The CCDR series highlights priorities outlined in the Country Climate and Development Reports (CCDR) and draws connections to the Sovereign ESG data portal to help researchers, policymakers and investors track progress towards these priorities. For countries where investors' interest in sovereign sustainability financing is increasing, each post shows available ESG indicators that are relevant to the priorities identified in the CCDR and outlines success stories, challenges and recommendations in mobilizing finance.
Highlighted policy priorities
- Reducing emissions from deforestation and agriculture highlighted by Brazil's land cover transitions and profile indicator
- Infrastructure investments for a decarbonized transport sector highlighted by the CO2 emissions from Transport indicator
- Towards shared prosperity highlighted by the Prosperity Gap indicator
As global economies continue their transition to decarbonization, Brazil emerges uniquely equipped — not just to keep pace, but to lead. With vast renewable energy potential and critical leverage in reducing land-use emissions, Brazil can strategically harness climate action as a powerful engine for growth, unlocking the productivity increases required to transition toward high-income status.
The CCDR report highlights Brazil's opportunity to advance inclusive and resilient economic growth through decisive climate-aligned policies. Brazil's high share of renewable energy production place it in a unique position to supply products required for decarbonization, including green minerals, green hydrogen, and green manufactured goods. A development model based on productivity growth would also make Brazil's manufacturing and traded services more competitive, help the country achieve high-income status and ease pressure on natural resources, with benefits for the climate, biodiversity, and local environment. Embracing innovative policies and financing solutions will set Brazil firmly on a development trajectory toward net-zero by 2050.
Although Brazil is one of the top 10 GHG emitters in the world, its unique emissions profile presents low-cost options for reducing the country's overall emissions while enhancing its resilience to climate risks. Three quarter of Brazil's GHG emissions came from land use change, including deforestation and agriculture, which globally only account for 18 percent of emissions. Recent developments in carbon markets and expansion of innovative climate financing instruments can help Brazil bridge the financing gap to reduce land-use change and agricultural GHG emissions.
The Sovereign ESG Data Portal provides key insights into Brazil's development trends. This data story highlights progress on sustainable land use, transport sector decarbonization, and social equity—key priorities identified by the CCDR.
Data from the ESG Data Portal
Reducing emissions from deforestation and agriculture
Three quarter of Brazil's GHG emissions come from land use change, including deforestation and agriculture. While the agricultural sector has achieved significant productivity gains that slowed deforestation, it remains highly emission-intensive.
A key indicator to track is Methane emissions from Agriculture . Brazil has the third-highest emissions, following China and India. Rising global demand for beef and soy increases pressure on land use, making sustainable practices essential to preventing further deforestation.
The CCDR's net-zero pathway emphasizes boosting productivity with minimal land clearing, prioritizing efficiency improvements on already-cleared or legally available land. This approach not only reduces emissions but also supports skilled job creation and strengthens agribusiness value chains. With A Balancing Act for Brazil's Amazonian States – An Economic Memorandum , the World Bank published an in-depth analysis of the economic challenges and opportunities in saving the Amazon .
The land cover profile map on the Sovereign ESG Data Portal shows the vast extent of the tropical rainforest, especially in the Amazon Biome. But, together with the indicator on annual tree cover loss , the map also shows the deforestation pressure at the forest border, where land is now used for agriculture (dark red) and pasture (grassland = light green).
Infrastructure investments for a decarbonized transport sector
Decarbonizing Brazil's transport sector is essential for achieving broader climate goals, as it accounts for 45% of energy-related emissions, with road transport alone contributing 91%. The country's heavy reliance on road-based mobility, inefficient infrastructure, and limited public transit options have led to high emissions, congestion, and rising fuel costs. Poor road conditions further increase travel time and fuel consumption, making freight transport costly and polluting.
The ESG Data Portal tracks CO2 emissions from transport within the energy sector, showing that Brazil ranks among the highest emitters. Shifting freight from roads to rail and waterways, alongside expanding public transit, is critical for cutting emissions, but long-term success requires sustained policy support, investment, and innovation in clean mobility solutions.
The CCDR highlights that the transport sector currently has the largest financing gap and estimates the need for additional infrastructure investment in the coming decades at US$434 billion for road infrastructure and US$215 billion to decarbonize freight and passenger transport. Investment costs are partly offset by economic benefits from reduced fuel-use, road disruptions, congestion and air pollution. Additionally, World Bank research shows that newly approved consumption taxes can provide price incentives to reduce fossil fuel consumption.
Towards shared prosperity
Brazil has sharply reduced the share of people living in extreme poverty (below $2.15/day, 2021 PPP) in the past three decades, but the situation has been volatile recently. In the economic downturn of 2015-2018 and the COVID-19 pandemic, progress has reversed, and poverty levels reached 7.5 percent in 2021. In 2022 and 2023, they fell again to below 4 percent.
However, climate-related reductions in agricultural income, extreme weather events and changing food prices could push another 800,000 to 3 million Brazilians into extreme poverty as soon as 2030.
Brazil also remains one of the most unequal countries in the world. The Sovereign ESG Data Portal allow us to track inequality using the Prosperity Gap , the Gini coefficient and the income share held by the bottom 20 percent . Brazil has one of the highest Gini coefficients in the world (52 in 2022) and the bottom 20 percent hold only 3.6 percent of total income – less than almost anywhere else in the world.
The Prosperity gap indicator, shown below, shows a similar picture. On average, household incomes in Brazil would have to be multiplied by a factor of 3.3 for everyone to reach a prosperity threshold of $25.0 per day. While this is an improvement compared to the sevenfold increase that would have been needed in 1999 and the 4.5 fold increase in 2009, it is still more than in most Latin American countries.
What about Financing
Brazil must significantly scale up infrastructure investment, notably in transportation, to meet development goals and climate targets, with total climate-related investments estimated at around 1.2 percent of GDP annually through 2050. See Table 4 of the CCDR. The report also highlights the critical need for diversified financing mechanisms—such as green bonds, patient bank capital, and sustainability-linked financing—to efficiently address this gap, given limited public funds and increasing social expenditures driven by population aging. The private sector is positioned as a key financing source, especially in sectors like energy and agriculture, requiring robust financial frameworks and green taxonomies to guide investments toward priority climate and infrastructure projects.
Currently, Brazil's sustainable finance sector is experiencing an exciting surge of innovation, driven by landmark developments that set new benchmarks for environmental leadership. Through IFC's initiatives, Brazil has set regional milestones by introducing the first sustainability-linked loan for waste management in emerging markets, Latin America's first blue loan , as well as pioneering ESG-driven financing instruments like super green loans and social bonds . Highlighting its ambition, Brazil successfully launched its first sovereign sustainability bond in late 2023, a significant $2 billion issuance developed with support from the World Bank Group and Inter-American Development Bank (IDB).
Ongoing collaboration between the World Bank Group and the Inter-American Development Bank is shaping guidelines for the innovative Amazonia Bonds, specifically designed to finance sustainable development and zero-deforestation initiatives in the Amazon region . Providing sufficient financial incentives to support zero-deforestation initiatives is an ongoing area of research, with recent working papers highlighting the role of external macroeconomic factors and innovative market based instruments .
The authors gratefully acknowledge constructive feedback on this post by Cornelius Fleischhaker and Daniel Navia Simon.
