The minute
- Seven in ten parliamentarians elected to Brazil’s next legislature oppose the socio-environmental agenda, according to an analysis by Observatório do Clima.
- The finding covers the full Congress (Chamber and Senate) resulting from the October 2026 elections.
- The shift signals a legislature more resistant to climate and environmental regulation than its predecessor.
Why it matters: Brazil passed landmark climate legislation in the current term, including the regulated carbon market framework (SBCE, enacted as Lei 15.042/2024) and updates to the National Climate Policy. A Congress dominated by lawmakers hostile to environmental rules could stall or weaken the secondary regulations still needed to make those laws operational, creating uncertainty for companies that have already begun adapting their compliance and reporting structures.
What changes for Brazilian companies
The practical risk is not that existing laws disappear overnight, but that implementation slows. The SBCE still depends on executive decrees and technical rules from the inter-ministerial committee to define emission caps, allocation methods, and offset eligibility. A hostile Congress can pressure the executive branch to soften targets, expand exemptions for agriculture and energy-intensive sectors, or simply defund enforcement agencies such as IBAMA and the newly structured national climate authority. For companies in sectors like steel, cement, oil and gas, and meatpacking, the timeline for mandatory emissions reporting and cap compliance becomes harder to predict.
Multinational firms operating in Brazil face an additional layer of complexity. The EU’s CBAM (Carbon Border Adjustment Mechanism) and CSRD disclosure requirements do not pause because Brazilian domestic politics shift. Companies exporting to Europe still need verifiable carbon data regardless of whether Brasilia moves forward with the SBCE or not. A gap between international buyer expectations and domestic regulatory stagnation could put Brazilian exporters at a competitive disadvantage against peers in jurisdictions with clearer carbon pricing.
Who gains and who loses
The immediate beneficiaries of a more hostile Congress are sectors that lobbied against stricter environmental controls: large-scale agribusiness interests that resist tighter deforestation enforcement, fossil fuel producers seeking to delay emissions caps, and mining groups that face licensing constraints in sensitive biomes. The bancada ruralista, already one of the largest blocs in Congress, would see its leverage reinforced by broader anti-environmental alignment among new members.
The losers are less obvious but no less significant. The voluntary carbon market in Brazil, which has attracted international buyers precisely because of the country’s vast forest assets and improving regulatory signal, risks losing credibility if the policy direction reverses. Project developers in REDD+, reforestation, and renewable energy who count on a regulatory premium for Brazilian credits may see demand soften. Indigenous communities and traditional populations, whose land rights are often intertwined with conservation policy, face heightened pressure from legislative proposals that could weaken demarcation protections.
What remains undecided
The Observatório do Clima analysis captures stated positions and voting records, but Congress composition alone does not determine policy outcomes. The executive branch retains significant power over environmental regulation through decrees, normative instructions, and the appointment of agency heads. Whether the presidency elected in 2026 aligns with or resists the anti-environmental congressional majority will be decisive. Additionally, the Supreme Court (STF) has shown willingness to intervene on climate matters, as it did when it ruled that the Climate Fund must be operational. Judicial checks could limit the practical impact of a hostile legislature on existing commitments.
The next concrete test will be the 2027 budget cycle. If Congress cuts funding for IBAMA, ICMBio, and climate-related programs in the annual budget law (LOA), the signal will be unmistakable. Until then, companies should monitor the composition of key committees (Environment, Agriculture, Mines and Energy) for early indicators of legislative priorities.
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