In a pattern similar to that seen in many jurisdictions this year, Chile experienced less regulatory activity related to ESG in the final months of 2024 and throughout 2025 than in the previous year. The developments that did occur were concentrated in the following areas:

• capital markets disclosure obligations moving towards alignment with International Sustainability Standards Board (ISSB) standards;
• the promulgation of a comprehensive data protection statute, scheduled to enter into force in 2026;
• the roll-out of the cybersecurity law and the establishment of a national agency; and
• environmental reforms advancing through the implementation of a green taxonomy, stricter extended producer responsibility (REP) enforcement and a still-pending overhaul of the Environmental Impact Assessment System (Sistema de Evaluación de Impacto Ambiental; SEIA).

In parallel, the “Economic Crimes Law” (Law No 21,595) continued to serve as a major driver for the adoption of crime prevention models and due diligence systems that incorporate environmental and corporate governance elements. Finally, in August 2025, legislation was enacted to gradually ensure gender balance on the boards of publicly traded and special corporations.

Environmental

The bill to modernise the SEIA slowed its progress in 2025 after moving to the Senate Finance Committee. The reform remains key to modernising environmental assessment procedures, aiming to increase investor certainty, shorten evaluation times and ensure comprehensive sustainability review – including climate considerations – under technical rather than political leadership.

The Biodiversity and Protected Areas Service (Servicio de Biodiversidad y Áreas Protegidas; SBAP), created by Law No 21,600 (2023), began operating in 2025 following approval of its internal regulations. This new agency initiated a review of protected terrestrial and marine areas, currently under public consultation, to strengthen management and conservation.

The Emissions Compensation System for the Green Tax (Sistema de Compensación de Emisiones del Impuesto Verde; SCE) became fully operational, compensating for 4.4 Mt of CO₂ in 2024 and launching its second cycle in 2025. A new regulation now governs the use of emission reduction and absorption certificates, enabling the activation of this carbon offset market.

Regarding circular economy, 2025 marked stricter enforcement of the “Extended Producer Responsibility Law” (Law No 20,920), with the Superintendency of the Environment (Superintendencia del Medio Ambiente; SMA) implementing a digital reporting platform and initiating sanctions for non-compliance. Producers must now ensure traceability, verified management systems and effective internal controls.

Finally, the Ministry of Finance’s Sustainable Finance Office launched Chile’s Taxonomy of Environmentally Sustainable Economic Activities (T-MAS) in May 2025. Although non-binding, it serves as a key policy tool, defining sustainable economic activities and guiding investment, financing and environmental decision-making.

Social

In 2025, progress focused on implementing laws enacted in 2024 rather than passing new legislation. The “40-Hour Workweek Law” (Law No 21,561) advanced towards its goal of reducing the standard workweek from 45 to 40 hours by 2028 to improve work-life balance.

Law No 21,643 (best known as the “Karin Law”) had an even stronger impact, reinforcing protections against workplace harassment and requiring companies to adopt protocols for psychosocial and mental health risks. Its full enforcement led to a surge in worker claims and court delays, later eased through administrative measures to maintain efficiency.

In April 2025, the Senate began reviewing the Bill on Corporate Due Diligence in Human Rights, the Environment, and Climate Change, currently under consideration by the Committee on Human Rights, Nationality, and Citizenship.

Governance

In December 2024, the Commission for the Financial Market (Comisión para el Mercado Financiero; CMF) revised General Standard No 461 (“NCG 461”) by means of General Standard No 519 (“NCG 519”), mandating that reporting entities adopt the ISSB S1 and S2 sustainability disclosure International Financial Reporting Standards (IFRS) for their 2026 annual report (to be released in 2027). Complementing this, NCG 519 gradually introduces obligations for special issuers and allows simplified reporting for smaller listed companies.

That same month, Chile enacted Law No 21,719, which creates an independent Data Protection Agency and sets out rigorous requirements for managing third-party information. Although the law takes effect in late 2026, many companies began adapting in 2025 to align their data-handling practices with the forthcoming framework.

Following the Cybersecurity Framework Law of 2024 (Law No 21,663), the National Cybersecurity Agency (Agencia Nacional de Ciberseguridad; ANCI) became operational in early 2025. It issued an implementation plan consistent with the 2023–28 National Cybersecurity Policy, anticipating that providers of critical services will face new sector-specific regulations, compliance audits and enforcement actions in the years ahead.

The Artificial Intelligence Regulation Bill also advanced during 2025, as the Chamber of Deputies approved a second report and sent it to the Senate. While still under debate, its evolution signals imminent requirements concerning transparency, human oversight and the governance of high-risk AI systems.

Lastly, the “More Women on Boards Law” (Law No 21,757), enacted in August 2025, introduces progressive gender-balance rules for listed and special corporations. It sets a gradual path towards a 60% ceiling for the majority gender, overseen by the CMF, compelling companies to adjust board succession plans, nomination procedures and disclosure practices.

Over the past 12 months, the modernisation of the SEIA has progressed through administrative regulations, while the statutory reform has stalled in Congress. The bill to modernise the SEIA and its procedures advanced during 2024 – receiving approval from the Senate Environment Committee and general approval from the Senate – but in 2025, the debate shifted to the Senate Finance Committee, slowing its progress. This reform is regarded as particularly significant because, although a permitting law was enacted in 2025 to streamline procedures for sectoral permits that are complementary or additional to environmental authorisation, that legislation does not address – as the SEIA reform must – the broader need to modernise the environmental assessment process as a whole. The reform seeks to provide greater legal certainty to investors and shorten evaluation timelines, while maintaining and strengthening a comprehensive assessment that encompasses all aspects of sustainability, including climate change. In addition, the bill proposes to centralise decision-making in specialised technical bodies, ensuring that evaluations are led by experts rather than politically appointed entities such as the current Environmental Evaluation Commission and the Committee of Ministers.

