Why Metrics and Targets continue to matter in IFRS Sustainability Standards?

August 31, 2026 / Alexandre Fioravante, Beatriz Giglio and João Vitor Souza

This series has covered the first three dimensions of IFRS S1 and S2 / CBPS 01 and CBPS 02: Governance, which defines who is responsible for overseeing sustainability and climate issues; Strategy, which shows how these factors are integrated into the business model and financial outlook; and Risk Management, which organizes the processes for identifying, assessing, prioritizing, and monitoring these exposures.

We conclude the series with the fourth dimension — metrics and targets — which is no less important. It is precisely what is reported in this dimension that makes everything else reliable for investors and other end users of the report. This is what enables companies to move beyond presenting essentially narrative-theoretical content and instead provide auditable figures, supported by global frameworks such as SASB.

Regarding the current Brazilian regulatory context, it is worth noting that it changes the framework without diminishing the relevance of the topic. In May 2026, CVM Resolution No. 244 revised CVM 193 and repealed the mandatory requirement that was to take effect for fiscal years beginning on January 1, 2026, with the first disclosure scheduled for 2027; reporting in accordance with CBPS 01 and CBPS 02 standards once again became voluntary for publicly traded companies. This relaxation, however, was in form, not in substance.

Those who choose to report remain required to follow the CBPS/ISSB standard without qualification and to submit the report for assurance by an independent auditor—a requirement that the new normative instruction has maintained. Furthermore, as of January 1, 2027, any company that chooses not to disclose will need to justify that decision in a public announcement to the market. Failure to report is no longer a discreet omission but now requires public justification; moreover, in this new context, it is presented as a strategic position and a competitive advantage.

From the outset, we have made it clear to the companies that seek our guidance that the pressure surrounding this agenda has never been solely about regulatory compliance. Investors, banks, major buyers, and actors in global value chains continue to demand reliable climate data, and in a voluntary framework, the distinction between those who report with quality and those who do not becomes more apparent, not less so. The report is no longer merely proof of compliance but instead signals maturity, with a concrete impact on access to capital, on indices such as the ISE B3, and on sustainable financing options.

Vale and Renner, pioneers of the first reports in 2025, have already indicated that they will continue reporting. Vale, in fact, published its second report on financial information related to sustainability in 2026, expanding coverage to include topics under IFRS S1, which demonstrates a trend toward continuity and maturation, not a step backward. The market itself reinforces the view that companies had already been structuring their sustainability agendas internally, assessing sustainability risks, and organizing their reporting. These companies tend to continue their efforts, and it is expected that among those opting for voluntary disclosure in 2026, they will maintain it in the coming years. In this context, metrics and targets are the dimension that relies least on regulatory support to generate value, and that is the focus of this article.

What the Metrics and targets dimension entails

Metrics and targets serve different yet complementary functions. Metrics measure performance—what the company emits, consumes, and exposes today; targets declare commitments—where it wants to go, by when, and starting from where. The standard not only requires both aspects but also stipulates that they must be aligned with one another (a goal without a progress metric lacks substance; a metric without a goal is a limited diagnosis that does not point the way forward) and that both must be robust. Each KPI and each target requires a base year, an explicit calculation methodology, and references that substantiate the information—minimum requirements without which the data cannot stand up to scrutiny by auditors or investors.

CBPS 01 / IFRS S1 addresses metrics related to any material sustainability issue that the company has identified as having a financial impact (current or potential). CBPS 02 / IFRS S2 explores climate change in detail, with seven categories of cross-cutting metrics that must be disclosed when climate change is financially material. Among these are absolute GHG emissions from Scopes 1, 2, and 3, measured according to the GHG Protocol Corporate Standard, with Scope 3 being the most critical area, as it accounts for the largest share of the total and represents the greatest challenge for companies today. It also requires disclosure on physical and transition risks and opportunities, expressed in monetary terms whenever possible (exposed assets, affected capex and opex, cash flow at risk), in addition to allocated capital, internal carbon pricing, and compensation linked to climate targets.

In addition to the cross-cutting metrics, Appendix B of S2, based on SASB standards, provides specific metrics for each industry within eleven defined sectors. It is in the financial sector—which encompasses industries such as commercial banks, insurance companies, and asset managers—that the greatest challenge lies: financed emissions, accounted for using the PCAF methodology, a metric that pertains to these institutions rather than to companies in general, as they arise from the credit and investment operations that make up their portfolios.

Recognizing this complexity, the ISSB issued amendments to IFRS S2 in December 2025 that allow financial institutions to limit the measurement of Scope 3 Category 15 to financed emissions and to choose the industry classification system used to disaggregate them, effective January 1, 2027.

