The main drivers of Environmental, Social, and Governance (ESG) criteria in Argentina are related to the United Nations Global Compact and the Sustainable Development Goals 2030 of the United Nations, through the Argentina Global Compact Network. During the last year there has been certain regulatory developments at the ministerial level for the organization of state institutions to contribute to the Sustainable Development Goals 2030.

Likewise, in the absence of binding hard law, there are ISO standards such as ISO 37001: Anti-Bribery Management System, ISO 37301: Compliance Management System, ISO 37000: Governance of organizations, ISO 14001: Environmental Management System, and ISO 26000: Social Responsibility Guide, among others, as well as certifications such as B-Corp that allow small and large companies to align with ESG criteria.

Although, in general, there is little progress in normative production and regulation around ESG criteria, greater priority is observed for environmental aspects.

In Argentina, regulation concerning ESG issues is still in its early stages and lacks a consolidated regulatory framework. 

Regulations specifically related to ESG can be found in matters connected to the issuance of sustainable financial instruments. For example, the local Securities and Exchange Commission (the CNV) has implemented a legal framework regarding such sustainable issuances, the Guidelines for the Issuance of Social, Green and Sustainable Marketable Securities, which follow internationally recognized standards such as the Green Bond Principles, the Social Bond Principles and the Sustainable Bond Guide developed by the International Capital Market Association (ICMA) and the Climate Bonds Standard. 

There are also general laws that address environmental aspects, such as the General Environmental Law, but no specific legislation comprehensively regulates ESG criteria.

Additionally, in November 2024, renowned chefs promoted a law to establish the Argentine System for Traceability of Fishing and Aquaculture, aiming to ensure food security and combat illegal fishing. This initiative seeks to provide transparency to consumers and promote sustainable practices in the fishing industry.

Recently, some initiatives have emerged that could influence the country’s ESG agenda. For example, the approval of the Regime of Incentives for Large Investments (RIGI, in its Spanish acronym) has raised concerns among environmental organizations due to the lack of environmental considerations in the benefits granted to multinational corporations. This regime focuses on promoting investments in extractive sectors, which could have negative implications for sustainability and governance.

In summary, ESG regulation in Argentina remains limited and fragmented, with a stronger emphasis on environmental issues. However, recent initiatives and discussions indicate a growing awareness and attention to these matters, which could lead to a more robust regulatory framework in the future.

In recent years there have been some notable developments in Argentina’s ESG regulatory landscape.

Environmental legislation

Yolanda’s Law implementation. Enacted in December 2020, Yolanda’s Law (Law 27.592) mandates environmental training for all members of the executive, legislative, and judiciary branches. The training covers topics such as climate change, biodiversity protection, and sustainable development. As of September 2023, over 50,000 officials have completed this training, reflecting a commitment to integrating environmental awareness across government sectors. 

Energy transition

Energy Transition Plan to 2030. The Federal Government has issued the guideline “Energy Transition Plan to 2030.” It aims to address climate change by implementing a structural change in the supply and use of energy systems. It tackles the decarbonization of the energy matrix and seeks to increase the production and distribution of affordable, reliable, and clean energy, promoting energy efficiency and strengthening adaptation to climate change. The generation of electricity by renewable sources is promoted in Argentina. 

Governance

Amendments to Access to Public Information Decree. In September 2024, through Decree No. 780/2024, the government amended Regulatory Decree No. 206/2017, which pertains to the Law on Access to Public Information (Law No. 27.275). The amendments aim to enhance transparency by refining definitions of public information and documents, regulating formal requirements for information requests, and clarifying exceptions and confidentiality terms. 

New regulatory framework by the Public Registry of the City of Buenos Aires. Effective from November 2024, General Resolution No. 15/2024 introduces significant changes to the regulatory framework for local and foreign entities registered with the Public Registry. The resolution simplifies administrative procedures, including provisions related to corporate purpose, capital contributions, and remote meetings, aiming to promote economic development and encourage foreign investments. 

These developments indicate a dynamic shift in Argentina’s ESG regulatory framework, with efforts to enhance environmental education, promote sustainable energy practices, and improve governance transparency. However, certain initiatives, such as RIGI, have raised concerns regarding environmental sustainability and the protection of local communities.