Meanwhile, Chile’s Council of Ministers for Sustainability, chaired by the Minister of the Environment, conducted a public consultation and, in 2025, approved the implementation of Phase II of the proposed reform to the SEIA Regulations. This reform aims to modernise, through regulatory changes, the thresholds for projects required to enter the system, as well as the typologies of projects and the criteria determining whether they must undergo environmental evaluation – redirecting lower-impact projects to the corresponding sectoral permits.

Additionally, in pursuit of reactivating investment while advancing sustainability commitments, the Framework Law on Sectoral Authorizations (Law No 21,770; Ley Marco de Autorizaciones Sectoriales, or LMAS) – also referred to as the Sectoral Permitting Law – was approved. Promoted by the Ministry of Economy, this law seeks to co-ordinate and modernise over 300 administrative and technical permits issued by various public agencies, which must be processed independently from the environmental impact assessment conducted by the Environmental Assessment Service (Servicio de Evaluación Ambiental; SEA).

The SBAP, created by Law No 21,600 (2023), began full operations in 2025 following the issuance of Supreme Decree No 27, which approved its internal regulations in December 2024. Over the past year, and with the goal of consolidating the management of protected terrestrial and marine areas, a review of the existing list of such areas was initiated. This proposal is currently under public consultation.

The SCE has reached operational maturity: the Ministry of the Environment reported that 4.4 Mt of CO₂ was compensated in 2024 and launched a second cycle in 2025. That same year, the Regulation of the Greenhouse Gas and Short-Lived Climate Pollutants Emissions Compensation System was approved. This regulation governs the use of emission-reduction or absorption certificates issued by projects that allow compensation for emissions from sources subject to the green tax, thereby activating this emerging market.

Regarding the circular economy, 2025 marked a turning point in the enforcement of the Extended Producer Responsibility Law for packaging and other products. In January 2025, the SMA launched the extended producer responsibility reporting platform and initiated sanctioning proceedings for non-compliance. Monthly digital reporting and traceability have become operational realities, requiring producers to verify their management systems, guarantees and internal controls.

Complementing these developments, the Ministry of Finance’s Sustainable Finance Office officially launched Chile’s T-MAS in May 2025. Although not a binding regulation, the taxonomy functions as a public policy instrument that provides a clear, technical and coherent definition of which economic activities qualify as sustainable, thereby guiding investment, financing and environmental management decisions.

Finally, regarding the Framework Law on Climate Change, in 2025 the National Adaptation Plan for Climate Change and the Nationally Determined Contribution (NDC) were approved, establishing principles of public-private collaboration and a series of sectoral plans in areas such as energy, infrastructure, water resources and coastal zones. These initiatives aim to decarbonise the economy and enhance the country’s climate resilience.

Courts and regulators demonstrated firmer, evidence-based scrutiny. In the Dominga case, a new ministerial rejection issued in January 2025 was annulled by the First Environmental Court in February; on 16 September 2025, the Supreme Court declared cassation appeals inadmissible, upheld the 2021 Environmental Qualification Resolution (Resolución de Calificación Ambiental; RCA) and ordered a new ministerial decision. The Supreme Court also confirmed a fine for noise-emission violations and reinstated urban wetland protections, showing deference to technical evidence and the precautionary principle. The SMA intensified mining enforcement actions, including a definitive closure order for the Alcaparrosa mine (related to the sinkhole case) and new charges against El Soldado.

Regarding criminal sanctions (final judgments) under the Economic Crimes Law in its “Environmental Offences” category, no convictions had yet been issued by 2025, as most cases remain under investigation.

In social matters, rather than major new legislation, what stands out in 2025 is the progress in implementing laws enacted in 2024, notably the 40-Hour Workweek Law, which aims to gradually reduce the standard workweek from 45 to 40 hours by 2028, promoting a better work-life balance.

The implementation of the Karin Law, named after a victim of workplace harassment, had an even greater impact in 2025. This legislation strengthens protections against workplace harassment and violence, requiring companies to implement protocols to address psychosocial risks and mental health issues. The law came fully into force and was widely invoked by workers, even causing delays in court proceedings due to case overload – an issue that has been mitigated through administrative measures designed to ensure the law’s effectiveness.

In April 2025, a bill was introduced in the Senate entitled “Bill Establishing and Regulating Corporate Due Diligence in Respect of Human Rights, the Environment, and Climate Change”. It is currently under its first review by the Senate Committee on Human Rights, Nationality, and Citizenship.

The most significant governance-related development has been the full adoption of the “Economic Crimes Law” (Law No 21,595) by Chilean companies. This law obliges companies to update their crime prevention models and compliance matrices to include ESG-related risks, and establishes severe penalties for non-compliance applicable to both legal entities and individuals.

In December 2024, the CMF amended NCG 461, requiring reporting entities to adopt the ISSB S1/S2 climate and sustainability IFRS for their 2026 annual report (to be published in 2027). NCG 519 also phases in obligations for special issuers and provides relief thresholds and simplified reporting requirements for special and relatively smaller listed corporations.

In December 2024, Chile enacted Law No 21,719, establishing an autonomous Data Protection Agency and imposing strict obligations regarding the handling of third-party information. Although the law will enter into force at the end of 2026, its requirements have already prompted companies to begin adaptation processes during 2025 to ensure compliance with the forthcoming framework.

Pursuant to the 2024 Cybersecurity Framework Law, the ANCI began operations in early 2025, issuing an action plan aligned with the 2023–2028 National Cybersecurity Policy. Providers of critical services should expect sector-specific rules, audits and sanctions to expand in the coming years.