As for targets, it is important to clarify that: the standard does not require companies to have them. What it does require is that, once established, these targets be reported in accordance with a minimum quality standard. It is not enough to simply announce a final numerical target; companies must also disclose the scope (which gases and scopes are covered), the base year, the time horizon, interim milestones, the potential use of carbon credits, and third-party validation.

Although there is no legal requirement, it is plausible that, as the company matures, it will begin to set targets, because they serve as a tool for public commitment, guide capital allocation and the decarbonization trajectory, foster internal employee engagement, signal ambition to investors and lenders, and lend consistency to the report itself over time. In this context, it is worth emphasizing the interconnectedness required by S1: metrics and targets must be integrated into governance, strategy, and risk management, not isolated from the rest of the report.

From regulations to practice: how companies report

The first early Brazilian disclosures show how different sectors interpret these requirements and where the biggest bottlenecks lie. The current landscape is divided into two groups: companies that have already published reports under IFRS S1 and S2, and those that, even without having adopted the format, already operate with more mature metrics and targets frameworks.

Vale published the first IFRS S2 report with a complete inventory of the three scopes audited by an independent third party and clear targets: a 33% reduction in absolute Scope 1 and 2 emissions (market-based) by 2030 compared to the 2017 baseline, a 15% reduction in net Scope 3 emissions by 2035, and net neutrality by 2050. It reported investments totaling approximately R$ 7.4 billion in decarbonization over five years. In 2026, it published its second report, expanding coverage to include IFRS S1 topics beyond climate and providing more content on internal carbon pricing: Vale treats exposure to pricing systems — from the SBCE to the CBAM — as a variable capable of affecting asset viability, thereby linking metrics, risk, and the financial perspective required by the standard.

Renner highlighted the challenge related to Scope 3 emissions in long and complex supply chains. Its SBTi-validated targets call for a 46.2% reduction in absolute Scope 1 and 2 emissions by 2030 (base year 2019), complemented by the Scope 3 target revised in 2024, a commitment to 100% more sustainable raw materials by 2030, and climate neutrality by 2050. Its first report, covering 2024, is transparent regarding methodology and data quality: it acknowledges the use of sector-specific emission factors (Higg Index and Ecoinvent) and the traceability uncertainties inherent in the textile supply chain. Furthermore, it quantified the sales opportunity for more sustainable products at approximately R$ 94 million in its 2024 results, with a projected R$ 223 to 256 million in cash flow over ten years—an example of best practice that links metrics to financial impact.

Irani, the third Brazilian company to publish an IFRS report, is an example of a company that demonstrates, with numbers, that climate opportunities can outweigh the risks. The report quantifies opportunities in the range of R$ 377 million associated with demand for sustainable paper and packaging and R$ 105 million from the appreciation of its own forest assets, compared to much lower estimated risks, such as R$ 67 million from extreme weather events. In terms of metrics, the company reported a reduction in Scope 1 and 2 emissions and met its commitment to expand the positive balance between GHG emissions and removals ahead of schedule. To substantiate these claims during an assurance process, the robustness and traceability of the inventory are essential requirements.

Other companies, such as Natura and Motiva (formerly CCR), already demonstrate maturity in reporting metrics and targets, even though they have not yet published their IFRS reports. Natura reports its performance in an externally assured Integrated Report, based on frameworks such as SASB, TCFD, TNFD, and CDP, and has already announced the early adoption of IFRS S2 for the second half of 2026. In 2025, the company reported a 17% reduction in absolute emissions across all three scopes compared to the previous year, in line with its ambition to become a regenerative business by 2050.

Motiva published a document in 2025 defined as a “transition report”: still based on GRI and SASB, with limited assurance, but already organized around the four pillars of the standard and designed as preparation for the future adoption of IFRS S1 and S2. This report also exemplifies the theme of this article, given the robustness of the reported targets: SBTi-validated commitments to reduce Scope 1 and 2 emissions by 59% and Scope 3 emissions by 27% by 2033 (base year 2019) and carbon neutrality for these scopes by 2035, with externally audited indicators and a portion of executives’ variable compensation tied to climate targets.

Across all sectors, at least three challenges remain: the difficulty in obtaining reliable data for Scope 3; ensuring comparability between reporting periods; and striking the right balance between credible targets and merely aspirational ones. Ultimately, we are talking about the quality and traceability of the data, which is exactly what an assurance process will guarantee.

What reasonable assurance requires in this regard

The discussion of metrics and targets takes on another dimension when we consider the evolution of assurance. Put simply, the two levels are distinguished by the nature of the auditor’s conclusion:

Limited assurance: negative conclusion. The auditor states that, based on the procedures performed, nothing has come to their attention that indicates a material misstatement.
Reasonable assurance: positive opinion, with a higher level of confidence, close to that of a financial statement audit, though never absolute.

