Key takeaways:

• • • Strategic collaboration is becoming a defining strength for the region 鈥� Latin American organizations are realizing that progress in AI accelerates when they combine forces by linking industry expertise, academic talent, and public鈥憇ector support.

    • AI initiatives rooted in real local challenges are gaining global relevance 鈥� By developing solutions grounded in the region鈥檚 own structural needs, whether in infrastructure, finance, agriculture, education, or mobility, many LatAm firms are producing technologies that are both highly impactful and naturally scalable.

    • Demonstrating clear outcomes is becoming fundamental 鈥� Organizations that show concrete operational improvements, measurable efficiencies, or stronger customer outcomes are strengthening their position with investors and partners.

In recent years, Latin America has experienced significant growth in investments related to AI, accounting for . This is strikingly low given that the region makes up around 6.6% of global GDP, highlighting the region’s opportunities to scale AI initiatives even further. Although there are notable differences among countries, Mexico and Brazil 鈥� the two largest LatAm economies 鈥� stand out for their volume of AI projects and funding, followed by other nations such as Chile, Colombia, and Argentina.

By recognizing the region鈥檚 strengths 鈥� which include cost-effective operations, access to data, clean energy, and public support 鈥� the region鈥檚 businesses can better position themselves and design strategies to draw in international investors that may be increasingly seeking promising locations for AI development.

Lessons from LatAm鈥檚 AI success stories

Latin America has produced remarkable AI success stories that can serve as models to build confidence among investors. These cases 鈥� involving companies that attracted substantial investment and achieved growth 鈥� demonstrate valuable best practices that range from technological innovation to working with governments and corporations. Some of these best practices include:

Building strategic alliances

The journey of innovation rarely unfolds in isolation. At times, the presence of large, established companies, whether local industry leaders or multinationals, has served as a catalyst for AI projects. The experience of that specializes in AI-powered agricultural irrigation, proves it. Now, Kilimo is partnering with EdgeConneX, a data center company based in the United States, on a community .

Academia, too, can be woven into this narrative. Collaborations with research centers or universities offer scientific credibility and connect ventures with emerging talent. In Mexico, AI startups often originate within university settings 鈥� such as computer vision projects from the National Autonomous University of Mexico (UNAM), for instance 鈥� and maintain agreements that sustain ongoing innovation and technical progress even with modest resources. And academic validations, whether in published papers or conference accolades, tend to resonate with foreign investors. Indeed, the emergence of this ecosystem that features early corporate clients and academic mentors frequently lends a distinctive appeal for those seeking investment.

Focusing on local problems with global impact

Within Latin America, certain issues prove especially relevant in situations in which AI solutions intersect with sectors renowned for regional strengths, such as fintech and financial inclusion, agrotech optimizing agriculture, and foodtech drawing on local ingredients. The experience of Chilean food startup NotCo 鈥� in which and subsequently exported 鈥� suggests how innovations rooted in local context may generate broader attention.

By addressing needs in urban transport, education, mining and related areas, local LatAm companies can provide access to homegrown data and users, which can further refine technology and open pathways for investors into similar emerging markets. When AI solutions respond to genuine pain points rather than mere novelty, momentum often builds more quickly, and the model finds validation among that evaluate investments.

Showing results and AI ROI early on

Questions linger for many executives . Evidence of clear metrics like cost savings, sales growth, or error reduction can prove persuasive, especially when complemented by success stories from local clients.

Recent studies show that companies ; and such figures tend to reassure those considering investment by illustrating tangible improvements. Testimonials or independent validations, such as a university study, can further illuminate achievements.

The act of quantifying impact 鈥� whether in efficiency, revenue, or other relevant KPIs 鈥� has a way of transforming perceptions from uncertainty toward clarity.

Leveraging government incentives and collaborations

Many Latin American nations have put forth support programs for AI and tech projects, such as non-repayable funds, soft loans, and tax benefits for innovation illustrated in , , , or the .

Public financing, when present, often acts as a stamp of validation for private investors. For example, this trust extended to Brazilian startups receiving Finep support for AI health projects, which in turn can shift perceptions for foreign ventures capitals. Engagement in government pilots, such as smart city initiatives or solutions for ministries, provides valuable exposure. In such contexts, public-private partnerships and incentives seem to act as quiet levers for growth and legitimacy.