The Artificial Intelligence Regulation Bill, introduced by the Executive, advanced in Congress during 2025 when the Chamber of Deputies approved a second report and sent it to the Senate. Although not yet law, its trajectory suggests forthcoming obligations related to transparency, human oversight, and the governance of high-risk systems.

Finally, in August 2025, Chile enacted the More Women on Boards Law, introducing progressive gender-balance quotas for listed and “special” corporations. The law establishes a gradual path towards a 60% cap for the majority gender, under the supervision of the CMF. Issuers are expected to adjust board renewal schedules, nomination policies and disclosure practices accordingly.

These reforms reflect Chile’s commitment to fostering transparency and promoting responsible governance practices aligned with international standards.

Chile’s regulatory and supervisory authorities play a crucial role in the ESG transition by ensuring the effective implementation and enforcement of sustainability regulations. The CMF, the SEA and the SMA are known for their rigorous oversight, requiring companies to fully comply with governance and environmental standards.

Similarly, the Labor Directorate (Dirección del Trabajo; DT) and the Superintendence of Social Security (Superintendencia de Seguridad Social; SUSESO) oversee compliance with social regulations, ensuring that labour laws like the Karin Law and the 40-Hour Workweek Law are strictly enforced. Their role in safeguarding employee rights and workplace conditions is central to upholding Chile’s social standards, making these authorities essential to the country’s broader ESG strategy.

Each of these bodies is characterised by its rigorous oversight and staffed by highly specialised professionals, making them difficult to bypass and ensuring that compliance is enforced with integrity and seriousness. Companies must approach these regulators with due diligence, as their strong reputation for upholding legal and ethical standards means that attempts to circumvent regulations are unlikely to succeed. Their role is pivotal in driving Chile’s ESG agenda forward, promoting transparency, protecting labour rights, and ensuring environmental sustainability. As such, these entities are critical to the effective functioning and credibility of Chile’s ESG regulatory framework.

In Chile, the sectors most impacted by ESG regulations in the coming years will be mining, particularly lithium extraction, and the expanding green hydrogen industry, due to their environmental footprint and strategic role in the economy. These industries face increased scrutiny on issues such as water usage, emissions and community impacts, especially under the Climate Change Framework Law. Additionally, these industries operate in global markets and are increasingly pressured by stakeholders to adhere to international ESG standards and assessments, such as the Global Reporting Initiative (GRI), IFRS, Initiative for Responsible Mining Assurance (IRMA), Dow Jones Sustainability Index (DJSI) and International Council on Mining and Metals (ICMM), to maintain market access and obtain financing.

Given their significant contributions to Chile’s GDP, mining and energy companies must meet stricter ESG criteria enforced by international financiers who require compliance with green finance standards. This creates a performative effect, where the need to meet these standards materially influences how these industries operate. At the same time, financial institutions in Chile will also be subject to growing ESG obligations as the government tightens regulations to combat greenwashing and establish more robust sustainability criteria, ensuring transparency and accountability in investments.

Chile's deep integration into the global economy makes it particularly vulnerable to geopolitical shifts and international policy changes, which is impacting the implementation of ESG regulations. While Chile's government actively supports ESG standards, progress has been slow, likely due to global economic challenges and changes in the United States’ stance towards sustainable development and climate goals. Despite the slow legislative progress, ESG considerations are well-integrated into key sectors, particularly mining and energy, which must adopt international standards imposed by clients and global banks.

However, as ESG practices become more embedded, the increasing complexity of obtaining the necessary permits has been a growing concern, particularly among foreign investors. Chile, once seen as having a comparative advantage due to its efficient regulatory processes, is now facing criticism for bureaucratic hurdles that are slowing down project approvals. This raises concerns that the added requirements might lead to a more burdensome regulatory framework, potentially leading to an adverse reaction from investors and threatening the viability of future projects, thus impacting the country’s economic competitiveness.

In 2024, Chilean corporate governance shifted to execution. The CMF’s NCG 519 reshaped the integrated annual report by adding a sustainability section with Sustainability Accounting Standards Board (SASB) metrics and disclosure of any independent assurance, and it adopts the ISSB S1/S2 IFRS for reports on FY 2026. Boards must also prepare for Law No 21,757, which caps the majority gender on boards through a staged schedule. Governance standards for exchanges under NCG 508 continued to take hold, strengthening risk oversight and internal controls.

Enforcement tightened as the CMF sanctioned dozens of issuers for late continuous reporting in January 2025 and, in September, fined a broker‑dealer executive approximately USD210,000 for providing false information to the market; the Supreme Court likewise upheld heavy sanctions for fictitious trades and misleading disclosures. The message to boards is evidence‑ready oversight of reporting, controls and market communications.

Digital governance remains a board priority. Chile’s new “Data Protection Law” (Law No 21,719) created an autonomous agency, with most duties starting in December 2026, and the Cybersecurity Framework Law launched the ANCI in 2025 with a sectoral rule-making agenda. Meanwhile, the risk‑based AI bill advanced to the Senate, pointing to future duties around transparency and human oversight.

In Chile, listed companies are currently the main entities required to report on ESG matters, reflecting the government’s strategy to implement sustainability disclosures gradually. At present, the obligation to report ESG data applies to large companies regulated by the CMF under NCG 461 and NCG 519. These companies must implement the ISSB S1 and S2 IFRS in their annual report corresponding to FY 2026, which will be filed in 2027.

NCG 519 introduces an exemption or simplified regime for companies whose total consolidated assets, averaged over the past two years, do not exceed approximately USD40 million. These entities may opt to submit a simplified annual report instead of the full report required under NCG 461.

