backBrazil’s Federal Supreme Court (STF) has begun, in virtual plenary session, the review of a lawsuit challenging the requirement that insurance companies, private pension funds and reinsurers allocate part of their technical reserves to the purchase of carbon credits. The action was filed by the National Confederation of Insurance, Private Pension, Life, Supplementary Health and Capitalisation Companies against a provision of Law No. 15,042/2024, which established the Brazilian Emissions Trading System. To date, only the reporting justice, Flávio Dino, has cast a vote, finding the requirement unconstitutional.
According to the rapporteur, the rule infringes constitutional principles such as free enterprise, equality and legal certainty by imposing compulsory investment in assets unrelated to the sector’s core economic activity and by singling out the insurance industry as a source of funding for the carbon market. He also identified a breach of the polluter-pays principle, noting that the financial burden does not fall on the actual greenhouse gas emitters, and highlighted the absence of a transition period, which he considered to have caused an element of surprise for market participants. The remaining justices have until early February 2026 to submit their votes.
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