ESG Litigation Guide

Peru

With thanks to Rebaza, Alcázar & De Las Casas for the below content.

Environmental

Resolution issued by the Peruvian Securities Authority (Superintendencia de Mercado de Valores – ‘SMV’)

In force

Companies listed on the Lima Stock Exchange

This resolution requires companies listed on the Lima Stock Exchange to disclose annual sustainability reports, along with their Annual Report. 

The sustainability reports will be used by the SMV to evaluate the actions of, and standards implemented by, the company in relation to its economic, environmental and social development related impacts. 

Through the annual sustainability reports, companies are required to answer questions related to the environment and climate change (e.g. environmental policies, water and energy use, emissions of greenhouse gases and solid waste), social issues (e.g. identification of interest groups, labour rights and human rights), and complementary information (e.g. corporate sustainability certifications and reports). 

Environmental

Resolution issued by the Banking and Insurance Superintendence (Superintendencia de Banca y Seguros – ‘SBS)

In force

Banking and financial entities 

This resolution requires the application of the Equator Principles to loans that exceed USD 10 million which have been granted to execute investment projects. 

The objective of this resolution is to avoid the exposure of the financial system to social and environmental risks relating to these investment projects. Banking and financial entities looking to invest will have to evaluate aspects of the financed projects such as: background, due diligence, potential impact (e.g. on air and water quality, natural resources, indigenous communities), mitigation measures, communication with indigenous communities, and complaint mechanisms. The results of this will lead to the investment project, clients and/or main vendors being classed by the respective financial entity as low, medium or high risk, in terms of their environmental/social impact. The risk categorisation is based on the entity’s general principles for the integration of risk management.

As a result, at any stage of the social and environmental risk assessment process, the financing entity may refuse to finance a particular project, if, in its opinion, the social and environmental risk is above the acceptable level. 

Environmental

Resolution issued by the Ministry of Economy and Finance

In force

The Peruvian Government and purchasing companies/investors, through the General Directorate of the Public Treasury, when acting as bond issuer

Under this framework, the Peruvian Government may issue green bonds, social bonds or sustainable bonds; the use of the proceeds of which is clearly regulated, including restrictions on eligible social and green expenditures, a strict process for project evaluation and selection (including an evaluation of environmental and social risk mitigation measures), and protocols for the management of proceeds and for the reporting to, and review by, external investors. 

Environmental

Law issued by the Peruvian Congress

Resolution issued by the Ministry of Energy and Mines

Pending

Companies that develop lithium exploration, exploitation and industrialisation projects in Peru.

This law outlines the need for Peru to engage in the exploration, exploitation and industrialisation of lithium and its derivatives, with the purpose of guaranteeing its sustainable development, as it is considered a strategic resource for the development of Peru. 

A working group is currently active, while the regulation is pending, to draft the legislation, which focuses on how to regulate this resource in a sustainable and efficient manner.

Environmental

N/A

In process

Companies that develop production activities in Peru.

Modesto Montoya, a member of the Peruvian Academy of Nuclear Sciences, stated that the environmental sector will prepare a legislative proposal for the creation of a guarantee fund for the occurrence of possible environmental disasters, which all companies will have to sign up to before starting their productive activities in the country[1]

It should be noted that the bill has not yet been drafted or sent to the Council of Ministers for approval.

  

[1] Recovered from: https://elperuano.pe/noticia/179716-minam-elabora-propuesta-para-crear-un-fondo-de-garantia-ante-eventuales-desastres-ambientales

Environmental

Bill

In process

Companies that import, manufacture and sell electric vehicles in Peru

On July 19, 2022, Bill No. 2656 was presented before the Peruvian Congress. It details the need to  promote and invest in the import, manufacture, and commercialisation of electric vehicles, as well as the establishment of conditions for the sustainable supply of energy for the operation of these vehicles.

Additionally, this bill declares the importance of the promotion and expansion of the electric vehicles market throughout Peru.   

It also highlights the need to create a legal framework that reduces or eliminates barriers to the import and commercialisation of these vehicles in the national market. 

The bill has not yet been debated by congress. It is under review by the assigned commission.

Environmental
Social
Governance

Index incorporated by The Lima Stock Exchange

In force

Companies listed on the Lima Stock Exchange

This index is the first ESG index in Peru to incorporate the three ESG dimensions (environmental, social and governance), and seeks to measure the performance of securities that meet certain sustainability criteria, applying exclusions based on non-compliance with UNGC principles, ESG business activities or involvement in ESG controversies as reported by S&P Global ESG’s Media & Stakeholder Analysis. 