While listed companies are subject to strict ESG reporting standards, unlisted entities currently enjoy greater flexibility. However, market pressure and growing regulatory expectations are likely to push unlisted companies towards adopting ESG practices, either voluntarily through best practices or through future regulatory requirements adapted to their size and capabilities.

The roles and responsibilities of directors and officers in Chile have significantly evolved with the implementation of the Economic Crimes Law, which now holds them criminally liable for failing to establish effective crime prevention models. For the first time, directors and senior management are legally required to actively consider non-financial risks, such as environmental, labour, social security and corporate governance risks, as part of their fiduciary duties. This has led to a shift from focusing solely on financial oversight to engaging in the development and integration of ESG strategies.

Directors and senior management must implement strong internal controls, ensuring that ESG matters – such as environmental impact, social concerns and governance – are incorporated into the company’s decision-making processes. Failure to do so can result in severe legal liabilities. Additionally, regulations issued by the CMF, such as NGC Nos 461 and 519, further mandate that boards oversee the transparency and accuracy of ESG disclosures. Given the interaction between the ESG reporting obligations and the Economic Crimes Law, there is also the potential for criminal liability if false or misleading ESG information is approved or reported by directors.

This growing responsibility emphasises the need for directors to be well-versed in sustainability issues and to ensure that ESG risks are integrated into the company's reporting and governance practices.

Chile does not have a specific legal framework exclusively designed for social enterprises, but businesses can incorporate social objectives within traditional structures like stock corporations (sociedades anónimas; SA) and limited liability companies (sociedades de responsabilidad limitada; SRL). Co-operatives are also an interesting option, as they prioritise social welfare and equitable participation over profit maximisation. Co-operatives are structured to ensure that members have a say in decision-making and benefit directly from the organisation’s activities, making them ideal for businesses focused on shared value and community impact.

Additionally, many socially oriented businesses in Chile opt for B corporation (Empresas B) certification, which formally recognises companies that meet high social and environmental standards. This certification provides a way for companies to distinguish themselves as socially responsible enterprises and align with global best practices in sustainability.

Moreover, a growing trend among high net worth companies is the creation of foundations aimed at benefitting local stakeholders, particularly communities where the company or its projects operate. These foundations focus on improving local livelihoods, enhancing social development and fostering positive relationships between companies and the communities impacted by their operations.

In Chile, current ESG obligations are not yet strong enough to drastically influence shareholder behaviour or decision-making. However, the implementation of NCG Nos 461 and 519 has started improving transparency by requiring publicly listed companies to disclose their ESG practices. While these disclosures are still evolving, they offer shareholders more insight into a company’s sustainability and risk management efforts.

Additionally, under the Law on Economic Crimes, the fiduciary duties of directors and managers have been elevated, placing greater pressure on companies to comply with ESG standards to avoid risks that may threaten long-term business sustainability. Shareholders are becoming more informed through increased access to ESG data and are showing a growing interest in encouraging better practices within the companies they invest in. Thus, shareholder expectations and pressure are increasingly shaping corporate governance for the adoption of ESG strategies. This dynamic positions shareholders as key influencers, pushing companies to voluntarily adopt higher standards, aligning with global trends and safeguarding business sustainability.

Although 2025 witnessed a global recalibration of expectations regarding green finance – mainly due to shifts in United States policy in this area – the fact remains that sustainability and climate trends continue to be structurally embedded in markets, including the Chilean one.

A major development in this context during 2025 was the launch by the Ministry of Finance of T-MAS, aimed at steering capital towards sustainable activities and curbing greenwashing.

This classification system seeks to determine which economic activities may be considered “environmentally sustainable” in terms of making a substantial contribution to the country’s environmental objectives, within a technical framework of verification and governance that provides confidence to both the financial and productive sectors to invest in projects and ventures in these areas.

The Ministry of Finance also updated Chile’s sustainability-linked bond (SLB) framework to include a biodiversity key performance indicator (KPI), expanding its original climate and gender targets to incorporate measurable conservation goals such as the percentage of national territory under effective protection. The country also maintained its robust ESG bond programme, which has positioned Chile as a regional leader in sovereign sustainable finance.

Finally, CMF NCG 519, by mandating the adoption of IFRS standards for annual reports starting in 2026–27, will also greatly encourage investment. This is because, particularly for foreign investors, it will provide objective parameters for comparison, and for conducting due diligence on Chilean publicly traded companies in matters related to ESG risk assessment.

In Chile, the General Banking Law does not yet explicitly codify ESG requirements, but financial institutions are increasingly incorporating ESG principles into their operations. Commercial banks are demanding non-financial disclosures from companies and promoting investments aligned with sustainable governance standards, guided by frameworks such as the International Finance Corporation (IFC) Performance Standards and the Equator Principles.

The CMF and the Central Bank of Chile are actively promoting ESG integration through complementary guidelines. In 2021, the CMF introduced a circular recommending the adoption of the Task Force on Climate-related Financial Disclosures (TCFD) framework, urging banks to disclose climate-related financial risks and integrate environmental and social factors into their risk management processes. This aligns Chile with international standards for ESG reporting and transparency.

Moreover, the Central Bank of Chile has incorporated climate-related risks into its financial stability assessments under the Green Finance Agenda (Agenda de Finanzas Verdes) initiative. This encourages the banking sector to consider environmental risks when evaluating long-term investments and asset portfolios. These developments, while not formal amendments to the General Banking Law, mark a broader shift towards embedding ESG criteria in Chile’s financial system.

Additionally, Chile newly introduced T-MAS, which provides a standardised classification for sustainable activities, offers clearer definitions for sustainable investments and helps align financial products with ESG goals, enhancing transparency and accountability across industries.