Seeking smart and diversified financing

Financial strategies in Latin America have been shaped by the interplay of local and foreign capital. Local funds often bring insights and patience, while foreign funds may offer larger investments and global scaling experience. Ownership dilution sometimes accompanies the arrival of strategic investors, whose networks can prove invaluable, such as . Programs like 500 Startups, Y Combinator, MassChallenge, and international competitions have ushered LatAm AI startups such as Heru, Rappi, Bitso, and Clip into new rounds of capital following increased exposure.

Efficiency in capital management, which can be demonstrated with lean burn rates and milestone achievement with limited resources, signals an ability to execute within the realities of LatAm, which may enhance the appeal for future investments. The cultivation of relationships and responsible stewardship of capital frequently matters as much as the funds themselves, suggesting that the value of mentorship, contacts, and reputation is often intertwined with deepening financial support.

Unlocking AI Investment

By applying these principles, Latin American companies have achieved a better position to attract AI investments to their projects and help position the region as a viable destination for technology capital. These recent experiences show that when a LatAm company combines innovation, talent, and strategy 鈥� while communicating its story well 鈥� it can win over global and local investors alike. Each of the best practices noted above is based on real lessons: international alliances (NotCo with US funds), leveraging incentives (Brazilian companies funded by Finep), talent formation (Santander and Microsoft programs), focus on ROI (successful use cases that convince boards), and more.

Latin America has challenges but also unique advantages. Companies that manage to navigate this environment intelligently will increase their chances of securing the financing needed to innovate and grow. By doing so, they will contribute to a virtuous circle in which each new success attracts more investment to the region and opens doors for the next generation of LatAm AI ventures.

You can find more about the challenges and opportunities in the Latin American region here

Key takeaways:

• • • Historic election with low turnout 鈥� Mexican citizens elected judicial authorities for the first time, but low voter participation shows limited civic engagement.

    • Controversial process 鈥� Candidate accusations and high campaign spending raised concerns about transparency and accountability.

    • Responsibility lies with elected ministers 鈥� Citizens pushed for change, and now it’s up to the new officials to build a fair and independent justice system.

On June 1, Mexico experienced an unprecedented event 鈥�听the country鈥檚 first-ever elections for the Judicial Branch, in which 881 judicial positions were filled, including ministers, judges, and magistrates. This historic process is a direct result of the judicial reform enacted in September 2024, aimed at transforming the Mexican judicial system into one that is more efficient, humane, austere, and free from corruption.

Campaigns began on March 30, 2025, 鈥� no public or private funding was allowed, and promotion was limited to forums and organic social media. To encourage informed voting, the National Electoral Institute (INE) launched (Get to Know Them), a digital platform that allowed citizens to review candidate profiles in a transparent and accessible way.

Rising controversies and low turnout

Throughout the electoral process, several controversies emerged that cast doubt on the legitimacy of certain candidates. against some candidates for alleged ties to drug cartels and cases of sexual abuse. Nevertheless, their candidacies were approved by committees composed of members from all three branches of government, a decision that raises serious questions about the rigor and transparency of the selection process itself.

There were also , particularly by candidates for ministerial positions, which drew criticism from observers and citizens. Another controversial issue was the increase in the campaign spending cap for national positions, such as ministers on the Supreme Court of Justice of the Nation (SCJN).

Despite the by the Chamber of Deputies in December 2024, the INE carried out the elections normally. Voters received six ballots of different colors, each corresponding to a judicial category. However, voter turnout was low, ranging between just 12.57% and 13.32% of the eligible population.

Even so, Claudia Sheinbaum, President of Mexico, emphasized that 鈥渘early 13 million Mexican men and women participated in the Judicial Branch election, more than double the turnout in the vote on the trial of former presidents.鈥�

Who will shape the future of Mexican law?