Social
Governance

Law issued by the Peruvian Congress and Regulations issued by the Ministry of Labor and Promotion of Employment

In force

All companies operating in Peru

This law, issued in December 2017, and its regulations issued in March 2018, forbid salary discrimination based on gender and allows for the execution of the principle “equal pay for equal work”.

The law ensures the exercise of women’s economic rights and its objective is to reduce institutional barriers that hinder equality in the private workplace between men and women.

Social
Governance

Law issued by the Peruvian Congress and Regulations issued by the Ministry of Women's Affairs and Vulnerable Populations

In force

All companies operating in Peru

This law, issued in December 2012, and its regulations issued in April 2014, establish a legal framework for the promotion, protection, and development of people with disabilities, as well as their full and effective inclusion in political, economic, social and cultural life. 

The law ensures that companies with more than 50 employees are obligated to hire people with disabilities in a proportion of not less than 3% of their entire workforce.

Environmental
Social
Governance

Index incorporated by The Lima Stock Exchange

In force

Companies listed on the Lima Stock Exchange

This index is the first ESG index in Peru to incorporate the three ESG dimensions (environmental, social and governance), and seeks to measure the performance of securities that meet certain sustainability criteria, applying exclusions based on non-compliance with UNGC principles, ESG business activities or involvement in ESG controversies as reported by S&P Global ESG’s Media & Stakeholder Analysis. 

Social
Governance

Law issued by the Peruvian Congress and Regulations issued by the Ministry of Labor and Promotion of Employment

In force

All companies operating in Peru

This law, issued in December 2017, and its regulations issued in March 2018, forbid salary discrimination based on gender and allows for the execution of the principle “equal pay for equal work”.

The law ensures the exercise of women’s economic rights and its objective is to reduce institutional barriers that hinder equality in the private workplace between men and women.

Social
Governance

Law issued by the Peruvian Congress and Regulations issued by the Ministry of Women's Affairs and Vulnerable Populations

In force

All companies operating in Peru

This law, issued in December 2012, and its regulations issued in April 2014, establish a legal framework for the promotion, protection, and development of people with disabilities, as well as their full and effective inclusion in political, economic, social and cultural life. 

The law ensures that companies with more than 50 employees are obligated to hire people with disabilities in a proportion of not less than 3% of their entire workforce.

Governance

Legislative Decree issued by the Peruvian President 

Regulations issued by the Ministry of Economy and Finances

In force

All companies operating in Peru

This law, issued in April 1996, establishes criminal liability, and the Supreme Decree No. 145-2019-EF issued in May 2019 establishes administrative liability, for directors and officers of companies that approve utilisation of improper or elusive structures, schemes or acts for tax purposes.

Governance

Law issued by the Peruvian Congress

In force

All companies operating in Peru and the Peruvian Government

This law, issued on August 17, 2022, creates a number of due diligence and conflict of interest obligations for individuals and companies operating in the public and private sectors, with the goal of reducing corruption.

This rule was created following the recommendation of the Organisation for Economic Cooperation and Development (OECD), which pointed out that movement between positions in the public and private sectors can lead to the emergence of conflicts of interest and the risk of policy capture. In that sense, it was recommended that states implement regulations regarding the effect of "revolving doors".

Governance

Bill

In process

All companies operating in Peru and The Peruvian Government

On September 30, 2021, Bill No. 00340 was presented before the Peruvian Congress. It proposes the issue of a law that prohibits companies that have partners, directors, managers or legal representatives with pending proceedings or who have been sentenced in the first instance for crimes of corruption from contracting with the Peruvian State.

To this end, it is proposed to amend Article 11 of the State Contracting Law. Various public entities such as the Ministry of Justice, the Comptroller General of the Republic, among others, have already sent their comments to this bill.

The assigned commission to the review has concluded with an official opinion. However, despite the fact that the project already has an opinion, it has not yet been debated by Congress.

Governance

Bill

In process

The Peruvian Government

On October 20, 2021, Bill No. 00504 was presented before the Peruvian Congress. It proposes the issue of a  law that creates anti-corruption citizen observatories. 

This bill proposes the promotion and regulation of the conditions for the creation of a citizen anti-corruption observatory, in order to prevent any form of corruption in state contracting and public investment processes. 

Besides the points indicated, the bill regulates the requirements for being part of the observatories, and the principal functions of the members of the citizen observatories roles. 

The bill has not yet been debated by the congress. It is under review by the assigned commission.

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