Luis Emilio Cuenca Botey, Chair of the Latin American Center for Competitiveness and Sustainable Development at INCAE Business School
In 2026, markets are receiving two opposing signals. On 29 May, Brazil’s securities regulator issued Resolution 244 and removed the obligation to report under ISSB standards, two years after Brazil became the first emerging economy to adopt them. That same day in Washington, the SEC proposed rescinding its climate disclosure rules. In Brussels, the word of the year is “simplification”. Meanwhile, by late 2025, some 733 organizations had voluntarily committed to the TNFD framework, up from 416 in June 2024, and in April 2026 the ISSB agreed to build its treatment of nature on it.
As an academic and a decision-maker in financial markets, I regard the regulatory retreat as bad news. A mandate sets a common floor, produces comparable information, and drags along the laggards, who need to move most. That mandate will not return soon, and waiting for it is the worst available strategy. If regulators do not demand, the demand comes from elsewhere. Without public comparability, discipline shifts to the bilateral relationship with financiers and buyers, who ask a company for evidence of its own rather than a comparison against its industry average. The asset managers that signed up to the TNFD did so after looking at their portfolios’ exposure to nature loss and finding nothing to measure it.
Why nature, and why now? For fifteen years, environmental risk ran on a single metric that worked as a common language precisely because it had no territorial anchor: a tonne of CO2 is identical in Europe and in Central America, and it adds up, offsets, and trades. A watershed, a pollinator or a soil is not. Each is specific to its place, not interchangeable, and has no deep market.
For Latin America, the risk is above average, and the date is already set. The European deforestation regulation applies from 30 December 2026, covering coffee, cocoa, beef, soy and timber, and in May the Commission confirmed there will be no further postponement. The requirement has moved from the report to the market’s front door, where traceability is the condition for selling. The credit side is moving too. The European Central Bank estimates that 72% of euro area non-financial companies, accounting for 75% of corporate lending, depend heavily on at least one ecosystem service, and is already mapping that exposure onto bank portfolios, water first. When that mapping reaches Latin American exposures, the region will appear with its own evidence or without any.
Producing that evidence means abandoning the carbon playbook, in three steps. First, before estimating impacts, locate dependencies, as the TNFD’s LEAP approach asks. Which watershed does this plant depend on? What happens to costs if the flow falls by 20%? That information exists in operations and almost never makes it into the report.
Second, rethink the unit of measurement: financial figures alone mislead. Scarcity raises the value of every unit of water available in the territory, and with it the position of whoever holds secured access. The financial signal improves as the aquifer falls. The two point in opposite directions, and whoever reads only one sees an improvement where there is a loss. Physical magnitudes must reach the table alongside financial ones, not be converted into them.
Third, redefine governance. Exposure to natural capital is fixed when a plant’s site is chosen, a ten-year supply contract is signed, or a water treatment investment is approved or not. By the time the report arrives, those decisions are irreversible. A sustainability committee that comes in at the end changes disclosure, not exposure; a useful one speaks before capital is committed.
None of this is quick, so the calendar matters. In April 2026, the ISSB decided not to issue a binding nature standard but guidance on applying IFRS S1, with a draft out for consultation in October, at COP17 on biodiversity. That guidance will rest on somebody’s data and assumptions. If Latin America does not supply them, it will rest on satellite imagery, sector averages, and models calibrated for temperate ecosystems. The risk discount will be applied all the same, on evidence the region’s companies did not produce and cannot refute.
Moving now, with no one compelling it, is not optimal; a well-designed mandate would be. But it is what lies in companies’ hands, and the region has spent too long selling the produce of its natural capital without measuring what it costs to sustain. The opportunity, for once, lies not in the asset but in the ability to show what is being done with it.