The SCJN, the nation鈥檚 highest authority in the Judicial Branch, will be composed of the following ministers, who will take office on September 1:

• • • Hugo Aguilar Ortiz 鈥� A Mixtec lawyer and indigenous rights advocate; elected president of the Supreme Court
    • Lenia Batres 鈥� Promotes social justice and austerity
    • Yasm铆n Esquivel 鈥� Supreme Court justice since 2019; faced plagiarism allegations
    • Loretta Ortiz 鈥� Supports decentralized justice and socially focused rulings
    • Mar铆a Estela R铆os 鈥� Labor law expert
    • Giovanni Figueroa 鈥� International academic and human rights defender
    • Irving Espinosa 鈥� Magistrate with experience in Mexico City鈥檚 government
    • Ar铆stides Guerrero 鈥� Proposes a Mobile Court and rulings in indigenous languages
    • Sara Herrer铆as 鈥� Human rights prosecutor

This group will be responsible for interpreting the Mexican Constitution and ensuring respect for human rights in the country, within a context of institutional transformation.

What鈥檚 next for 惭别虫颈肠辞鈥檚 legal landscape?

Despite this democratic milestone, access to justice in Mexico remains limited. In fact, a National Survey on Victimization and Perception of Public Safety showed that , according to 惭别虫颈肠辞鈥檚 National Institute of Statistics and Geography (INEGI), the country鈥檚 main government institution in charge of statistics and census data.

Further, , reflecting a deep mistrust of the judicial system鈥檚 ability to address and resolve cases affecting citizens. In budgetary terms, Mexico is among the countries that spend the least on justice, , according to the Organisation for Economic Co-operation and Development (OECD).

Overall, the judicial reform being undertaken includes a series of proposals aimed at strengthening the country鈥檚 justice system and ensuring its independence, efficiency, and proximity to citizens. Key measures include:

• • • Budget allocation 鈥� At least 2% of federal and state budgets are earmarked for judicial branches
    • Collective justice access 鈥� Stronger mechanisms will be developed for group lawsuits and shared rights
    • Ruling enforcement 鈥� Clear frameworks for executing judicial decisions will be established
    • Feminicide classification 鈥� Standardized recognition and investigation protocols nationwide will be enacted

These proposals are outlined in the document , prepared by the SCJN and aim to address the main challenges facing 惭别虫颈肠辞鈥檚 judicial system.

Although the electoral process was framed as a democratic step forward, critics warn it may politicize the Judicial Branch. Some argue the reform could enable one party to control all three branches of government, risking legal uncertainty and weakening transparency. Indeed, the election鈥檚 low turnout, candidate allegations, and rising campaign costs raised concerns about the legitimacy and effectiveness of this new judicial election model.

Still, the 2025 judicial election marks a milestone in 惭别虫颈肠辞鈥檚 democratic history, but it also presents profound challenges. The key will be to monitor the implementation of the reform, strengthen judicial independence, and ensure that new ministers and judges act with ethics, professionalism, and social commitment.

Critically, Mexico needs a justice system that is not only accessible but also effective, empathetic, and trustworthy. Despite limited civic participation, the first step toward judicial transformation has been taken. Now, the true responsibility lies with those elected to lead and deliver meaningful change.

You can find out more about听the challenges faced by courts here

Indeed, some economists have found that GenAI has the in the LatAm region by transforming jobs and industries, but inadequate infrastructure and digital access are problems that hinder these gains. Others have stated that the region鈥檚 large informal sector makes due to limited access to financial and legal opportunities, and the struggle to attract investment.

The TRI survey report complements the few existing studies on GenAI and its impact on Latin America, enabling us to examine the opinions of professionals in Latin America on GenAI and contrast these views with those of their contemporaries around the globe.

Latin America鈥檚 strong optimism for GenAI

A striking 56% of LatAm respondents to the TRI survey report expressed excitement about the future of GenAI in their industries, a figure that significantly surpasses the 27% of global respondents sharing this feeling. Additionally, another 22% of LatAm respondents indicated further positive sentiment towards GenAI, saying they feel hopeful about it. These findings reveal the region鈥檚 enthusiasm to embrace technological advancements and leverage them to promote growth and innovation within their respective industries.

