the BCB has implemented restrictions on financing for properties that violate the Forest Code or are located in protected areas. The report highlights the role of the Rural Environmental Registry (CAR) and the Rural Credit Bureau (SICOR) in monitoring compliance and suggests further integration of remote sensing data to enhance oversight.

• The Central Bank of Brazil (BCB) launched the BC# Sustainability Agenda in 2020 to promote sustainable finance and manage social, environmental, and climate risks within the national financial system and the bank itself.
• New regulatory frameworks established by CMN Resolutions 4,943, 4,944, and 4,945 in 2021 require financial institutions to identify and monitor social, environmental, and climate risks, explicitly including deforestation and transition/physical climate risks.
• The BCB has implemented a phased adoption of TCFD recommendations for financial disclosures, with the first phase focusing on qualitative aspects like governance and risk management through the GRSAC Report.
• Rural credit is a primary lever for environmental policy in Brazil, with the BCB using the Rural Credit Manual (MCR) to restrict financing for properties that do not comply with environmental criteria.
• Resolution BCB no. 140/2021 and CMN Resolution no. 5,081/2023 prohibit rural credit for properties with canceled or suspended CAR registrations, those in protected areas, indigenous territories, quilombola communities, or areas under IBAMA embargoes.
• The BCB is developing a Rural Credit Bureau by transforming the SICOR system to integrate databases from agencies like IBAMA, INCRA, and FUNAI, enabling real-time verification of environmental impediments.
• Financial incentives, such as increased working capital credit limits and interest rate discounts, are provided to producers who have a validated CAR and are in compliance with the Forest Code.
• Historical data indicates that requiring environmental compliance for agricultural financing in the Amazon between 2008 and 2011 reduced credit volume and helped curb deforestation.
• The BCB is incorporating climate risk into its macroprudential monitoring through climate stress tests on physical risks and the adaptation of the 'Samba' DSGE macroeconomic model.

APA

Stussi, M., Souza, P., & Contreras, M. F. (2024). Halting Deforestation through Finance: Regulatory Mapping of the Central Bank of Brazil. Climate Policy Initiative. https://www.climatepolicyinitiative.org/wp-content/uploads/2024/07/Regulatory-Mapping-BCB-1.pdf

Chicago

Stussi, Mariana, Priscila Souza, and Maria Fernanda Contreras. Halting Deforestation through Finance: Regulatory Mapping of the Central Bank of Brazil. Climate Policy Initiative, 2024. https://www.climatepolicyinitiative.org/wp-content/uploads/2024/07/Regulatory-Mapping-BCB-1.pdf.

Wikipedia

{{cite report |last1=Stussi |first1=Mariana |last2=Souza |first2=Priscila |last3=Contreras |first3=Maria Fernanda |title=Halting Deforestation through Finance: Regulatory Mapping of the Central Bank of Brazil |publisher=Climate Policy Initiative |date=July 2024 |url=https://www.climatepolicyinitiative.org/wp-content/uploads/2024/07/Regulatory-Mapping-BCB-1.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{stussi2024halting, author = {Stussi, Mariana and Souza, Priscila and Contreras, Maria Fernanda}, title = {{Halting Deforestation through Finance: Regulatory Mapping of the Central Bank of Brazil}}, institution = {Climate Policy Initiative}, year = {2024}, month = jul, url = {https://www.climatepolicyinitiative.org/wp-content/uploads/2024/07/Regulatory-Mapping-BCB-1.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }