CPI Launches Climate Finance Reform Compass to Guide Brazil's Green Transition

Climate Policy Initiative has released the Brazil Climate Finance Reform Compass, a structured assessment mapping the country's progress and gaps across eight climate finance themes. The tool is designed to help policymakers and investors prioritise reforms needed to unlock large-scale capital for Brazil's green transition, particularly ahead of COP30 on Brazilian soil.

The Compass evaluates Brazil's policy and institutional landscape across 24 reform topics tied to mobilising private and public capital for climate goals. CPI's assessment finds notable advances in regulatory frameworks for sustainable finance, the New Forest Code, a national taxonomy launch, and the introduction of sovereign sustainability instruments. Progress is also visible in agriculture and land use, where efforts to scale climate-smart production systems are gaining momentum. However, private sector engagement in adaptation remains limited, and project preparation capacity is thin across multiple sectors.

The Compass highlights that Brazil's most significant reform gaps lie in financial mechanisms to halt deforestation, including operational carbon markets and international concessional finance channels. While a national carbon market law has been approved, the trading architecture is still emerging. Fiscal tools such as climate-aware budgeting and debt instruments designed to absorb climate shocks are yet to be developed. CPI notes that Brazil's institutional foundations are strengthening, but the financial instruments needed to operate at scale are still taking shape.

CPI intends the Compass to function as both a diagnostic and a roadmap for action, providing structure that policymakers and financial actors can use to coordinate more effectively and bridge remaining gaps. As Brazil prepares to host COP30, the tool positions the country to demonstrate leadership in aligning climate ambitions with investable financial architecture. CPI plans to update the Compass periodically as reforms advance and new financing mechanisms come online.

Key figure — 24 reform topics