Access to green financing in Chile has expanded significantly through various mechanisms introduced by the government and financial institutions. The Chilean government has actively promoted green bonds, and in October 2025, Banco Estado, a state-owned company, carried out the first issuance of blue bonds in international markets, allocating the proceeds to energy-related projects. Another state-owned company, Metro de Santiago, issued green bonds in September 2025 for USD183 million in Switzerland, with the aim of financing or refinancing sustainable projects in accordance with its Green Financing Framework.

Meanwhile, the private company Forestal Arauco successfully completed the largest bond issuance in Chile’s history, valued at the equivalent of USD800 million. These bonds have a hybrid nature, incorporating sustainability-linked components.

With regard to the domestic framework for bond issuance, the Ministry of Finance updated the SLB framework, incorporating a new KPI related to biodiversity protection.

Additionally, the Chilean Economic Development Agency (Corporación de Fomento de la Producción; CORFO) has developed a refinancing programme aimed at supporting projects focused on renewable energy, energy efficiency and circular economy initiatives. Through financial intermediaries, CORFO offers loans of up to 15 years and finances up to 70% of the total investment, with a ceiling of USD20 million per project.

Local banks have joined these efforts by promoting green and sustainable loans for projects that prioritise environmental benefits. The Ministry of Energy has also launched a centralised website that consolidates information on public funding sources, making it easier for companies to explore available financing options.

While these initiatives have improved accessibility, smaller companies and projects still face challenges in meeting strict eligibility requirements and understanding ESG frameworks. The recently published T-MAS and the progressive adoption of international standards for ESG reporting – guided by the CMF’s initiatives – are expected to further promote the growth and availability of sustainable financing in Chile.

In Chile, the mining sector is the primary industry facing potential risks of becoming a stranded asset. However, the mining sector has been proactive in integrating ESG practices to align with global sustainability trends. Key mining companies are investing in renewable energy, water efficiency and community engagement initiatives, demonstrating a strong commitment to adapt to evolving ESG requirements and comply with Chile’s goal of achieving of carbon neutrality by 2050 and shifting its energy matrix towards renewable sources.

Chile’s 2030 National Decarbonization Plan has already led to the closure of several coal-fired power plants, but these closures have been managed through transition plans that aim to minimise economic and social impacts. The mining industry, a major consumer of energy, is actively transitioning to renewable energy sources, thereby reducing its carbon footprint and aligning with national decarbonisation goals.

Rather than excluding traditional borrowers, financial institutions are increasingly supporting mining companies that adopt sustainable practices. This shift is reflected in the availability of green loans and SLBs tailored specifically for mining operations that meet environmental and social standards.

While the risk of stranded assets remains, particularly for non-compliant operations, the extractive resources and non-renewable energy industries are not being left behind. Instead, the focus is on transforming traditional sectors to meet ESG criteria and maintain their competitiveness in a low-carbon economy. This approach ensures that traditional industries can adapt to new requirements without losing access to critical financing.

Chile’s sustainable finance landscape faces several challenges as it adapts to growing ESG expectations. A primary concern is greenwashing, whereby companies exaggerate their environmental credentials to attract investment. To address this, a proposed bill against greenwashing seeks to regulate sustainability claims, penalise misleading statements and establish clear guidelines for companies to follow. Once enacted, this bill will help ensure transparency and credibility in ESG representations, thereby fostering greater trust in sustainable finance.

An emerging concern is the rise of “anti-ESG” sentiment among sectors that regard stricter regulations as barriers to competitiveness. In this respect, however, there is both political and social consensus that, in Chile, it is indeed necessary to reduce timeframes and clarify the criteria for environmental assessments and other sectoral permits. The recent LMAS represents an initial step in this direction, without implying any reduction in the quality of the assessments. Nonetheless, there remains a genuine concern regarding the excessively strict interpretation of environmental regulations by the administrative authorities or the courts, which could hinder an effective energy transition by preventing the adoption of new clean energy sources due to minor localised impacts. This, in turn, could lead to the continued operation of more polluting industries with substantially greater contributions to the greenhouse effect and global warming. Decisions of this nature may also seriously discourage the financing of new clean energy projects that require lengthy environmental authorisations.

Additionally, financial institutions are facing greater compliance burdens as ESG standards become increasingly complex, requiring enhanced monitoring and reporting systems. This could place particular strain on smaller institutions with limited resources. The establishment of a domestic taxonomy, however, constitutes an important step towards providing greater certainty for investment.

In Chile, ESG-related soft law is increasingly being integrated into binding regulations, reflecting a shift towards stricter compliance. A key development is the proposed Human Rights Due Diligence law, which aims to enforce corporate responsibility regarding human rights and environmental protection. The initiative is aligned with international standards, such as the EU’s Corporate Sustainability Due Diligence Directive (CSDDD), and would require companies to identify, prevent and mitigate any negative impacts across their value chains. If passed, this law would mark a significant transition from voluntary ESG guidelines to mandatory due diligence obligations.

Moreover, NCG Nos 461 and 519, issued by the CMF, introduced mandatory ESG disclosures for publicly listed companies. The regulation requires these companies to include information on their ESG policies in their annual reports, establishing a clear reporting standard. While these standards do not yet impose penalties for non-compliance, they have laid the groundwork for more robust reporting obligations.

Additionally, the Economic Crimes Law, enacted in 2023, expanded corporate liability to include offences related to environmental damage and governance misconduct. This law increases accountability for companies, making it part of a broader regulatory framework that supports ESG enforcement.

Overall, while many ESG regulations in Chile are still based on best practices, the country is moving towards hard law frameworks that aim to provide clearer guidelines and stricter compliance measures for companies.

In Chile, there is an increasing focus on human rights due diligence in corporate supply chains, driven by the global trend of strengthening corporate responsibility. While there is no comprehensive due diligence law covering all ESG areas, the Chilean government is considering a regulation focused specifically on human rights due diligence. This would require companies to assess, prevent and mitigate human rights risks throughout their supply chains, aligning with international standards like the United Nations Guiding Principles on Business and Human Rights.

