Sustainability has become a cornerstone of business operations worldwide. Within this context, the EU’s Corporate Sustainability Reporting Directive (CSRD) marks a major step forward, introducing tougher reporting requirements based on the European Sustainability Reporting Standards (ESRS). The directive significantly broadens the scope of companies required to report, increasing from 12,000 to over 50,000, while also setting standards that extend far beyond EU borders.
From 2028, non-EU companies with substantial operations in the region will need to comply with the CSRD if they exceed €150 million in annual turnover within the EU, have a subsidiary classified as a large company or listed entity in the EU, or maintain a branch with a turnover of over €40 million in the bloc. All affected companies, including those outside the EU, will have to report in line with the ESRS or equivalent standards, as defined by the European Commission.
Large groups will be allowed to consolidate reporting to cover their EU operations, avoiding duplication. This also applies to companies seeking financing in the EU—those adopting ESRS early could gain a competitive edge, attract sustainability-focused investors, and improve access to capital.
This places Latin America in a unique position. With countries like Mexico, Brazil, Colombia, and Chile deeply integrated into European supply chains, businesses in the region have a valuable opportunity to position themselves as strategic partners in global markets. However, this will require them to adapt to the strict transparency and sustainability requirements introduced by the CSRD.
The Impact of the CSRD on Latin America
According to the document “Compliance and Sustainability Report by the Latin America Sustainability Legal Ecosystem Alliance”, EU regulations are having an extraterritorial impact on several key sectors in the region. Key implications include:
- Meeting ESG Requirements: The CSRD obliges companies with significant EU operations to report their environmental, social, and governance (ESG) impacts. This directly affects industries critical to Latin America—mining, agriculture, manufacturing, and energy—prompting the need for a shift towards more sustainable practices.
- Aligning with International Standards: Many companies in the region still lack the internal processes necessary to meet CSRD requirements. However, the widely used GRI Standards offer a helpful starting point for preparing reports aligned with the ESRS. That said, while GRI Standards are useful, they don’t fully meet the ESRS requirements, which are more specific and detailed.
- Pressure on Supply Chains: The CSRD will also have an indirect effect on Latin American suppliers to European companies. EU businesses may require certain data from their suppliers to fulfil their own sustainability obligations. This might involve:
- Improving supply chain traceability.
- Transparency on carbon emissions and resource consumption.
- Ensuring fair labour practices and respect for human rights.
Country-specific insights
The CSRD’s impact varies depending on the country and sector:
- Mexico: Mexico has already begun aligning with global regulations through the recent introduction of its Sustainability Information Standards (NIS). Its strong ties to European supply chains and its efforts to adopt standards like GRI place it in a good position to meet CSRD requirements. The country is also strengthening internal regulations to ensure its businesses remain competitive in global markets.
- Colombia: Key sectors such as energy and agriculture face specific challenges, including transitioning to more sustainable energy sources and adopting responsible farming practices. Companies are exploring digital tools to collect and report sustainability data more effectively.
- Brazil: Deforestation and sustainable agriculture are pressing issues, placing Brazilian companies under intense scrutiny. Businesses will need to implement traceability systems to ensure their exports comply with EU standards.
- Chile and Argentina: The mining and agricultural sectors, vital for exports to the EU, are adopting international reporting standards to maintain access to markets and attract sustainable investment.
Opportunities and advantages
Adopting ESRS isn’t just about compliance; it’s also a chance to enhance competitiveness. Key benefits include:
- Attracting Sustainable Investment: European markets value responsible business practices, and companies that embrace ESRS early can secure investment and enhance their reputation.
- Streamlining Operations: Implementing ESRS-compliant processes can highlight inefficiencies and help reduce costs.
- Future-Proofing: Early adoption ensures companies stay ahead of emerging global sustainability regulations.
A comprehensive ESG reporting solution for non-EU companies
The CSRD is more than just a compliance exercise—it’s a framework that redefines how businesses operate and report on their impact. For Latin America, it represents both a significant challenge and a rare opportunity to strengthen ties with international markets.
At Sygris, we understand the complexities of these regulations and offer an all-in-one solution with our Sygris Reporting platform. Designed to help companies manage and report sustainability data, our platform enables:
- Centralised, automated data collection.
- Accurate and traceable reporting.
- Full compliance with ESRS requirements.
With Sygris Reporting, we support Latin American companies in their sustainability journey, transforming compliance into a driver of innovation and competitiveness. This is more than just meeting legal obligations—it’s an opportunity to enhance operations, lead on sustainability, and make a positive impact on communities and the environment.
