ESG in Brazilian agribusiness: regulation, challenges and opportunities

The regulatory picture for Brazilian agribusiness (EUDR, CBAM, SBCE)

Brazilian agribusiness is operating under an unprecedented convergence of climate regulation. Three rules in particular are redrawing the game.

The EUDR, the EU Deforestation Regulation, requires European importers to prove that seven commodities, soy, coffee, cocoa, beef, timber, rubber and palm oil, were not produced on land cleared after December 2020. For Brazil, the world's largest exporter of soy and beef, the impact is direct: without georeferenced traceability back to the farm of origin, access to the European market is compromised.

The European Union's CBAM affects agriculture indirectly through industrial inputs: fertilisers made with carbon-intensive processes will carry a surcharge on import into Europe. CBAM targets industrial products, but the agricultural chain feels it in input costs.

The SBCE, Brazil's emissions trading system, will create domestic obligations. Law 15,042/2024 establishes a regulated carbon market in Brazil. Agriculture is not directly regulated in the first cycle (the initial focus is installations emitting above 25,000 tCO2e a year), but the trend is towards progressive expansion. Producers already measuring and reducing emissions will be ready.

The message for the sector is clear: the era of self-regulation is over. Whoever moves first gains competitive advantage, access to premium markets, cheaper credit and differentiation from competitors who did not adapt.

Emission sources in agriculture (enteric fermentation, manure, fertilisers, land-use change)

Brazilian agriculture emits GHGs through four main routes, each with its own dynamics and solutions.

Enteric fermentation. The digestive process of ruminants (cattle, sheep, goats) produces methane (CH4) as a by-product of microbial fermentation in the rumen. With the world's largest commercial herd, more than 200 million head, enteric fermentation is Brazil's largest agricultural GHG source. The emission factor varies with breed, age, weight, diet and production system (extensive vs feedlot). Mitigation strategies include genetic improvement, supplementation with anti-methanogenic additives (such as 3-NOP), pasture improvement and sustainable intensification.

Manure management. Anaerobic decomposition of animal waste in storage systems (lagoons, pits) generates methane and nitrous oxide (N2O). The magnitude depends on the management system: anaerobic lagoons in hot climates carry very high factors, while direct distribution on pasture carries lower ones. Biodigesters that capture methane for energy turn an emission source into an energy asset.

Nitrogen fertilisers. Applying synthetic and organic fertilisers to agricultural soils generates N2O through nitrification and denitrification. N2O has a GWP of 273 (AR6), so each tonne is equivalent to 273 of CO2. Practices such as precision application (variable rate), nitrification inhibitors and controlled-release fertilisers cut emissions without hurting yield.

Land-use change (LUC). Converting native vegetation into cropland or pasture releases the carbon stored in biomass and soil. Historically, clearing in the Amazon and the Cerrado has been Brazil's largest emissions source. The Forest Code (Law 12,651/2012) requires Legal Reserves and Permanent Preservation Areas, but enforcement is uneven. Companies buying commodities from areas with recent clearing take on LUC emissions in their Scope 3.

GHG Protocol for agriculture (Agricultural Guidance)

The GHG Protocol developed guidance specific to agriculture, recognising that emission sources and dynamics differ significantly from industry.

Inventory boundaries. The agricultural inventory covers direct on-farm emissions (Scope 1): enteric fermentation, manure management, managed soils, burning of crop residues, liming, diesel in machinery. Scope 2 covers electricity for irrigation, drying and storage. Scope 3 covers input production (fertilisers, crop protection, seed), transport of inputs and products, post-farm processing and land use.

Emission factors. MCTI publishes factors specific to Brazilian agriculture and livestock, including emission rates per head by animal category, soil emission factors by crop type and region, and biomass conversion factors by biome. These are more accurate than IPCC defaults for the Brazilian context.

Carbon removals. The agricultural inventory also accounts for removals: carbon sequestered in soils through no-till farming, crop-livestock-forest integration (ILPF), recovery of degraded pasture and reforestation. Removals can be reported separately and contribute towards neutrality targets.