The proposed regulation would place responsibilities on companies to actively identify potential human rights violations within their operations and business relationships, setting a precedent for broader vertical responsibilities. Although it has not yet been formally introduced as a bill, discussions around this regulation have raised awareness among companies regarding the need to implement robust risk management systems that extend to third-party contractors and suppliers. This growing attention to supply chain due diligence is also closely tied to international commercial pressure, especially concerning Chilean exports.

Other regulations, such as the Economic Crimes Law, have expanded corporate liability in areas like governance and environmental offences, and made companies responsible for the commission of economic crimes in those areas even if committed by commercial partners such as suppliers and service providers. Thus, the implementation of the company’s crime prevention model requires that its application extend to its supply chain.

The implementation of the Economic Crimes Law has significantly impacted how companies in Chile manage their supplier relationships and contract partners. The law, which expanded the scope of criminal liability for companies, requires businesses to integrate a comprehensive risk management approach that includes third-party suppliers into their compliance structures. This has forced companies to be more diligent when selecting partners, and to incorporate them into their crime prevention models as relevant stakeholders.

Under Law No 21,595, companies must consider suppliers and contractors in their risk matrix and include them in due diligence processes to identify any potential risks related to, for example, environmental, governance or corruption offences. This approach aims to ensure that companies are not only compliant with internal policies but are also protected from being held liable for illegal activities carried out by their business partners.

As a result, companies are now more cautious when contracting suppliers, often requiring them to meet specific compliance standards and sign agreements that align with the company’s crime prevention policies. This includes implementing enhanced know your supplier (KYS) procedures, ongoing monitoring and, in some cases, terminating relationships if a supplier fails to meet the required standards.

This regulatory shift is not only improving compliance among primary companies but is also enhancing practices down the supply chain. Smaller suppliers are being pushed to elevate their standards, adopt formal risk management procedures and invest in training programmes to understand and meet these new requirements. By doing so, suppliers strengthen their own compliance frameworks, making them more attractive business partners and minimising the risk of being excluded from supply chains.

Ultimately, this approach is fostering a more responsible and transparent business environment throughout Chile’s supply chains, ensuring that suppliers play a proactive role in mitigating legal and reputational risks. Increasingly, the reputational risk of incorporating suppliers with a negative ESG track record has led large companies to adopt stricter selection criteria when choosing their business partners, encouraging better practices and alignment with sustainability goals.

In Chile, the integration of non-financial risks – such as ESG factors – has become a critical component of due diligence processes in mergers and acquisitions (M&A). Traditionally, due diligence focused primarily on financial, operational, and legal risks; however, recent trends reveal a growing emphasis on assessing a target company’s ESG performance in order to identify potential risks and liabilities that could affect the long-term value of an acquisition.

This shift has been driven by several factors, including regulatory developments, investor expectations and the increasing importance of sustainability within corporate strategies. For instance, evaluating a target company’s environmental impact, labour practices, human rights policies and governance structures has now become standard practice. Failure to address these non-financial risks may result in significant reputational damage, restricted access to project financing or even legal liabilities following the acquisition.

Consequently, M&A transactions now often incorporate specific ESG due diligence modules alongside traditional parameters. This entails assessing the target’s adherence to ESG standards, identifying areas of non-compliance and estimating potential future costs associated with aligning the company to best practices. Integrating ESG considerations into due diligence not only enables purchasers to understand the full scope of risks but also ensures that the acquisition aligns with their broader sustainability objectives. In the case of publicly listed companies, the requirement under CNG 519 to adopt the S1 and S2 sustainability disclosure IFRS from 2027 onwards will significantly facilitate a more objective and comparable analysis of ESG-related risks.

This comprehensive approach strengthens decision-making, reduces the likelihood of inheriting hidden liabilities and supports sustainable growth strategies – making ESG an indispensable element of the M&A due diligence process.

In Chile, ESG disclosure requirements for publicly listed joint-stock companies are governed by NCG Nos 461 and 519, issued by the CMF. This regulation mandates that listed companies report on ESG practices – including climate-related risks, human rights and governance structures – in their annual reports.

NCG 519 requires securities issuers to disclose more structured information aligned with international standards set by the ISSB, such as IFRS S1 and S2. The goal is to increase transparency and ensure that non-financial risks are integrated into overall corporate strategies.

Companies with average consolidated assets below USD40 million may choose to be exempted from the full integrated reporting requirement and instead submit a simplified version.

In Chile, there are currently no mandatory requirements for companies to publish specific transition plans or commit to ESG targets, except for those established under NCG Nos 461 and 519, which apply to large publicly listed companies. These regulations require issuers of publicly traded securities to include in their annual reports information on sustainability strategies, ESG policies and specific objectives, together with details of their progress and governance mechanisms. However, they do not mandate formal transition plans or binding ESG targets. Furthermore, there is no specific legal standard or statute addressing greenwashing, which leaves a regulatory gap concerning the accuracy and verification of companies’ sustainability claims.

With regard to climate change, the Climate Change Framework Law, enacted in 2022, does not impose direct, company-specific obligations to adopt or publish climate or transition commitments. Nevertheless, the regulatory framework derived from this law is evolving: the sectoral regulations currently being developed under its authority are expected to introduce concrete obligations for specific industries. These are likely to include binding requirements for emission reductions and adaptation plans and measures, as well as the issuance of new emission standards – such as those for greenhouse gases and short-lived climate pollutants – with which private entities will be required to comply.

