Week 48, 2024 - Latin America

“Live your life with flavor” - Celia Cruz (Cuban singer)

MARKETS

November 29, End Of Day

• Argentina S&P MERVAL Index = 2,258,294.88 (YTD = 142.90%)
• Brazil BOVESPA Index = 125,667.83 (YTD = -6.35%)
• Chile S&P IPSA Chile = 3,556.10 (YTD = 2.55%)
• Colombia MSCI COLCAP = 1,397.50 (YTD = 16.93%)
• Mexico IPC Mexico BMV = 49,812.64 (YTD = -13.20%)
• Peru S&P/BVL Peru = 29,705.66 (YTD = 14.43%)

BUSINESS

Latin America's ESG Landscape: Progress and Challenges

Latin America is making progress in ESG (Environmental, Social, Governance) adoption, but significant gaps in strategy, leadership, and transparency highlight the need for accelerated action, in the recent publication surveying Latin American companies.

1. Limited Adoption of ESG Strategies

• Only?45%?of companies in Latin America have formal ESG or sustainability strategies, indicating that sustainability is not yet a strategic priority for many.
• Less than?20%?of organizations have a dedicated sustainability officer, reflecting a lack of leadership focus on ESG integration.
• A lack of capacity, training, and resources was cited as the primary challenge by?22%?of companies, underscoring the need for greater investment in internal expertise.

2. Gaps in Transparency and Reporting

• Fewer than?40%?of companies publicly disclose their ESG practices, highlighting a transparency deficit that could undermine stakeholder trust.
• Over?50%?of companies are unprepared to implement IFRS S1 and S2 sustainability disclosure standards, which are critical for aligning with global reporting expectations.

3. Regional Disparities and Focus Areas

• Chile and Central America show higher levels of ESG integration compared to Brazil and Mexico.
• Brazil faces challenges in managing biodiversity impacts and measuring Scope 3 emissions, while Mexico emphasizes community engagement and impact measurement.
• These regional differences suggest the need for tailored approaches to ESG implementation that address specific local priorities and challenges.

4. Opportunities for Leadership and Growth

• Companies that publicly commit to sustainability goals, such as net-zero targets, report advantages in attracting talent and accessing affordable financing.
• Strategic focus on reducing GHG emissions, improving waste management, and fostering community engagement are key opportunities for companies to demonstrate leadership and drive tangible impact.

5. The Path Forward

• Strengthening non-financial reporting, embedding ESG into corporate strategy, and investing in training and resources will be essential for improving ESG performance across the region.
• By addressing these gaps, Latin America has the potential to contribute to regional and global development goals.

Latin America’s ESG potential remains vast, but realizing it will require a commitment to transparency, strategic leadership, and a focus on actionable priorities. The progress made so far offers a solid foundation for the region to build on.

Fundraising picks of the week

Te Ayudo: Te Ayudo is offering a digital platform that connects users with trusted service providers. Te Ayudo simplifies the process of finding and booking various services via a mobile app. Dive deeper into the case here.

OGA Soluciones: OGA Soluciones is transforming home maintenance in LatAm with a comprehensive platform offering on-demand and subscription-based services, from plumbing and electrical work to gardening and cleaning. Dive deeper into the case here.

Dora: Dora has reached nearly 1000 tenants in just 12 months and achieved a 30% month-over-month revenue growth. The company has expanded to 17 new city markets in Colombia in 2023. Dive deeper into the case here.

Interested in Latin American businesses? Subscribe here to get business updates in the verticals that interest you the most.

Dive deeper into other fundraising firms in LatAm here.

CURRENT AFFAIRS

Uruguay:?Yamandu Orsi, a 57-year-old former history teacher and mayor, won Uruguay’s presidential runoff with 49.8% of the vote, leading the center-left Broad Front coalition. Backed by leftist icon José Mujica and moderate groups, Orsi aims to balance social welfare and economic growth while addressing homelessness, poverty, and rising crime. Known for his pragmatic and dialogue-driven approach, he has pledged no tax hikes and plans to attract investment, citing his success in luring firms like Google as mayor. Orsi represents a generational shift, blending progressive ideals with business-friendly policies.

Mexico:?Bank of America remains optimistic about Mexico’s growth prospects, driven by the nearshoring trend, despite President-elect Donald Trump’s tariff threats. The bank plans to double its revenue and client base in Mexico within five years, capitalizing on North American economic integration. While Trump’s tariff threats have unsettled markets, BofA’s Mexico head Emilio Romano views them as a negotiation tactic unlikely to derail long-term opportunities.

Suriname:?Chinese mining company Chinalco plans to invest $426 million in a bauxite mining project, granting Suriname a 13% stake. Pending parliamentary approval, construction could begin mid-2025, with an annual production target of 6 million tonnes of bauxite, the primary ore for aluminum.

FURTHER READING

Check our recently published insights here. Recent post:

?? What is the market potential of DeepTech in LatinAmerica?

According to the IDB, Deep tech is bringing a new wave of innovation to Latin America. The market potential of deeptech in Latin America is influenced by various factors that shape the ecosystem and determine the growth and adoption of advanced technologies.

?? Read more here.