Chile’s financial watchdog taking steps to upgrade ESG standards

Chilean financial regulators are taking steps to update ESG (environmental, social and governance) regulations by demanding companies provide information on sustainability issues using the EU as a model. 

“This is an issue that is moving faster and faster. Not only governments are adopting more ambitious sustainability goals, but financial regulators are also starting to appear, such as Chile’s [securities watchdog] CMF,” said Trinidad Lecaros, Deloitte Chile’s sustainable financing senior manager.

By 2025, nearly all firms overseen by CMF will be required to include information related to sustainability in their annual reports. 

Lecaros said that Chile has mostly followed the lead of the European Union, though she admitted that its framework is not as strict as the EU one, which has recently included provisions to sanction greenwashing. 

The executive made the comments during an ESG trends webinar held by Chile’s College of Engineers and Deloitte. 

CMF is also expected to issue norms on reporting risks related to sustainability in investment portfolios. 

When BNamericas asked about the possibility of a standardized ESG framework across Latin America, as in the EU, Lecaros said the IFRS (International Financial Reporting Standards) framework is on its way to becoming standardized worldwide anyway. 

Last year, following the COP26 summit in Scotland, the IFRS Foundation launched an International Sustainability Standards Board (ISSB) which, among other aspects, will seek to develop a global sustainability financial information database and ways to report information as transparently as possible. 

Lecaros added that this was a step towards worldwide ESG standardization and that would also help investors to process and compare information faster. 

“If I was an investor and tried to read all annual reports, which have around 500 pages each, I would go insane,” she said.