Additionally, companies are increasingly adopting voluntary commitments in line with international standards such as the TCFD and SASB frameworks. Many firms, particularly those operating in sectors with a high environmental impact, such as mining and energy, are implementing emission reduction targets, climate risk assessments and sustainability goals to align with global best practices and maintain their competitiveness in the international market.

Overall, while transition plans and binding ESG targets are not yet universal, Chile is progressing towards a more structured framework. The absence of clear regulations on greenwashing remains a notable gap, although future regulatory developments are expected to address this issue and strengthen accountability.

In Chile, there are currently no specific regulations governing the use of ESG labels or sustainability claims. However, companies must comply with the general Consumer Protection Law (Law No 19,496) and advertising standards to avoid making false or misleading statements about the sustainability of their products or services. This implies that any sustainability-related claims must be accurate, verifiable and not misleading, ensuring that consumers are not deceived by vague or exaggerated ESG statements.

Chile is working on a proposed bill against greenwashing, which aims to regulate and standardise how companies and financial institutions present their environmental and social credentials. This legislation, once enacted, will establish clear criteria for making sustainability claims and introduce penalties for companies that engage in greenwashing. The bill seeks to ensure that companies back up their claims with reliable data and certifications, ultimately enhancing the credibility of ESG labels and fostering transparency in the market.

In the absence of specific ESG label regulations, many Chilean companies voluntarily adopt international standards and certifications, such as the GRI, B corporation certification and International Organization for Standardization (ISO) 14001 for environmental management. These standards serve as benchmarks for validating sustainability claims and ensuring consistency in reporting.

In Chile, environmental compliance is overseen by the SMA, which ensures that companies adhere to environmental regulations. The SMA monitors compliance with environmental standards and has the authority to enforce penalties for non-compliance.

ESG disclosures and sustainability marketing claims are primarily monitored by the CMF, which oversees compliance for large publicly listed companies. NCG Nos 461 and 519, issued by the CMF, mandate that listed entities include ESG information in their annual reports, such as environmental policies, gender equality and corporate governance structures, among other things, in alignment with the ISSB guidelines. In any case, an offence classified as an economic crime under the Law on Economic Crimes – namely, the provision of false ESG information to the market in official documents – could ultimately give rise to criminal prosecution by the Chilean Public Prosecutor’s Office. This may extend to the boards of directors of companies subject to the supervision of the Financial Market Commission, in connection with false information contained in the companies’ approved integrated annual report.

For sustainability claims made to consumers, the National Consumer Service (Servicio Nacional del Consumidor; SERNAC) is the primary regulatory body. SERNAC enforces the Consumer Protection Law, which prohibits misleading or deceptive advertising. Companies making false or exaggerated ESG claims can face fines and reputational damage if their marketing practices are found to mislead consumers.

It is also worth noting that Chile has been debating a greenwashing bill in Congress since 2022, which could, in its final wording, either delegate supervisory and sanctioning powers to an existing body or establish a new institution to exercise such powers.

In Chile, enforcement of ESG-related non-compliance was strengthened with the enactment of the Law on Economic Crimes, which came into full effect in September 2024. This law significantly expands corporate liability by including offences related to environmental crimes and misleading disclosures in corporate reports. Under the law, companies and their executives can be held criminally responsible for providing false or incomplete ESG information that is legally mandated (eg, NCG 461 or NCG 519), potentially facing severe penalties – including fines and imprisonment for those involved.

The uncertainty that originally existed regarding how prosecutors would apply this law, particularly concerning the scope of its text, has persisted in 2025, since the first cases that the Public Prosecutor’s Office has undertaken and decided to investigate have not yet resulted in trials with final judgments that could establish criteria – for instance, regarding the use of false or misleading information in terms of ESG disclosure. For consumer-facing claims, SERNAC enforces the Consumer Protection Law, which penalises misleading advertising. The greenwashing bill, which is expected to further strengthen penalties, providing a clearer framework to address ESG-related misstatements and ensuring greater accountability in the Chilean market, has stagnated in Congress.

As of October 2025, ESG reporting in Chile is undergoing a decisive transformation driven by NCG 519, issued by the CMF in late 2024. This regulation modernises and replaces part of the previous framework under NCG 461, aligning Chile’s reporting standards with the ISSB guidelines – specifically IFRS S1 (general sustainability disclosures) and IFRS S2 (climate-related disclosures). These standards will become mandatory from FY 2026, marking a major step towards harmonisation with global ESG reporting practices.

While there has been consistent progress in ESG transparency, gaps persist in areas such as biodiversity, climate targets and governance quality. The implementation of NCG 519 seeks to close these gaps by requiring sector-specific SASB metrics, enhanced third-party verification and clearer disclosure of governance structures, diversity policies, and labour practices. These new obligations are expected to significantly improve the consistency, comparability and credibility of ESG information. This is also crucial from an international investor’s perspective as it will facilitate the increasingly common ESG due diligence processes and provide credibility to all stakeholders regarding the data presented by companies.

At the same time, Law No 21,595 on Economic Crimes continues to raise the standard by which companies comply with and record their ESG progress, also as a means of protecting themselves against potential criminal prosecution processes in the future.

Despite these advances, companies face substantial challenges. Many must still upgrade their data systems, internal controls, and governance frameworks to produce reliable, audit-ready sustainability reports. Integrating financial and non-financial information, ensuring materiality assessments and achieving assurance under international standards will remain demanding tasks in the short term. Beginning with its implementation at the end of 2026, the incorporation of the new Data Privacy Law’s requirements will pose particular challenges, especially in relation to how companies manage third-party information, as they will often need to collect and disclose such data to demonstrate both their own compliance and that of their supply chains under ESG criteria.

