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

This report by the Climate Policy Initiative (CPI) analyzes the regulatory efforts of the Central Bank of Brazil (BCB) to combat deforestation and ecosystem conversion. It details the BCB's integration of sustainability into its 'BC# Agenda', the implementation of social, environmental, and climate risk management for financial institutions, and specific restrictions on rural credit for non-compliant producers. The document also provides context on the drivers of land-use change in the Amazon and Cerrado biomes and offers policy recommendations to further align the national financial system with environmental conservation goals.

• The Central Bank of Brazil (BCB) integrated a Sustainability dimension into its BC# Agenda in September 2020, recognizing climate change as a risk to financial stability and promoting sustainable finance within the National Financial System (SFN).
• The BCB has established a regulatory framework requiring financial institutions to manage social, environmental, and climate risks, including the creation of a Social, Environmental, and Climate Responsibility Policy (PRSAC) and the disclosure of GRSAC reports based on TCFD recommendations.
• Rural credit is a critical lever for environmental policy in Brazil, as emissions are predominantly linked to land use change and agriculture. The BCB uses the Rural Credit Manual (MCR) to impose restrictions and incentives to align agricultural financing with sustainability goals.
• Specific restrictions on rural credit access were introduced via Resolution BCB no. 140/2021 and CMN Resolution no. 5,081/2023, blocking credit for properties with canceled or suspended CAR registrations, those in protected areas, indigenous territories, quilombola communities, or those with IBAMA embargoes for illegal deforestation.
• The BCB is developing a Rural Credit Bureau by transforming the SICOR system to integrate databases from agencies like IBAMA, INCRA, and SFB, enabling real-time verification of environmental impediments during the contracting of rural credit.
• The Rural Environmental Registry (CAR) is central to the BCB's credit policies, with incentives such as interest rate discounts and increased credit limits for producers whose CAR information has been validated by state agencies.
• Historically, the Amazon has lost about 20% of its original extent, and the Cerrado has lost more than 50% of its native primary vegetation. Approximately 95% of deforestation in the Amazon and conversion in the Cerrado (specifically the MATOPIBA region) is illegal.
• The BCB conducts climate stress tests and uses macroeconomic models, such as the adapted Samba (Dynamic Stochastic General Equilibrium) model, to assess the sensitivity of financial institutions' portfolios to physical risks like extreme droughts and heavy rainfall.

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} }