Reporting and verification Guide
ESG MRV (monitoring, reporting and verification) in Brazil's Sustainable Taxonomy: what changes in practice
Update on September 30, 2026: the Brazilian Sustainable Taxonomy was established by Decree 12,705/2025. Adoption is initially voluntary, and the TSB MRV System provides for indicators by audience (PAES for companies, PAS/POVS for S1 and S2 banks and PIS for asset managers), an MRV Portal around 2027, a second wave that includes credit cooperatives and insurers around 2028, and mandatory verification by accredited verifiers around 2029. These dates follow the published schedule and may still change.
The Brazilian Sustainable Taxonomy (TSB) creates a standard for classifying sustainable activities and projects in Brazil.
For the financial sector, this changes the game: it is not enough to label a transaction as green; you have to prove it, back it with evidence and audit it.
This is where MRV (Monitoring, Reporting and Verification) comes in, supported by ESGreen's data infrastructure: a set of routines, data and controls that make the taxonomy applicable to credit, risk and compliance now, meeting regulatory and market pressure for traceable, consistent information.
What is the Brazilian Sustainable Taxonomy (TSB) Link para esta seção
The TSB is a classification system that helps determine whether activities, assets and project categories contribute to strategic objectives (environmental and socioeconomic) defined for the Brazilian context. In practice, it organizes technical criteria and a common vocabulary to reduce ambiguity in "sustainable finance".
Why the TSB matters for banks and cooperatives Link para esta seção
For financial institutions, the taxonomy is likely to directly affect:
- credit origination and pricing (eligibility and terms);
- sustainable products and instruments (fundraising, bonds, funding);
- risk management (social, environmental and climate) and internal controls;
- audits, accountability and reporting to regulators and stakeholders.
Scope note: applicability may vary by economic sector, type of financial product, counterparty size and each institution's internal classification and rules (policies and risk appetite). Use the TSB as the baseline, but put it into operation according to your internal governance and criteria.
What is MRV (Monitoring, Reporting and Verification) and why it makes the taxonomy workable Link para esta seção
MRV (Monitoring, Reporting and Verification) is the operational layer that ensures the "sustainable" label does not stay on paper. In simple terms:
- Monitoring: collecting and tracking relevant data and events over time (not just at onboarding).
- Reporting: consolidating information in a consistent format (internal and external), with traceability.
- Verification: validating evidence and controls (checks, tests, audit, decision trail).
The TSB itself provides for an MRV System, reinforcing that a taxonomy without MRV is intention without proof.
What "proving" means in practice Link para esta seção
For the financial sector, "proving" usually requires:
- verifiable data (reliable, traceable sources);
- documentary evidence (licenses, assessment reports, reports, certificates, policies);
- an audit trail (who validated, when, based on what evidence);
- consistency across departments (credit, risk, sustainability, legal, compliance);
- auditable criteria by activity or segment (e.g., classification by CNAE, the Brazilian economic activity code, where applicable).
What changes in the credit, risk and compliance routine Link para esta seção
Below is a practical map of what is likely to change when the taxonomy starts to guide decisions.
1) Credit: eligibility and terms stop being a matter of "opinion" Link para esta seção
- Definition of minimum criteria for sustainable classification by transaction type.
- A required evidence package (documents + indicators + controls).
- Periodic revalidation rules (it is not "one and done").
2) Risk: the taxonomy joins the continuous monitoring pipeline Link para esta seção
- Integration of MRV into the social, environmental and climate risk cycle and the institution's policies.
- Review triggers when there are material changes (events, liabilities, incidents, corporate changes, sanctions, etc.).
- Alignment with the structures required for the Social, Environmental and Climate Responsibility Policy (PRSAC)
3) Compliance and audit: evidence, traceability and governance Link para esta seção
- Standardization of the "MRV dossier" by transaction, client or project.
- Controls to prevent inconsistencies and reduce the risk of greenwashing (intentional or not).
- The ability to respond to audits with data and a history of decisions (trail).
Taxonomy (the "what") vs. MRV (the "how") Link para esta seção
| Topic | Brazilian Sustainable Taxonomy (TSB) | MRV (Monitoring, Reporting and Verification) |
|---|---|---|
| Role | Defines criteria and classifies what is sustainable | Proves, tracks and audits compliance with the criteria |
| Output | Classification/label (eligible or not, by criterion) | Evidence, audit trail and consistency over time |
| Main risk | Ambiguity / interpretation | Data failure, weak evidence, lack of governance |
| Impact on financial institutions | Eligibility rules and products | Routines, controls, automation and continuous audit |
How an MRV system cuts operating costs and reputational risk Link para esta seção
For financial institutions, the challenge is not "having a spreadsheet". It is scaling: hundreds or thousands of counterparties, products and suppliers, with constant changes.
A well-designed MRV system usually includes:
- data ingestion and integration (internal + external sources);
- automated checks and rules by criterion;
- evidence management (documents, validity, versioning);
- alerts and continuous monitoring;
- a dashboard for decision-making and an audit trail.
As an ESG and climate data infrastructure, ESGreen supports MRV by providing:
- continuous monitoring and alerts;
- assessment based on criteria and materiality;
- centralization and traceability for audit.
From taxonomy to operations: MRV as a credit and risk routine Link para esta seção
The Brazilian Sustainable Taxonomy is likely to consolidate a classification standard, but what defines competitive advantage in the financial sector is the ability to prove: consistent data, organized evidence and continuous verification. MRV is the way to turn intention into routine, with less noise, less risk and more predictability.
Want to quickly map where the gaps are (data, evidence, governance, monitoring)? Talk to an ESGreen expert and get initial guidance on what to prioritize.
