Indigenous Rights in Brazil's ESG Landscape

Over the past decades, the integration of Indigenous rights into laws and policies has become increasingly important, especially in relation to Environmental, Social, and Governance (ESG) regulations. 

Therefore, companies — particularly those located in environmentally important ecosystems, such as the Amazon — are becoming increasingly important stakeholders when it comes to advocating for human rights and environmental protection.  

The Amazon rainforest is an essential ecosystem that not only supports a wide variety of species but is inhabited by many Indigenous communities. It’s important to ensure these people don’t encounter threats to their rights and lands due to industrial development. In that sense, companies working in the area should uphold and be aware of Indigenous rights, which include land ownership, protection of cultural heritage, and obtaining Free, Prior, and Informed Consent (FPIC).  

As we explore below, the regulatory landscape is prompting a shift where legal compliance may not be enough, and businesses must become more aware of their roles in driving long-term value and ethical accountability.

Indigenous rights in Brazil — Regulatory Landscape

International 

UDHR

The Universal Declaration of Human Rights (UDHR), although not explicitly referencing Indigenous peoples, is interpreted as foundational to their protection, establishing the principles of equality and non-discrimination, and supporting rights to property, cultural expression, and religious freedom.  

Over the last 20 years, the regulatory framework has been evolving to direct how businesses interact with indigenous communities, particularly in regions with significant environmental and cultural importance, such as the Amazon forest. 

UNGPs

The UN Guiding Principles on Business and Human Rights (UNGPs) establish that companies must respect all human rights, including those of indigenous peoples. This involves carrying out human rights due diligence, assessing and addressing potential risks, and ensuring remedies are available if harm occurs.  

ILO Convention 169 

Additionally, ILO Convention 169, has been ratified by Brazil, requiring companies must consult indigenous people to ensure they provide their FPIC before conducting any activities that could impact their lands, resources, or way of life.  

OECD Guidelines

Companies can also find practical recommendations in the OECD Guidelines for Multinational Enterprises on Responsible Business Conduct, which encourages companies to prevent negative effects on indigenous rights and to communicate openly and respectfully with affected groups.  

UNDRIP 

Finally, the United Nations Declaration on the Rights of Indigenous Peoples (UNDRIP), despite not legally enforceable, is an influential standard that supports indigenous peoples’ rights to self-determination, cultural continuity, and authority over their ancestral territories. 

National – Brazil Federal 

Law 6.001/1973 

Law 6.001 of 19 December 1973, or the Statute of Indigenous People, defines the primary legal basis for the rights and status of indigenous people in Brazil, later established in Article 231 of the Federal Constitution, which came to recognize them as distinct cultural groups. By requiring that the social structures, customs, languages, beliefs, and traditions of indigenous peoples are acknowledged and safeguarded, it recognizes their unique cultural identity within the country.  

Moreover, its establishes that indigenous people have permanent ownership of their ancestral lands and grants them exclusive rights to use the natural resources on those lands, while forbidding non-indigenous individuals, such as industries, from renting or commercially exploiting these areas.  

Law 14.701/2023

However, 30 years after the publication of Law 6.001/1973, Law 14.701 of 20 October 2023, brought major changes to the laws related to indigenous territories in Brazil with the goal of setting specific rules on how these lands are recognized and used, as outlined by the Federal Constitution.  

This Law is known for implementing the “Marco Temporal” (Time Frame or Cut-off date) thesis, according to which a land can only be considered as traditionally occupied indigenous land if indigenous groups occupied it on 5 October 1988, when the Federal Constitution took effect. This thesis is widely criticized for attempting to restrict Indigenous rights, by threatening the historical and material challenges Indigenous communities face in documenting continuous occupation. It has been seen by many as undermining the original rights guaranteed in Article 231 of the Constitution.  

It’s important to note that the Supreme Federal Court (STF) ruling (RE 1017365) used for the leading case on the General Repercussion Thesis 1031 (even before Law 14.701/2023 entered into force), firmly rejects the Marco Temporal thesis stating that indigenous land claims remain valid as long as there’s a cultural or spiritual connection to the land, regardless of whether the community was physically present in 1988.  

Today, Law 14.701/2023 remains under constitutional vigilance. In June 2025, the STF facilitated a dialogue leading to a consensus proposal for amending the law, aiming to align it with constitutional principles and the Court’s prior rulings. Despite Law 14.701/2023 controversy, the Law still establishes that companies and other private individuals can only enter indigenous areas if authorized by the indigenous community. Furthermore, economic activities in indigenous lands can only be carried out by the indigenous community itself, notwithstanding the cooperation and hiring of non-indigenous third parties being allowed. 

Companies must be aware that failing to respect indigenous people rights and to comply with constitutional and international requirements can lead to the revocation of permits and suspension of projects. Collectively, these cases emphasize the increasing necessity for companies to engage openly, consult thoroughly, and fully respect indigenous sovereignty in their operations. 

Additionally, companies carrying out operations within or near indigenous areas must be proactive and ensure a strong policy with indigenous people rights to prevent penalties, legal disputes, and harm to their reputation. Therefore, businesses must secure FPIC before starting any projects that might impact indigenous territories or communities.