When considering the application of GenAI in professional services work, LatAm respondents showed remarkable optimism. An impressive 85% said they believe GenAI should be integrated into their work, compared to 62% globally. And while 4% of LatAm respondents said they did not think GenAI should be applied in their jobs, this is considerably less than the 13% of global respondents who said the same thing. This positive stance reflects Latin America鈥檚 proactive approach to adopting AI technologies in order to improve efficiency and effectiveness in professional work.

According to LatAm respondents, GenAI will shape the future of professional work in the region in various ways. The most popular view, shared by 20% of respondents, was that GenAI will make an impact on their work through transformative changes. Further, 18% said they believed that GenAI will streamline work processes, making tasks more efficient and reducing the time and effort required to complete them. Similarly, another 18% said they regarded GenAI as a valuable tool for enhancing work-life balance, suggesting that its integration could lead to more flexible and manageable work environments.

GenAI challenges and opportunities in Latin America

Despite the region’s overall positive sentiment towards GenAI, survey respondents in Latin America identified certain challenges and opportunities that must be correctly assessed to ensure its successful adoption and maximize its potential in the region.

• • • Concerns and barriers to adoption 鈥� Despite the overall optimism, LatAm respondents acknowledged significant concerns that could hinder GenAI adoption. Data security (cited by 53% of LatAm respondents), privacy and confidentiality of information entered into GenAI tools (50%), and the cost of these tools (50%) emerged as primary barriers. By contrast, the most popular concern on a global scale was the potential for inaccurate responses (73%).
    • Policy and training gaps 鈥� Interestingly, only 18% of LatAm respondents said their organizations have established policies guiding GenAI use, compared to 36% globally. Further, 77% of LatAm respondents reported a lack of training on GenAI from their organizations. When compared to the global picture, this figure is higher by 13 percentage points (64% globally).
    • Integration and future plans 鈥� While LatAm currently lags behind the global average (22%) in the business integration of GenAI, with only 15% of LatAm respondents saying they already use it, there is a strong inclination towards future adoption. More than one-third (38%) of respondents from the region said their organizations are planning to implement GenAI, and 20% said they are still evaluating its usage within their organizations.
    • Timeframe for wide-scale adoption 鈥� Less than one fifth (18%) of LatAm respondents mentioned that their organizations are already using GenAI on a wide-scale basis, while 26% of global respondents said their organizations were. However, 21% of LatAm respondents said they expect this to happen within their organizations over the next 6 months, 29% said they think it will happen in 6 to 12 months, and 12% said they anticipate this change in 1 to 3 years. Only 20% said they were not sure about their organization鈥檚 adoption timeline.

Making LatAm services more competitive

The survey results reveal Latin American professionals鈥� strong belief in GenAI’s potential to improve productivity and reshape the landscape of professional work in new ways. While the region may currently lag in the organization-wide integration of GenAI compared to other parts of the world, its proactive position is evident in the significant number of respondents who voiced excitement about it and whose organizations are planning to implement GenAI in their processes sooner rather than later.

With structured strategies, well-studied policies, and an investment plan that involves tech tools and personnel training, organizations in Latin America can embrace GenAI successfully and enhance their competitiveness and innovation in the global market.

You can download a full copy of the 成人VR视频 Institute鈥檚 recent 2025 Generative AI in Professional Services Report here

As this reform is still in its early phases, there is a level of uncertainty surrounding its potential impact on the practice of law in Mexico. Until the new judges assume their roles in August 2025, the direction in which the Mexican judiciary is heading remains largely speculative.

Challenges and opportunities ahead

, President of the Mexican Lawyers Council, highlights a series of potential challenges posed by the recent judicial reform. One significant obstacle is the anticipated learning curve for newly elected judges, many of whom may lack substantial experience in the judiciary. This inexperience could lead to delays in case resolutions, which could pose a risk to the efficiency of the judicial process.

Another challenge stems from the creation of a Court of Judicial Discipline. This body is tasked with overseeing judges’ conduct, and its broad mandate to evaluate decisions based on public interest could have far-reaching implications. However, there also is a concern that this could lead to reversals of judgments, particularly those that stop public projects or go against government interests. Such actions might affect the balance between judicial independence and public accountability, raising questions about the Court of Judicial Discipline鈥檚 influence on the justice system.