In January 2022, several NGOs, including Greenpeace Argentina, filed a constitutional collective action against the Argentinian National State and the Ministry of Environment and Sustainable Development. The lawsuit challenged the approval of offshore fossil fuel exploration activities by the Norwegian company Equinor, citing concerns over climate change, environmental impact, and procedural deficiencies in public participation and information access. 

Other than that, public records and media records consulted do not show the existence of ESG-related cases of litigation.

Soft non-binding laws

United Nations 2030 Agenda for Sustainable Development, Anti-Corruption Office (OA) Guidelines, CNV Corporate Governance Code, and CNV Guidelines for Sustainable Financial Instruments.

Stakeholders

In general, the main promoters of ESG criteria in this jurisdiction are entities such as Sistema B Argentina, the Argentine-German Chamber of Industry and Commerce, Red de Pacto Global Argentina, as well as universities and the third sector.

There is a greater focus on ESG-related aspects among companies operating in Argentina that have foreign-based headquarters.

National Contact Points (NCPs)

In Argentina, the Argentine National Contact Point (PNCA) has been established to promote responsible business conduct through the Organisation for Economic Co-operation and Development (OECD) Guidelines for multinational companies.

The PNCA operates under the National Directorate of Multilateral Economic Relations of the Argentine Ministry of Foreign Affairs, International Trade, and Worship.

The PNCA serves as a platform for dialogue, conciliation, and non-contentious resolution of issues related to the implementation of the OECD. Guidelines by multinational companies (both national and foreign) operating in the country, as well as Argentine multinational companies operating abroad.

Depending on the type of sector and industry, there will be an obligation for companies to report on sustainability, social and governance aspects in their annual reports or financial statements. Currently, there are no standards that audit compliance with the statements or information disclosed by companies.

Reporting

Companies participating in the markets regulated by the National Securities Commission of Argentina must comply with certain requirements related to sustainability and social responsibility which must be included in their annual reports and corporate governance reports. Likewise, the Central Bank of the Argentine Republic has promoted and introduced sustainability initiatives for the financial sector.

On the other hand, Argentine companies with an international presence generally have a tendency towards self-regulation through the voluntary introduction of social, transparency and sustainability commitments.

Banks

Banks in Argentina face both regulatory requirements and market expectations to adopt more robust ESG policies. The Central Bank of Argentina has promoted sustainability initiatives in recent years, pushing banks to integrate ESG factors into their risk assessment and investment strategies. Banks are motivated to comply with ESG criteria to meet regulatory requirements, attract international investors, and enhance their reputation.

Small and medium-sized enterprises (SMEs)

SMEs in Argentina may not have the same level of ESG integration as larger corporations, due to limited resources and lack of incentives. However, they are increasingly considering these factors, especially those seeking international market access or investment. SMEs see ESG compliance as a way to attract investors, enter more regulated markets, and meet the growing demands of clients and suppliers. However, current regulations and incentives are insufficient to facilitate widespread adoption.

Energy industry 

The energy sector in Argentina is under pressure to reduce its carbon footprint and transition to sustainable energy sources, due to its reliance on fossil fuels and the global push towards renewable energy. Companies in this sector are driven by regulatory pressures, investor expectations, and the need to align with global sustainability trends. Compliance helps them manage risks and potentially access new funding sources focused on green energy.

Real estate industry 

The real estate sector in Argentina is becoming more relevant in terms of ESG factors, with a focus on sustainable building practices and energy efficiency. There is a growing trend towards green buildings and sustainable urban development. Real estate companies are motivated by the potential for cost savings, enhanced property values, and meeting the demands of environmentally conscious consumers. ESG compliance also helps attract investment and align with global sustainability standards.

In Argentina, the trend is toward an increased awareness of ESG factors, their integration as a business opportunity and development. In some organizations, such as multinational companies or large and medium-sized national companies, it is increasingly common for there to be a sustainability area within their corporate structure, as well as internal committees to deal with all ESG matters. To a lesser extent, a person responsible for ESG may be found within the Board of Directors. These committees lead the company’s transversal ESG strategy and its integration into the company’s overall strategy. 