Intensity metrics. Beyond absolute emissions (total tCO2e), agriculture uses intensity metrics: tCO2e per tonne of product (soy, maize, beef), tCO2e per hectare, tCO2e per litre of milk. These allow comparison between production systems and progress over time.

Traceability and environmental due diligence

Traceability in the agricultural chain has become a market requirement, no longer a differentiator.

Georeferencing. The EUDR requires geographic coordinates for every production plot. For soy and coffee, that means identifying the farm of origin of each lot. For beef, it means tracing the animal from birth to slaughter, through every rearing and finishing farm. The Rural Environmental Registry (CAR) provides the geospatial base, but its integration with trading systems is still incomplete.

Supplier due diligence. Buying companies have to verify that their suppliers are not associated with deforestation, slavery-like labour, invasion of Indigenous land or other violations. That requires cross-referencing databases, PRODES (deforestation), the labour ministry's employer blacklist, FUNAI (Indigenous land), and continuous monitoring.

Blockchain and digital traceability. Some initiatives use blockchain to record the chain of custody of commodities, from farm to export terminal. Promising as they are, these solutions face challenges of scale and adoption, particularly among small and mid-sized producers.

Green credit and financing lines

Sustainable agriculture has growing access to differentiated finance.

The ABC+ Plan (Low Carbon Agriculture). A federal government programme offering subsidised credit for practices such as crop-livestock-forest integration, no-till farming, recovery of degraded pasture, manure treatment and planted forest. The rates are significantly below conventional lines.

Agribusiness green bonds. Agribusiness companies are issuing green bonds in the capital markets. Green CRAs (agribusiness receivables certificates) tie the proceeds to projects with verifiable environmental benefits. The Brazilian Sustainable Taxonomy will provide standardised eligibility criteria.

Carbon credits. Producers adopting low-carbon practices can generate carbon credits in the voluntary market, through soil carbon sequestration, methane reduction via biodigesters, or conservation of native vegetation beyond the legal requirement. The extra revenue from credits can make mitigation technology investments viable.

International funds. Brazil attracts investment from impact and climate funds such as the Green Climate Fund and the Climate Investment Funds, as well as bilateral cooperation mechanisms. Projects that demonstrate measurable emission reductions and social co-benefits have a better chance of securing those resources.

Cases and opportunities

Brazilian agribusiness already offers concrete examples of ESG integration.

Crop-livestock-forest integration (ILPF). Systems combining crops, livestock and forestry on the same land show lower emissions per hectare, higher productivity and carbon sequestration. Producers with certified ILPF access ABC+ credit lines and can generate carbon credits from verified sequestration.

Regenerative livestock. Intensive rotational grazing systems, with high animal density and adequate rest periods, increase soil organic matter and lower emissions per unit of beef produced. The scale is still limited, but the results are promising.

Sugarcane and bioenergy. The sugar-energy sector has relatively low emissions per unit of energy produced and cogenerates electricity from bagasse. Mills with an emissions inventory and sustainability certification (Bonsucro, RenovaBio) reach premium markets and differentiated CBIO pricing.

How Mangue Tech serves agribusiness

Mangue Tech offers an integrated package for agribusiness, combining a specialised inventory, regulatory consulting and access to the carbon market.

The agricultural inventory uses MCTI emission factors specific to Brazilian livestock, crops and land use. The platform supports enteric fermentation calculation by animal category (IPCC Tier 2), managed soil emissions by crop type and region, and accounting for carbon removals from ILPF and no-till farming.

The traceability module maps the supplier chain, cross-references environmental monitoring databases and produces due diligence reports aligned with the EUDR. The supply chain engagement module makes it easier to collect data from producers and cooperatives.

For producers and cooperatives looking to reach the carbon market, Mangue Tech identifies credit generation opportunities, quantifies the reduction and removal potential, and connects to registries and buyers through the Carbonext partnership.