Joint Circular No. 1/2023/CVM/SIN/SMI

SECURITIES AND EXCHANGE COMMISSION OF BRAZIL
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Joint Circular No. 1/2023/CVM/SIN/SMI
Rio de Janeiro, December 26, 2023

To persons qualified to act as members of the distribution system and securities consultants

Subject: Interpretation of provisions of CVM Resolution No. 30

Dear Sirs,

1. As is known, CVM Resolution No. 30 determines, among other matters, that persons qualified to act as members of the distribution system and securities consultants must verify whether "the product, service, or operation is suitable for the client's investment objectives", and also whether "the client has the necessary knowledge to understand the risks related to the product" (Article 3, items I and III, of CVM Resolution No. 30).

2. On the other hand, there is a growing structuring of products with ESG (Environmental, Social, and Governance) strategies, approaches, or objectives of the most diverse natures and extents, covering environmental issues (including climate-related), social, and governance matters. Some of these, regarding informational and conduct aspects within the securities market, are already regulated by the CVM 1.

3. Thus, considering the current context of the Brazilian capital market and the formatting of products already offered to investors, combined with the commercial appeal that securities structured in the market possess, we understand that the best compliance with the provisions of Article 3, items I and III, of CVM Resolution No. 30, requires intermediaries and consultants to map and know their clients' profiles also from the perspective of their appetite and interest in securities with "sustainable" objectives (or any other term related to sustainable finance), in order to ensure that, in the process of recommending to them the most varied available options, the intermediary can also recommend (or the consultant can suggest) those that correspond as adequately as possible to the clients' profiles under this same lens.

4. Furthermore, securities intermediaries and consultants must certify, under the best efforts regime and within the limits of their duties, whether a given security or security recommended by them is effectively aligned with an ESG objective, in order to avoid that any greenwashing practices harm the clients they serve, by inducing them to invest in alternatives that do not observe the investment objectives they seek.

5. Thus, for example, before recommending a specific investment fund, persons qualified to act as members of the distribution system and consultants must verify whether the fund complies with the discipline provided for in Article 49 of CVM Resolution No. 175; as well as whether it is aligned with the self-regulation rules applicable to this type of product 2. The same rationale also applies to securities publicly offered with identification as "green, social, or sustainable" (or related terms), in accordance with CVM Resolution No. 160; as well as regarding the provisions of Article 4 of Supplementary A to CVM Resolution No. 60.

Sincerely,

Digitally signed by
DANIEL WALTER MAEDA BERNARDO
Superintendent of Institutional Investor Supervision

Digitally signed by
ANDRÉ FRANCISCO LUIZ DE ALENCAR PASSARO
Superintendent of Market Relations and Intermediaries

1 See, for example, Article 49 of CVM Resolution No. 175; or the identification, as "green, social or sustainable" of a security subject to a public offering, in accordance with CVM Resolution No. 160; and Article 4 of Supplementary A to CVM Resolution No. 60.

2 https://www.anbima.com.br/data/files/C3/03/3E/09/954C88107D83F688EA2BA2A8/1.%20Regras_procedimentos_Fundos%20IS_13.7.23.pdf