Narayan AmmachchiA majority of corporate firms in Latin America are struggling to adopt global standards for financial reporting on sustainability, known as IFRS.
While many companies appear to value sustainability, only 46% have formal policies in place, and only half have a dedicated sustainability officer, according to a survey by RSM, a global tax and accounting consultancy.
Even more concerning, 22% of companies have yet to make sustainability a priority.
Many companies also face challenges with “non-financial reporting,” which involves tracking and publicly sharing data on their environmental, social, and governance (ESG) practices.
Only 40% of firms publicly disclose their ESG reports. Key obstacles include limited resources, expertise, and government support, which make it difficult for companies to meet global standards.
The study, titled the ESG Latin America Landscape 2024 Survey, covered 200 companies across the region.
It also highlighted that sustainability reporting goals vary by country. For instance, businesses in Brazil have advanced social impact tracking, whereas in Mexico, sustainability is less integrated into corporate strategy.
When asked about their biggest challenges in enhancing ESG practices, 30% of companies cited difficulty in tracking key performance indicators, while 25% found it challenging to measure environmental and social impacts.
According to the report, Chile is among the most mature in the region on ESG issues, with 66% of companies having formal sustainability policies. However, many companies still face internal resource and training gaps.
Colombian companies find disjointed local regulations a major hurdle in advancing sustainability efforts.
Meanwhile, Mexican firms lag in public ESG reporting, with only 25% currently publishing these reports. However, new government regulations are expected to drive faster adoption of sustainable practices in the near future.
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