Mercosur Corporate Sustainability Guidelines

Description of Characteristics:

• Regional Guidance: The Mercosur Corporate Sustainability Guidelines offer recommendations for companies operating in the Mercosur region (Argentina, Brazil, Paraguay, and Uruguay) to improve their sustainability reporting practices.
• “Comply or Explain” Approach: The guidelines adopt a “comply or explain” approach, providing flexibility for companies to tailor their reporting to their specific circumstances while encouraging transparency and accountability.
• Focus on Materiality: The guidelines emphasize the disclosure of material economic, environmental, and social (EES) risks and opportunities that could affect a company’s business.
• Encourages International Standards Adoption: The guidelines recommend using internationally recognized sustainability reporting standards and frameworks, such as GRI and the Integrated Reporting Framework.
• Promotion of Regional Integration: The guidelines aim to facilitate regional integration and trade by promoting a common understanding of sustainability reporting in the Mercosur region.

Targeted Audience:

• Companies operating in the Mercosur region: The guidelines are primarily targeted towards companies operating in Argentina, Brazil, Paraguay, and Uruguay, although adoption is voluntary.
• Investors and Stakeholders: The guidelines aim to provide investors and other stakeholders with transparent and relevant information about companies’ sustainability performance.

Specific Criteria:

• Comply or Explain Components:
  • Sustainability statement in annual reports
  • Material EES risks and opportunities
  • Sustainability governance
  • Sustainability targets
• Recommended Disclosures:
  • Anti-corruption
  • Climate change and greenhouse gas emissions
  • Energy and water use
  • Waste management
  • Occupational health and safety
  • Labor practices
  • Community engagement
  • Product responsibility

Reporting Principles:

• Materiality: Companies should focus their reporting on material EES risks and opportunities.
• Stakeholder Inclusiveness: Reporting should consider the information needs of a range of stakeholders.
• Comparability: The use of internationally recognized frameworks and standards is encouraged to enhance comparability.
• Balance: Reports should present both positive and negative aspects of the company’s sustainability performance.
• Clarity and Conciseness: Disclosures should be clear, concise, and understandable.

Reporting Process:

1. Identify Material EES Risks and Opportunities: Conduct a materiality assessment to identify the most significant EES factors.
2. Collect and Analyze Data: Gather and analyze data related to the identified material EES factors.
3. Prepare Sustainability Statement: Prepare a sustainability statement in accordance with the Mercosur guidelines, addressing the comply or explain components and recommended disclosures.
4. Include in Annual Report: Include the sustainability statement in the company’s annual report.
5. Review and Improve: Regularly review and improve sustainability reporting practices.

Connections to Other Frameworks:

• Encourages International Standards: The guidelines recommend the use of internationally recognized sustainability reporting standards, such as GRI and the Integrated Reporting Framework.
• Alignment with Regional and Global Trends: The guidelines align with broader trends in ESG reporting and sustainable finance in the Mercosur region and globally.

Challenges:

• “Comply or Explain” Approach: The flexibility of the “comply or explain” approach can lead to inconsistencies in reporting across companies.
• Data Availability and Quality: Collecting reliable and comparable data on EES risks and opportunities can be a challenge, particularly for SMEs.
• Capacity Building: Some companies may need support and capacity building to implement effective sustainability reporting practices.

Compliance Guidance:

• Mercosur Corporate Sustainability Guidelines: The official guidelines provide the main source of information on reporting requirements and recommendations.
• National Regulatory Bodies: Relevant regulatory bodies in each Mercosur country may provide additional guidance and support on sustainability reporting.

Usability Evaluation:

• Level of Adoption: Adoption is increasing among companies in the Mercosur region, driven by regulatory requirements and growing investor interest in sustainability.
• Ease of Use: The “comply or explain” approach provides flexibility, but companies still need to understand and apply the guidelines.
• Focus Areas: Focuses on material EES risks and opportunities, encouraging a holistic approach to sustainability reporting.
• Data Availability: Data availability and quality can vary depending on the company and its industry.

SyncFrame Compatibility:

• Alignment: SyncFrame’s focus on impact measurement, materiality assessment, stakeholder engagement, and alignment with international standards aligns well with the objectives of the Mercosur Guidelines.
• Data Integration: SyncFrame can facilitate data collection and analysis for reporting in accordance with the guidelines.
• Expert Guidance: SyncFrame advisors can provide support in conducting materiality assessments and preparing sustainability reports that comply with the Mercosur Guidelines.

Reference Links/Resources:

• Mercosur Corporate Sustainability Guidelines: https://www.mercosur.int/en/ (Specific guidelines may need to be found on individual member country websites)

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