Chile does not have a specialised court exclusively dedicated to addressing ESG matters, and many ESG criteria remain voluntary goals without specific legal or administrative sanctions. ESG-related disputes are generally heard by different forums depending on the nature of the issue and the sector involved. Environmental matters, for instance, are addressed by the environmental courts (tribunales ambientales), which have exclusive jurisdiction over conflicts related to environmental regulations, damage assessments and remediation actions. These courts provide a specialised mechanism for environmental litigation, offering technical expertise in resolving complex environmental issues. Although decisions can be appealed before higher courts in Chile, these typically apply the principle of deference to the technical aspects of rulings issued by specialised tribunals.

For social or community-related matters, parties may resort to the emergency injunction action (recurso de protección) before the local court of appeal. This legal remedy is designed to protect constitutional rights when there is an imminent threat to fundamental freedoms. It is widely used in Chile to seek swift judicial intervention in response to urgent social issues. In labour rights matters, there is a specialised jurisdiction that also handles complaints under the Karin Law, and cases involving violations of fundamental rights in the workplace.

In contrast, disputes involving corporate governance – such as breaches of fiduciary duties, shareholder conflicts or mismanagement of corporate assets – are typically handled by civil courts. These cases are usually framed as claims for damages or compensation and require proof of financial harm or misconduct by corporate officers. Because there is no specialised tribunal for governance issues, such matters follow standard civil procedures, which can lead to longer resolution times. However, the Economic Crimes Law has empowered the National Criminal Prosecutor’s Office (Fiscalía Nacional Criminal) to investigate corporate economic crimes, which, if formally charged, will be heard by criminal courts. Since the law came into force in September 2024, several cases are currently under investigation, though no criminal court rulings have yet been issued.

Thus, the legal landscape for ESG litigation in Chile is fragmented and sector-specific, with no single specialised forum to address all ESG-related issues. Companies and stakeholders must carefully identify the appropriate legal mechanism based on the nature of the dispute – whether environmental, social or governance-related.

Non-governmental organisations (NGOs) and activists in Chile are becoming increasingly sophisticated and play a crucial role in advancing ESG-related issues. Their knowledge of the legal framework has empowered them to strategically leverage existing regulations to influence corporate and governmental decisions, particularly regarding environmental and social matters.

In recent years, Chile has witnessed a surge in climate activism, with activists actively engaging in legal processes to challenge environmentally harmful projects and promote stricter compliance with environmental laws. They frequently bring lawsuits before the environmental courts, challenging permits and environmental impact assessments, and demanding greater protection for ecosystems and local communities. This legal expertise allows them to effectively participate in complex cases, utilising scientific data and robust legal arguments to strengthen their positions.

Additionally, activists are adept at using legal instruments like the emergency injunction action to protect social and community rights when they believe constitutional guarantees are at risk. This legal sophistication has made them formidable stakeholders in large-scale projects, especially those impacting indigenous communities and vulnerable populations.

Their strategies are not limited to litigation. Activists and NGOs also use public campaigns, media and international platforms to raise awareness, influence public opinion and pressure companies and the government to adopt higher ESG standards. As a result, they have become key drivers of more responsible business practices in Chile, compelling companies to address environmental and social issues more proactively.

The growing influence of these well-informed and organised activists is reshaping the ESG landscape in Chile, making it essential for companies to consider their perspectives when developing projects and compliance strategies.

In Chile, there have been no significant claims or legal actions brought by investors or regulatory authorities specifically related to greenwashing. This is partly because many ESG regulations remain voluntary and focus on best practices rather than strict compliance. While the CMF has implemented NCG Nos 461 and 519 to enhance transparency in ESG reporting for companies, these regulations do not include direct penalties for exaggerated or misleading ESG statements.

That said, concerns about greenwashing are growing, especially regarding the advertising of the supposedly sustainable nature of companies’ operations. However, the bill aimed at combating greenwashing has made no progress in Congress. This proposed legislation seeks to establish clear criteria for sustainability claims and introduce penalties for companies that provide false or misleading information about their environmental credentials. It would apply to both financial and non-financial sectors, ensuring that companies substantiate their sustainability claims with verifiable data.

On the other hand, greenbleaching has not been a topic of significant public discussion in Chile over the past 12 months. Many companies continue to voluntarily disclose their sustainability efforts, largely driven by market expectations and investor interest in ESG practices. Nevertheless, as new regulations emerge, maintaining a balance between preventing greenwashing and fostering genuine ESG commitments will be a critical challenge for both regulators and companies in the years ahead.

In Chile, ESG-related litigation is expected to become increasingly frequent over the coming years, as is expected to occur internationally as well. This trend will likely be driven by the strengthening of local regulations, greater stakeholder awareness and the increasing influence of sophisticated NGOs and activists. As companies are held to higher standards of environmental and social responsibility, disputes related to non-compliance, inadequate ESG disclosures and social impacts on local communities are likely to increase.

The enactment of laws such as the Economic Crimes Law, the which expands corporate liability for environmental and governance offences, combined with the potential introduction of a greenwashing bill and the enforcement of the Data Protection Law, will provide more legal tools for plaintiffs to pursue ESG-related claims. These regulations will create clearer grounds for litigation, especially for misrepresentations in corporate sustainability reporting or breaches of new human rights due diligence obligations.

Additionally, as Chile advances in its implementation of the Climate Change Framework Law and progresses with its 2030 Decarbonization Plan, companies will face greater scrutiny over their environmental impacts and compliance with new climate regulations. This will likely lead to an increase in disputes, particularly in sectors with large environmental footprints such as mining and energy.

Overall, as Chile’s ESG landscape matures and regulatory enforcement strengthens, the number of ESG-related cases is expected to rise gradually. Companies will need to proactively manage these risks by improving their ESG strategies, enhancing transparency and adopting more robust compliance frameworks to avoid potential litigation in the near future.