Limited assurance still predominates as the entry point for sustainability assurance, but regulatory and technical trends are moving toward a more robust standard — a shift reinforced by the IAASB’s publication of ISSA 5000, designed to ensure sustainability information across different topics, frameworks, and levels.

The difference ceases to be abstract when it comes to climate metrics. Regarding Scopes 1 and 2, limited assurance tends to rely on analytical procedures and inquiries, assessing consistency, plausibility, and methodological adherence. Reasonable assurance goes deeper: meter readings verified against energy and fuel bills, recalculation of emission factors and conversions, justification for the exclusion of sources, and rigorous assessment of the inventory’s completeness. This point is central because IFRS S2 requires the disclosure of absolute emissions across the three scopes in accordance with the GHG Protocol Corporate Standard, which makes the quality of measurement the foundation of the report’s credibility. In practice, ISSA 5000 shifts the discussion from “having the number” to “being able to substantiate the number.” This requires:

formal internal controls over data collection, consolidation, and review;

traceable evidence back to the original source;

an assessment of the completeness of the reported scope;

defensible assumptions and estimates, especially when sector-specific factors or secondary data are used;

identification of areas with the highest risk of material misstatement.

This transition is rarely immediate. That is why the readiness assessment has gained traction as an intermediate step, allowing for the evaluation of gaps in data, controls, systems, responsibilities, and evidence prior to formal scrutiny. The market may also move toward combined scopes, with part of the information subject to reasonable assurance and part to limited assurance, especially for indicators that are more dependent on estimates or supply chain data. In this scenario, Scopes 1 and 2 tend to transition first, as they involve data closer to operations and evidence that is more directly verifiable.

In Brazil, the assurance requirement remains the one aspect that has not been relaxed. CVM 244 made reporting voluntary but maintained the requirement for assurance by an independent auditor registered with the CVM for those who choose to disclose, and the consolidated text of CVM 193 provides for the transition from limited assurance to reasonable assurance for fiscal years beginning on or after January 1, 2026.

(In addition, in December 2025, the CFC approved NBC TAS 5000, the Brazilian version of ISSA 5000, providing a national technical basis for these engagements.) For companies that decide to report, therefore, the bar has not been lowered: it is not enough to simply publish; they must do so using standards, methods, and evidence that support independent assurance.

Going beyond compliance

Robust metrics and targets also generate value beyond the report itself. A reliable inventory is the foundation for a technically defensible internal carbon pricing system and for capital expenditure (capex) decisions that incorporate the cost of carbon into analyses of net present value (NPV), payback, and investment prioritization. This same foundation enhances dialogue with investors and lenders, who are increasingly evaluating the consistency between stated targets, progress trajectories, transition plans, and actual capital allocation; According to the PwC Global Investor Survey 2024, 76% of investors report greater confidence in sustainability information when it is assured, and 73% agree that metrics, KPIs, and narrative disclosures should be assured to the same standard as financial statements.

This also translates into a strategic position regarding emerging carbon markets. Law No. 15,042/2024 established the Sistema Brasileiro de Comércio de Emissões (SBCE), Brazil´s Emissions Trading System, a regulated framework for limiting emissions and trading assets related to GHG emissions, reductions, or removals. Companies with traceable data, mature controls, and clarity regarding their exposure will be in a better position to price risks, evaluate opportunities, and engage with regulators and counterparties. And linking climate metrics to variable compensation—when well designed—reinforces internal alignment: it transforms the target into a management responsibility, not merely an institutional commitment disclosed to the market.

Anticipation as a key element

As we conclude this series, what remains is the understanding of the four dimensions as a system, rather than as independent sections: governance, strategy, and risk management describe intentions, decisions, and processes, while metrics and targets make them measurable, comparable, and verifiable. This is the principle of connectivity in IFRS S1 and S2 in practice; the report must highlight the relationship between processes, risks, performance, and financial effects.

And, as the case studies throughout the text have shown, there is no single path: the industry, company size, and reporting structure determine where the focus lies — whether among those already reporting under IFRS or among those laying the groundwork before adopting the format. Thus, the starting point varies depending on each company’s maturity. For those just starting out, the priority is a reliable database and the governance and validity of this data, before announcing ambitious goals, because a “robust” goal based on fragile data can end up being a liability, not an asset. For those who have already made progress, the focus shifts to, among other things, traceability, comparability across cycles, methodological consistency, and readiness for assurance.

CVM Resolution 244 changed the degree of mandatory compliance, not the relevance of the information: building robust metrics and targets remains a management decision, not a compliance one; this is what allows the company to understand its exposure, allocate capital, engage with the market, and transform the report into an effective decision-making tool.