On the opportunity front, R铆os Ferrer says he envisions a significant rise in arbitration as an alternative to traditional court litigation, potentially offering a more expedient and effective resolution process. This shift towards arbitration could benefit domestic and international institutions offering these services, as parties may seek quicker and more practical alternatives to resolve disputes outside the conventional courtroom setting.

Other options outside of courts and arbitration would include alternative dispute resolution methods, such as mediation and collaborative agreements. Settlements achieved through these methods will have the force of res judicata by law.

The broad scope of the reform

Most of the discussion around the reform of the judicial power in Mexico has focused mainly on the democratic process for appointing Supreme Court justices and federal judges. However, it is important to emphasize that the reform’s impact extends beyond the federal level to include local or state judges, who are responsible for administering everyday justice throughout the country.

According to the National Census of and Law Enforcement, which is conducted by INEGI, a Mexican government agency that gathers the country鈥檚 statistical information, federal courts received 950,184 cases in 2023, while state courts handled almost 2.2 million cases.

Although federal courts deal with fewer cases, the reform of the judicial power is expected to have the most significant impact on everyday legal matters. The technical capability and experience of the new judges will be crucial in addressing everyday justice cases in civil, family, commercial, and criminal disputes that directly affect Mexican citizens’ daily lives.

How lawyers can confront the new reality

The reform has created uncertainty among law students and professors, says R铆os Ferrer, adding that he expects a larger number of lawyers to lean more towards advisory services for organizations rather than litigation for their future career paths.

R铆os Ferrer says he believes that mediation and negotiation are important skills for lawyers to work on and develop. And by enhancing these abilities, lawyers can prevent potential conflicts or resolve existing ones as an alternative to court litigation.

For lawyers who choose to specialize in civil, family, labor, or criminal law, R铆os Ferrer recommends that they keep attending everyday justice or federal courts. This will help them react to how the elected judges administer justice and assess their performance. Having a fluent dialogue with members of the judiciary through memorandums will be a key aspect of lawyers鈥� practice as well.

Initially, dispute resolution in courts might need to be more pedagogical so that trials are conducted more thoroughly under the new reform. Litigators may want to be vigilant about who the candidates of the judiciary are and, once they are elected, investigate each one’s profile. By doing so, lawyers will be able to anticipate how instructive the lawyers will need to be with some of the new judges 鈥� and whether lawyers can be less so with others.

R铆os Ferrer also emphasizes the importance for litigators to maintain strong technical and ethical professional preparation, because it will be imperative to ensure that these new changes do not lead to corruption or the appearance of impropriety.

Conclusion

Mexico is embarking on an unprecedented historical transformation that will reshape the country in various ways. With the changes now outlined in the Mexican Constitution, the legal community remains hopeful that the judicial reform will benefit society and the country as a whole.

You can find out more about here.

The report, , gathered the opinions of 179 tax & accounting professionals in Brazil though an online survey in which these professionals were asked about their perspective on a number of reform-related issues, including how ready they feel for the transition, their satisfaction with the support received from their firms, and how the reform will impact them both positively and negatively.

They also were asked to estimate their firms鈥� adjustments in investment and budget in the short- and medium-terms due to the reform. (The new report is a companion piece to TRI鈥檚 previous report on the impact of Brazil鈥檚 tax reform on corporate tax departments, which came out in August.)

Key findings

The survey for the report on tax & accounting professionals was conducted in April and May of this year, and most of the respondents said that their firms had not yet begun implementing actions in response to the tax reform. According to these professionals, their firms were still in the process of collecting information and assessing how the reform might affect their operations. However, more than 60% of respondents said that they expect a high or very high impact of the reform in their businesses.

Tax & accounting professionals surveyed for the report identified both benefits and challenges from the transformative change brought by the reform plans. More than half of respondents agreed that the simplification of ancillary obligations, a decrease in the tax burden, and greater clarity in tax and fiscal planning will be positive changes. By contrast, respondents cited an overload of work during the transition period between existing and new tax models, a potential rise in the tax burden, and increased costs to learn, adapt, and change firms’ systems to comply with the new rules as the biggest challenges brought by the reform.