PL 2.159 and PL 1.725

As Brazil navigates the complex intersection of environmental protection and economic development, two ongoing legislative proposals — PL 2.159/2021 and PL 1.725/2025 — represent the evolving regulatory landscape. These proposals reflect contrasting visions for the region’s future and signal important implications for companies operating in Brazil or sourcing from the Amazon.
 

The “Devastation Bill” — PL 2.159/2021 

PL 2.159/2021, recently approved by the Federal Senate, seeks to reform Brazil’s environmental licensing framework. If adopted, it would introduce mechanisms such as self-declared compliance and automatic licensing, aiming to streamline approvals for infrastructure and extractive projects. Supporters of the bill argue that it would reduce bureaucratic inefficiencies, promote investment, and harmonize licensing procedures across Brazil’s diverse jurisdictions. 

However, the proposal has drawn significant criticism from environmental and indigenous rights advocates, who have labeled it the “Devastation Bill”. They argue that it poses a serious threat to Brazil’s environmental governance.  

Key concerns include: 

• Weakened oversight: The bill would exempt certain projects from licensing altogether and simplify procedures like the License by Adhesion and Commitment (LAC), allowing developers to proceed based on self-declared compliance without prior review by environmental authorities. 

• Erosion of indigenous rights: Protections would be limited to lands that are already officially demarcated, excluding many indigenous communities still awaiting legal recognition. 

• Non-compliance with international standards: The bill may violate obligations such as the requirement for free, prior, and informed consultation with indigenous and traditional communities, as outlined in international agreements like ILO Convention 169. 

Following its approval in the Senate, PL 2.159/2021 is now under review in the Chamber of Deputies, where it must undergo further analysis and voting. If passed, the bill will proceed to the President for final consideration, where it may be sanctioned in full or partially vetoed.
 

Oil ambitions in the Amazon — PL 1.725/2025 

In contrast, PL 1.725/2025, introduced in April 2025, proposes a ban on new oil and gas exploration blocks in the Amazon and mandates environmental recovery of areas already under exploitation. The bill would also outline a structured transition plan for existing operations, including requalification of workers and incentives for renewable energy investments. 

PL 1.725/2025 comes at a strategic moment not only due to the Deforestation Bill but also as a response to mounting pressure to expand fossil fuel exploration in the Amazon, particularly in the Equatorial Margin, a frontier region that includes the Foz do Amazonas basin. The urgency is fueled by recent offshore oil discoveries in Suriname and Guyana, just 50 kilometers from Brazil’s northern coast. These neighboring countries have rapidly increased production and revenues, prompting calls within Brazil to capitalize on similar reserves. 

Proponents of PL 1.725/2025 argue that opening new exploration fronts in the Amazon would contradict Brazil’s climate commitments and pose unacceptable risks to biodiversity and traditional communities. 

While still in the early stages of legislative review, the proposal signals a growing awareness within parts of the Brazilian Congress of the long-term environmental and reputational costs associated with fossil fuel expansion in ecologically sensitive regions.

Navigating uncertainty: Compliance as a strategic lever

The contrasting trajectories of PL 2.159/2021 and PL 1.725/2025 underscore the regulatory uncertainty facing companies. On one hand, there’s a push to relax environmental oversight in favor of economic acceleration; on the other, a growing movement seeks to reinforce environmental and social safeguards in line with international commitments. 

In this context, compliance is no longer a static obligation — it is a dynamic and strategic imperative. While some companies may benefit in the short term from more flexible domestic regulations, the global trend still appears to be moving toward stricter ESG requirements. Frameworks such as the European Union’s Deforestation-Free Products Regulation (EUDR) and the Corporate Sustainability Due Diligence Directive (CSDDD) are reshaping expectations for transparency, traceability, and accountability across global value chains. 

Companies that fail to anticipate these shifts risk: 

• Restricted access to key markets, particularly in the EU and other ESG-sensitive jurisdictions 

• Reputational damage that can affect investor confidence and consumer loyalty 

• Operational disruptions due to legal challenges, supply chain scrutiny, or shifting stakeholder expectations 

Conversely, businesses that go beyond minimum compliance can turn ESG alignment into a competitive advantage. By investing in traceable, deforestation-free supply chains, engaging meaningfully with local and indigenous communities, and integrating sustainability into core operations, companies can enhance resilience, attract ESG-focused capital, and position themselves as leaders in responsible sourcing. 

In a region as ecologically and politically complex as the Amazon, the ability to navigate regulatory uncertainty with foresight and integrity will increasingly define long-term success.

Strategic takeaways

As Brazil’s legal and political landscape continues to evolve, companies operating in or sourcing from the Amazon must recognize that respecting Indigenous rights isn’t only a legal obligation but a strategic necessity. The tension between legislative proposals like PL 2.159/2021 and PL 1.725/2025 reflects a broader global debate: whether economic development can coexist with environmental stewardship and human rights. 

In this context, businesses must move beyond reactive compliance and embrace proactive engagement. This means securing Free, Prior, and Informed Consent (FPIC), investing in traceable and deforestation-free supply chains, and aligning operations with both national laws and international standards. Companies that do so will not only mitigate legal and reputational risks but also contribute to a more equitable and sustainable future for the Amazon and its Indigenous peoples. 

Ultimately, the path forward demands integrity, transparency, and a genuine commitment to ethical governance. In the Amazon, where biodiversity and cultural heritage are deeply intertwined, corporate responsibility must be measured not just by profit margins, but by the legacy left behind.