While Argentina lacks comprehensive legislation mandating the submission of ESG reports, the CNV has issued guidelines on responsible investment and the inclusion of environmental and governance information in annual reports. These guidelines provide a relevant framework for aligning with international ESG standards and practices. Currently, the development of ESG criteria in Argentina remains in its early stages, primarily relying on self-regulation and the voluntary adoption of best practices. However, there is a clear trend toward the integration of ESG factors into corporate governance, driven by global standards and third-party risk management requirements imposed by clients and suppliers of Argentine companies.

ESG rating agencies 

The use of ratings from agencies such as Standard & Poor’s, Moody’s or Fitch Ratings is increasingly widespread among investors and companies. These ratings are important for assessing companies’ ESG performance and guiding investment decisions. The presence of international rating agencies indicates growing market awareness and a differentiating element of ESG factors for financial decision-making.

ESG benchmarks 

ESG benchmarks, such as the MSCI World SRI Index, Dow Jones Sustainability Index (DJSI) or the Sustainalytics ESG Index, are used by companies and investors to assess their performance against sustainable investing standards. This is common in regulated companies. In Argentina, one of the most relevant precedents is the Sustainability Index of Argentine Stock Exchanges and Markets (BYMA), established in 2019, which is used to compare compliance with ESG principles.

The use of ESG ratings and benchmarks is part of a broader movement in Argentina towards integrating ESG factors into investment decisions. This trend is supported by the CNV, which has issued non-mandatory guidelines since 2019, offering a framework relevant to socially responsible investment. These guidelines align with international standards and encourage the adoption of ESG practices.

Overall, while there is no mandatory ESG reporting regime in Argentina, the reliance on ESG ratings and benchmarks is indicative of a voluntary shift towards sustainable investment practices within the financial community. This shift is driven by both global influences and local market developments, with a clear trend towards greater ESG integration in investment strategies.

Private companies 

Private companies in Argentina are increasingly integrating ESG issues into their business strategies. This integration is driven by shareholders, investor awareness, pressure from institutional clients, international exposure, customer demand for sustainability, the need to comply with supply chain requirements for multinational corporations and the expectation that better ESG performance will lead to more resilient and potentially better long-term returns. 

Public companies 

Many public companies in Argentina voluntarily align their ESG reports with international standards such as the Global Reporting Initiative (GRI) and the Task Force on Climate-related Financial Disclosures (TCFD). These companies are proactive in developing comprehensive ESG approaches, which go beyond mere regulatory compliance. There is a notable trend towards the adoption of international ESG standards and practices, reflecting a commitment to sustainability and responsible business conduct.

In addition to international influence, this trend has certainly been influenced by guidelines issued by Argentina’s National Securities Commission, which has provided a framework for socially responsible investing. This has encouraged public companies to improve their ESG governance, focusing on areas such as corporate governance, including environmental and social factors, shareholder rights, and reporting and auditing.

Public companies in Argentina are increasingly participating in sustainability initiatives such as the 2030 Agenda for Sustainable Development, and setting ambitious ESG goals, such as achieving carbon neutrality and implementing social impact projects. These efforts are driven by regulatory requirements, investor expectations, corporate reputation, and compliance with best practices of international standards to achieve greater competitiveness.

Government-owned organizations 

ESG considerations are becoming key in government-owned organizations or those in which the government has a stake. The Argentine Government has established an institutional architecture to design and undertake steps for the formulation of a National Sustainable Finance Strategy (ENFS). This strategy aims to mobilize resources to encourage investments that contribute to economic, environmental, and social objectives.

ESG agenda 

The ESG agenda in Argentina is influenced both locally and by international governments/private shareholders. International demands for compliance with certain norms and standards have led to the incorporation of ESG factors, particularly as Argentina is a significant exporter of raw materials. 

