On May 31st, 2022, Bulletin No. 15044-12 was submitted to the Lower Chamber, as a congressional proposal for a bill to prevent and penalize greenwashing.

The bill aims to prevent, define, and specify the concept of “greenwashing,” and to regulate a permanent platform of environmental information for companies, to supply more tools for inspection and supervision, as well as sanctioning, in the event of non-compliance.

Contents

This bill requires companies publicizing sustainability to provide complete, truthful, comprehensible, and accurate information. Any practices that are publicized as sustainable must be conducted in compliance with legal and statutory provisions.

Pursuant to the bill, “publicizing sustainability” is communicating responsible and sustainable practices in the social, environmental, and economic dimensions of companies, their brands, products, and services. To these ends, the bill commissions the Ministry for the Environment to elaborate, within the 12 months following the publication of the law, the regulations that detail the concepts, adjectives, indicators, standards, and certifications regarding companies publicizing sustainability.

Processing status

The bill is currently in its first constitutional stage before the Lower Chamber.

Globally, there has been a recognized need to establish classification systems or “taxonomies” to identify economically sustainable activities with a positive environmental impact. The goal is to create a common language that facilitates comparability across different economic activities, preventing inaccurate or false information about the sustainability features of financial products and services offered in the market.

In Chile, the importance of having a national taxonomy to identify sustainable economic activities was acknowledged in 2021. A “Roadmap for a Taxonomy in Chile” was developed, providing ten recommendations for its creation. Subsequently, in early 2022, a Preparatory Committee for the Development of a Sustainable Economic Activities Classification System was convened. The process of creating this system is currently led by the Ministry of Finance, with support from financial regulators, supervisors, and the Ministry of the Environment.

In August 2023, the Ministry of Finance published the “Structure of taxonomy of environmentally sustainable economic activities for Chile”, which establishes a framework with the essential elements that have been considered for the development of the taxonomy. The proposal distinguishes between “Structural Elements” and “Content Elements”. The former establish the framework upon which the content of the Taxonomy will be developed, while the latter correspond to technical aspects, mainly consisting of the list of Eligible Economic Activities (EEA) and the Technical Selection Criteria, which will determine whether such EEA can be considered environmentally sustainable.

Essential Components of the Taxonomy

Environmental Objectives: Inspired by the EU Taxonomy and other jurisdictions (such as Colombia and Mexico), these objectives include: mitigating climate change, adapting to climate change, sustainable use and protection of water and marine resources, transitioning to a circular economy, pollution prevention and control and conservation and restoration of ecosystems and biodiversity.

Eligible Economic Sectors: The taxonomy defines sectors such as agriculture, mining, manufacturing industries, energy supply, water and waste management, construction, transportation, communications, and real estate. Their evaluation is based on their contribution to environmental objectives.

Eligible Economic Activities: These will be defined based on a comparative analysis with other national or foreign taxonomies or classification systems. Consideration will be given to their current or potential contribution to achieving the environmental objectives and their relevance within  national economic activity.

Minimum Standards: To be considered “environmentally sustainable,” an economic activity must meet minimum standards, including not causing significant harm to environmental objectives, substantial contribution to one or more objectives, and compliance with minimum safeguards.

For more information, visit: www.hacienda.cl

The Financial Market Commission (CMF) has conducted a survey among General Fund Administrators (AGF), revealing that the fund industry is actively advancing in the integration of sustainable investment criteria and environmental, social, and governance (ESG) factors.

In response to this evolution and international development, the CMF plans to introduce a new regulatory framework in the second semester of 2024, focused on ESG information disclosure by the fund industry.

The proposed regulation aims to promote the development and adoption of practices, policies, and procedures that consider sustainability risks and opportunities in the investment processes of the funds.

This initiative will not only promote transparency and accountability in the industry but also align AGFs with international best practices and the expectations of investors committed to sustainability.

For more information: https://www.cmfchile.cl/portal/prensa/615/w3-article-80066.html