On May 25th 2018, the Brazilian National Monetary Council (CMN) published Resolution CMN 4.661/2018, which revised the norm that governs occupational pension funds’ investments. The new norm requires pension funds’ asset managers to consider environment, social and governance (ESG) risks as part of their investment decision making process.

This regulatory improvement was one of the recommendations identified in our 2015 Fiduciary Duty in the 21st Century report and included in the Brazil Roadmap (also in Portuguese), published in 2016.

The new Resolution represents a significant advancement compared to the previous Resolution CMN 3792/2009. It enhances the obligation from disclosing the integration of ESG consideration in investment policies to a requirement to integrate ESG issues in regular risk management processes, whenever possible.

A mandatory implementation guidance (or ‘instruction’) is expected to be published in August and should include a comply-or-explain disclosure requirement on the ESG integration process. This should increase the resolution’s enforcement and help raise awareness on the importance of responsible investment within the wider investment community. The new norm also strengthens governance requirements of occupational pension entities. It emphasises the need for robust internal control procedures to avoid conflicts of interest in investment operations.


PREVIC, the Brazilian occupational pension funds supervisory body, led the process of proposing the regulatory changes to CMN. It included a public consultation with key stakeholders, and built on two years of interactions with the wider investment community.

Such regulatory clarification also aligns with progress taking place in other countries and regions, notably in the European Union through the EU legislative proposal on investor disclosure and duties.

In the coming months, the Fiduciary Duty in the 21st Century project team will continue to advise PREVIC on the upcoming implementation guidance of Resolution CMN 4.661/2018. The team will also provide recommendations to the Superintendence of Private Insurances (SUSEP) who regulates pension products issued and managed by insurance companies.

SUSEP has already included the management of ESG issues as part of insurers’ investment policy rules in its 2018 Regulation Plan, but it is still needed in the guidelines. Including ESG requirements in the industries’ investment policies may trigger a revision of the norm that states the investments guidelines of open pension plans and insurance markets.

Regulatory clarification on ESG requirements in Brazil financial markets will be key to help the country achieve its Nationally Determined Contribution (NDC) commitments. It complements other major initiatives such as those hosted by the Brazil Innovation Lab for Climate Finance.


For more information about the Fiduciary Duty in the 21st Century project, please visit: https://www.fiduciaryduty21.org/