Sustainability and Environmental, Social, and Governance (ESG) criteria have evolved from a trend to an indispensable requirement for global companies. In this context, the new international regulations, such as International Reporting Financing Standards (IFRS S1 and S2), along with regulatory incentives such as the EU Omnibus Package, are shaping a regulatory framework directly affecting Latin American companies. This region has a single opportunity to excel in corporate sustainable management but must face considerable challenges requiring immediate strategic action.
Trump’s Impact on Sustainability: Rhetoric vs Reality
- Least Strict Federal Policies: Donald Trump dismantled key environmental regulations, such as the retirement of the Paris Agreement in 2017. In 2025, he signed an executive order reaffirming his pro-fossil fuel policies. Conversely, despite these regressive federal policies, the U.S. private sector is still committed to sustainability. According to a Bloomberg study, over 75% of CFOs in the U.S.A. plan to maintain or increase their investments in sustainability, regardless of political situation.
- Increasing ESG’s Investment: Although federal policies have loosened, the U.S. private sector maintains its solid commitment to sustainability. Indeed, 77% of CFOs plan to increase their investments in this scope in 2025, according to a specialized survey performed this year by a recognized professional services company. This information reaffirms that sustainability is still crucial for corporate leaders, investors, and consumers.
UE Omnibus Package: Streamlining and Competitiveness
The UE Omnibus Package aims to streamline the regulatory burden but requires transparency in disclosing non-financial information. Specifically, the Corporate Sustainability Reporting Directive (CSRD) and Corporate Sustainability Due Diligence Directive (CSDDD) will directly affect Latin American companies operating or intending to enter the European market. In Peru, approximately 16% of exports are for Europe, which implies a lot of Peruvian companies aligning with these new regulations.
In this regard, Peruvian exporters, particularly mining and agro-industrial, will have to fit these standards due to the increased transparency required by Europe in sustainability and supply chain reporting.
IFRS S1 and S2: Global ESG Disclosure Standard
The IFRS S1 and S2 of the International Sustainability Standards Board (ISSB) provide a standardized framework for disclosing sustainability and climate reporting. These rules align with approaches such as the Task Force on Climate-related Financial Disclosure (TCFD) and the Sustainability Accounting Standards Board (SASB), making them the most relevant standards for companies aiming to attract sustainable investments.
According to the IFRS Foundation report, over 30 jurisdictions have adopted or are in the process of adopting these standards in their regulatory frameworks. These regions account for approximately 57% of the Gross Domestic Product (GDP) worldwide and over 50% of global greenhouse gas emissions.
This environment displays global markets are swiftly progressing in implementing these standards, and companies not aligned with the latter will risk being left behind in an increasingly competitive and regulated environment. (IFRS Sustainability Consultant Content Programme, 2024)
Latin American Sustainability Regulations: Chile, Mexico, Brazil, and Colombia
These countries, such as Brazil, Costa Rica, El Salvador, Chile, and Mexico, have adopted regulations aligning their non-financial reporting with the IFRS S1 and S2 Rules for listed companies.
For other type of businesses, Mexico has adopted the NIS (Normas de Información de Sostenibilidad – Sustainability Reporting Standards) recently due to the CINIF (Consejo Mexicano de Normas de Información Financiera – Mexican Financing Reporting Standards Board), which requires private companies, either SMEs or large, operating in Mexico to disclose their financial statements, including 30 Basic Sustainability Indicators (BSI) in their notes.
Colombia has required listed companies since 2021 to report under the SASB and TCFD standards. This March, voluntary sustainability reporting has been proposed for companies with a turnover above US$10 million (External Circular 100-000002).
What Should Regional Companies Do as a Strategy?
- Adopt international standards: As regulations in the main global markets align with IFRS S1 and S2, Latin American companies must adopt them to ensure competitiveness. Adapting to these standards is a regulatory obligation and an opportunity to improve transparency, trust, and market perception.
- Integrate sustainability into the core strategy: Reporting isolated sustainability data is no longer enough. Sustainability must be strategic for innovation, enhance corporate reputation, and increase financial resilience. Companies must incorporate these principles into their organizational culture and long-term goals.
- Train teams and strengthen governance: In order to comply with sustainability standards and ensure accurate disclosure, companies must have specialized teams, solid measurement systems, and explicit commitment from senior management. In addition, they must ensure that ESG reporting is an integral part of their annual financial reporting.
- Leverage sustainable financing: The issuance of green and social bonds has reached record levels, and companies can access finance at more competitive rates for projects primarily promoting climate change mitigation, as well as the growing interest in climate adaptation and nature. According to a report by Moodys, global issuance of sustainable bonds should amount to US$1 billion by 2025, similar to 2024, opening up new financing opportunities for Latin American companies. (2025 Sustainable Finance Outlook)
- Promote forward-looking competitiveness: In an increasingly globalized business environment, regulatory requirements must be anticipated. Companies adopting ESG standards today can access cheaper capital, attract quality talent, and differentiate themselves from less sustainable competitors.
Conclusion: A Path Full of Opportunities
Latin American companies have a unique opportunity to lead in sustainability globally. Regulatory progress and new international standards, such as IFRS S1 and S2, are creating a transparent and more demanding framework for companies in the region to further this agenda. Adopting these standards ensures competitiveness and access to international markets and represents a strong business strategy for the future. Companies must act now, leading sustainability to be the best positioned eventually.
Corporate Preparation
In an increasingly demanding global environment regarding sustainability, anticipating new standards is crucial for competitiveness. At TPC Group, we have a multidisciplinary team specialized in ESG regulations, IFRS S1 and S2 implementation, and the design of tailor-made sustainable strategies.
Contact us today for customized advice and to adapt your company to the new international requirements.