On the regulatory and governmental promotion front, there were some significant advancements in ESG until 2023. Many initiatives aimed at enhancing ESG practices were introduced, supporting both regulatory frameworks and voluntary guidelines. However, these efforts have faced setbacks with the change of government. Some projects have been reformulated or halted, leading to a period of uncertainty and slowed progress in ESG regulation and promotion.

Companies in Argentina encounter many challenges to comply with ESG obligations. As there is no specific legal obligation to report ESG aspects (although there are international methodologies to present and disclose ESG actions), the level of presentation is not standardized in the country, and the data obtained is of low quality due to the limited possibility of measuring and monitoring supply chain activities with which companies are related. It is common to see greater focus on environmental and governance aspects and social aspects are opaque.

Public opinion plays a predominant role in the implementation of ESG factors by companies, however, they often lead to greenwashing or greenhushing, practices that cannot be discouraged without regulation.

Initiatives such as those of the Argentina Global Compact Network and Sistema B Argentina promote ESG factors. Likewise, there are NGOs such as the Fundación Vida Silvestre (FVS) and the Fundación Ambiente y Recursos Naturales (FARN) dedicated to conservation, environment and sustainability. The Center for the Implementation of Public Policies for Equity and Growth (CIPPEC) functions as a think tank, with a focus on the research and promotion of public policies that include various topics, including sustainability, social equity and governance, among other existing think tanks in the country. Equally, universities play a relevant role, with the University of Buenos Aires, Universidad Torcuato Di Tella, Universidad de San Andrés, and Universidad del Aconcagua standing out in these aspects.

Regarding private measurement frameworks for ESG aspects, the best known and used by some companies in the country the GRI, the TCFD, Carbon Disclosure Project (CDP), Sustainalytics, MSCI ESG Ratings, and the DJSI.

Argentina has a National Sustainable Finance Strategy, which includes a section, “Common language and taxonomy”, however, for formal purposes, a standard taxonomy has not been developed for the entire country.

In the short term, Argentina faces several challenges related to ESG, especially in terms of data access and quality. The country lacks a comprehensive and consistent ESG reporting framework, which makes it difficult to monitor and compare the ESG performance of companies and sectors. Moreover, the country has experienced political and economic instability, which has affected its ability to comply with international ESG standards and commitments.

However, Argentina also has the opportunity to improve its ESG performance in the short term. The country has a growing awareness of the importance of ESG among its stakeholders, including investors, regulators, consumers, and civil society. The country also has a potential to leverage its natural resources and human capital to foster more sustainable and inclusive development. Therefore, it is essential for Argentina to prioritize ESG in its recovery and growth plans, as it can help the country to transition to a greener and more resilient future.

Over the medium term, we expect Argentina to adopt a more integrated approach to ESG within its financial sector. This means that ESG factors will be incorporated into the financial analysis and decision-making processes of investors, lenders, and issuers. To achieve this, Argentina will need to enhance its data and transparency on ESG issues, by adopting standardized and comparable reporting frameworks and indicators. Argentina will also need to embrace technology and innovation to develop ESG solutions and tools, such as green bonds, green loans, and fintech platforms. 

Another key trend that we anticipate for the medium term is the increased focus on climate change and sustainability as the main drivers of ESG in Argentina. The country will have to align its policies and practices with the global goals and initiatives on climate action, such as the Paris Agreement and the Net Zero Asset Owner Alliance. This will require businesses to set ambitious and measurable targets to reduce their carbon footprint and to implement sustainable practices across their operations and supply chains.

Over the long term, Argentina’s vision of achieving net zero emissions by 2050 implies a radical transformation of its economy and society. The country will have to address its dependence on fossil fuels and diversify its energy sources and industries. The country will also have to make progress in other areas related to ESG, such as reducing car use, promoting public transportation, protecting biodiversity, and preventing deforestation.

The role of the private sector in supporting the net zero transition will be crucial, as it will have to provide reliable and consistent data on its greenhouse gas emissions and its mitigation and adaptation strategies. The role of the public sector will also be vital, as it will have to enforce and monitor the compliance and performance of the ESG regulations and policies. The collaboration and coordination among all the stakeholders, including the government, the private sector, the civil society, and the international community, will be key to ensure a successful and sustainable future for ESG in Argentina.