COLOMBIA Trends and Developments Contributed by: Clare Montgomery, Karen Santamaria and Silvana Aroca, Baker McKenzie
Listed entities are required to disclose informa - tion on social and environmental issues, includ - ing climate issues. The mandatory annual report includes items such as: • sustainability and responsible investment practices applied; • environmental and social metrics under inter - national standards; • actions implemented to achieve social objec - tives; and • an explanation on how they achieve social and environmental matters when they include these matters in their advertising. Quarterly reports on any material change to these practices and processes are also required. Due diligence ESG factors continue to play an important role in M&A and corporate-related processes. Investors are prioritising due diligence on ESG matters to ensure that potential targets align with their own ESG values, have sustainable business models and are not exposed to significant reputational risks. For example, due diligence on environ - mental, human rights issues, displacement and protection of communities in property transac - tions and infrastructure projects is becoming more common in transactions in Colombia. As ESG policies and regulations are established around the world, multi-jurisdictional trans - actions inevitably become subject to global expectations for representations and warranties, thereby affecting purchase price, indemnity obli - gations and other transaction terms. Even when evaluating the attractiveness of an investment, the adoption of, and compliance, with ESG poli - cies and regulations is an important factor when determining operational and cultural fit.
The promotion and inclusion of international standards in sustainability and corporate gov - ernance therefore means that Colombian com - panies will likely be held to global practices and standards. By embracing the trend, companies will therefore not only align with the best inter - national practices that continue to exist in many foreign jurisdictions but may also open doors in foreign markets, improve global competitiveness and make Colombian companies more attractive targets for foreign investment. Corporate governance The relevance of a transparent and robust cor - porate governance regime for investors has focused businesses on regulating relationships between shareholders, directors, management and other stakeholders. Rules on shareholder rights, accessibility to information and equal - ity of treatment for shareholders are common among large unlisted companies. Independence and diversity on boards While publicly traded companies must have independent members making up to 25% of the board by law and majority state-owned publicly traded companies must have 30% of the board made up of female members, private companies are also seeking independent mem - bers and greater diversity among skill sets, age, gender and race. For example, organisations such as the 30% Club and the Programme for Female Board Members of the CESA University (which currently has more than 700 graduates) have focused on the benefits of gender diver - sity, monitoring advances and leading upskilling programmes for female executives. Female board membership in Colombia has increased from 15% in 2015 to more than 25% in 2025 according to the National Securities Register of the Financial Superintendence. Train -
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