Environmental disclosure: Mitigation and adaptation using ESG statistics from Latin American public companies

Abstract

Governments and organizations encourage companies to measure and report their environmental impact. However, in Latin America, a standardized framework for companies to disclose environmental information has yet to be established. This article investigates changes in CO2 emission intensity and water usage, as well as the effects of corporate actions related to environmental mitigation and adaptation. To this end, we created two indices—one for adaptation and one for mitigation—using data from 672 publicly listed companies across six Latin American countries from 2017 to 2023. We conducted an analysis using a structural equation model to measure the effects on company value, water usage intensity, and CO2 emissions in relation to sales. The findings suggest that reported mitigation actions effectively reduced companies’ CO2 intensity. However, no evidence was found that adaptation actions reduced water usage. These results are based on data from one-third of the listed companies that disclose environmental information. This group invested the equivalent of 0.70% of their sales in sustainability. Addressing climate change moving forward will require deeper engagement in new environmental actions and the involvement of a broader range of companies.