EU Latin Business Forum Statement on the Revision of the European Sustainability Reporting Standards (ESRS)

The EU Latin Business Forum welcomes the European Commission’s efforts to simplify the European Sustainability Reporting Standards (ESRS) under the Omnibus simplification agenda. We recognize that the European Union is attempting to strike an important balance between maintaining ambitious sustainability objectives while also protecting competitiveness, reducing administrative burden, and ensuring that reporting obligations remain practical and proportionate for businesses.

This discussion comes at a critical moment for Europe’s economic future. European companies are currently navigating a highly complex global environment marked by geopolitical fragmentation, rising energy costs, industrial competition from the United States and China, supply chain restructuring, and inflationary pressures affecting both businesses and consumers. In this context, simplification and regulatory clarity are essential.

The EU Latin Business Forum particularly applauds the recognition that excessive reporting requirements can unintentionally create barriers for small and medium-sized enterprises (SMEs). This is especially relevant in the context of EU–Latin America trade relations.

Latin America Is a Region Dominated by SMEs and Small Producers

Across Latin America, SMEs account for approximately 99% of all businesses and generate a significant share of employment throughout the region. In sectors connected to EU sustainability regulations — including coffee, cocoa, agriculture, forestry, food products, and agri-processing — value chains are often composed of:

• Smallholder farmers

• Agricultural cooperatives

• Family-owned businesses

• Rural producers

• Informal or semi-formal intermediaries

• SMEs with limited digitalization capacity

While sustainability goals are broadly supported, there is growing concern that overly complex ESG reporting frameworks may unintentionally create disproportionate compliance burdens for smaller suppliers operating outside the European Union.

Many exporters in Latin America are already beginning to face:

• Extensive ESG questionnaires from European buyers

• Requests for supply chain sustainability data

• Traceability requirements

• Climate-related disclosures

• Biodiversity and deforestation-related information requests

• Additional verification and auditing expectations

For many SMEs and agricultural producers, particularly those operating in rural areas, these new obligations can represent significant operational and financial challenges.

The EU Latin Business Forum therefore strongly supports efforts to simplify ESRS reporting requirements, reduce excessive datapoints, streamline materiality assessments, and create a more proportionate framework that allows sustainability reporting to remain achievable and inclusive.

Simplification Should Not Lead to Exclusion

As the European Union refines its ESG architecture, it is important to ensure that simplification does not inadvertently translate into the exclusion of smaller international suppliers from European value chains.

The future of sustainable trade should not be reserved only for large multinational corporations with vast compliance departments and extensive ESG reporting capabilities. If sustainability frameworks become excessively complex or costly, there is a real risk that:

• Large corporations consolidate market access

• Smaller producers become marginalized

• Rural exporters lose competitiveness

• Strategic supplier diversification weakens

• Developing economies face disproportionate adjustment costs

This would run counter to Europe’s broader objectives of promoting resilient, diversified, and sustainable supply chains.

The Need for Greater Harmonization and Recognition of Third-Country ESG Frameworks

The EU Latin Business Forum also calls for greater harmonization between European sustainability reporting frameworks and existing national ESG laws, sustainability standards, and reporting systems in trusted third countries.

As Latin America becomes increasingly important to Europe’s long-term economic strategy — particularly in agriculture, food security, clean energy, critical raw materials, and strategic supply chains — it is essential to strengthen mutual regulatory trust between Europe and its international partners.

Today, many countries across Latin America are already developing or implementing:

• National sustainability frameworks

• Climate reporting systems

• Environmental compliance schemes

• Agricultural traceability initiatives

• ESG disclosure requirements

• Deforestation monitoring programs

• Sustainable finance frameworks

A more harmonized and interoperable approach between European and third-country ESG systems would:

• Reduce duplication of reporting requirements

• Lower compliance costs for SMEs

• Improve efficiency in cross-border trade

• Encourage international regulatory cooperation

• Strengthen confidence in strategic trade partners

• Facilitate smoother integration into European supply chains

Europe should continue to promote high sustainability standards while also recognizing that trusted partners may achieve similar sustainability objectives through different regulatory approaches.

Strategic Importance of Latin America for Europe

Latin America is becoming increasingly strategic for Europe in the context of:

• Supply chain diversification

• Food security

• Green transition objectives

• Climate resilience

• Strategic autonomy

• Access to agricultural commodities

• Renewable energy cooperation

• Critical raw materials

At a time when Europe seeks to reduce excessive dependency on limited external suppliers and strengthen economic resilience, Latin America represents a natural long-term strategic partner.

The modernization of trade agreements, including the EU–Mexico Global Agreement and the EU–Mercosur Agreement, demonstrates the growing importance of interregional cooperation.

For this reason, sustainability frameworks should aim not only to promote environmental objectives but also to facilitate stronger and more resilient economic partnerships.

Transitional Flexibility for Products Not Significantly Produced in Europe

The EU Latin Business Forum further encourages policymakers to consider extended transitional periods or phased implementation mechanisms for products that are not significantly produced within the European Union, particularly products such as:

• Coffee

• Cocoa

• Tropical agricultural commodities

These products play a fundamental role in European consumption patterns and supply chains while depending heavily on international producers, many of whom are SMEs or smallholder farmers.

A more gradual adaptation period would:

• Allow producers additional time to digitalize and adapt

• Support smoother implementation of sustainability systems

• Reduce disruption to global supply chains

• Lower compliance shocks for SMEs

• Help avoid sudden increases in import costs

• Contribute to reducing inflationary pressures affecting European consumers

At a time when inflation and cost-of-living concerns remain major issues across Europe, policymakers should carefully evaluate how sustainability-related compliance costs may affect food prices and consumer affordability.

A pragmatic transition period for key imported commodities would support both sustainability objectives and economic stability.

Building a Sustainable and Competitive EU–Latin America Partnership

The EU Latin Business Forum believes that sustainability, competitiveness, and international cooperation must advance together.

Europe has the opportunity to build a sustainability framework that:

• Protects environmental objectives

• Encourages responsible supply chains

• Supports competitiveness

• Maintains access to strategic imports

• Preserves SME participation

• Strengthens partnerships with trusted regions such as Latin America

The future of EU–Latin America trade should be built not only on sustainability standards but also on pragmatism, inclusion, resilience, and mutual trust.

The EU Latin Business Forum remains committed to supporting constructive dialogue between European institutions, Latin American stakeholders, businesses, and policymakers as both regions navigate the next phase of sustainable and competitive global trade.