You can hear on a special edition of the 成人VR视频 Institute Insights podcast on Spotify (in Portuguese).

Not surprisingly, the majority of respondents said they anticipated their firms would increase investment in talent training, process updating, and tax management solutions within the first six months of the reform. This trend is expected to continue over the next two years, with talent training, process updating, and accounting management solutions being key areas of focus and investment.

These findings suggest that many tax & accounting firms in Brazil have already begun investing in human capital, anticipating that enhanced investment in process updating and tax management solutions will support their professionals during the transition to the new tax regime.

Regarding expectations for their firms鈥� tax management solutions and the role of those systems in the tax reform, tax & accounting professionals noted the two most important aspects of these systems during the transition period will be: i) keeping up with continuous updates with the new rules; and ii) increasing automation and accuracy in the systems鈥� ability to do tax calculations and assessments as well as generate ancillary obligations.

Conclusion

The new report shows that as Brazil鈥檚 tax reform plans being to have an impact local tax & accounting firms will need to plan and adopt strategies such as keeping abreast of regulatory changes, make use of technology and automation, and reallocate resources to areas like talent development and tax management systems, among other initiatives.

And the way to ensure a smooth transition, according to the opinions of the tax professionals who will be at the forefront of this change, will be for tax & accounting firms to prepare in advance in order to better position themselves to face the obstacles and leverage the opportunities that the tax reform will bring.

You can access the 成人VR视频 Institute鈥檚 report here.

At the same time, however, leadership focus on GenAI has not translated into practical applications, according to a new report from the 成人VR视频 Institute. The 2024 Tax Firm Technology Report has found many tax & accounting firms still have a way to go in making sure technology actually works in the best interest of the firm. Even if firms are increasingly purchasing software solutions, few firms have the personnel, workflows, and leadership strategies to make sure they are getting the most out of their technology usage, the report shows.

Overall, those firm leaders surveyed said they feel they are relatively mature in their technology usage compared to peers. More than half of survey respondents rated the tech competency of their firm personnel at a 7 or 8 out of 10, indicating that while there was some room for improvement, they felt generally positive about how technology was being used. Similarly, when asked about their firm鈥檚 overall position on the technology maturity curve, nearly half called themselves proactive 鈥� not to the level of optimized or predictive 鈥� but still generally positive.

However, these positive beliefs may not hold up to close scrutiny at many firms. For one, there is a lack of personnel within these firms whose role it is to actually guide broader technology decision-making 鈥� just more than half of respondents (55%) said their firms had a person formally charged with tax technology strategy. And outside the United States, that proportion dropped to less than half.

Further, few tax & accounting firms are actually measuring their technology. Only one-quarter of respondents said their firms were using metrics to track technology success, and at small firms that percentage dropped to just 10% of respondents. And even among those utilizing success metrics, the most common metrics were more qualitative 鈥� employee and client satisfaction, for example 鈥� rather than more quantitative metrics like return-on-investment or usage rates.

Perhaps most revealing when it comes to their approaches to technology, there are stark differences between the haves and have nots in the tax & accounting world. It鈥檚 perhaps unsurprising that large firms have more monetary resources and personnel to address technological needs, but those differences are placed in sharp relief when we see that the average large firm鈥檚 technology budget is about thirty-times the average small firm鈥檚 technology budget. This puts into question how small firms will keep up at all, particularly as clients come to expect technology usage that鈥檚 more sophisticated and more fully embedded into work processes.

鈥淚 don’t know what I don’t know,鈥� said one small firm owner from the US. 鈥淎nd working on my own, I’m only implementing changes that I hear about and approve.鈥�

Of course, as the tax & accounting profession moves into the future with GenAI and other technologies, there is a lot subject to change. Perhaps nowhere is this more evident than in Latin America, where survey respondents said they expect massive growth 鈥� not only in technology usage, but in the budgets and personnel required to support that usage.

Throughout the world, however, there is still a sense that tax & accounting professionals are poised to move into a new technology-sound age. Now, firms just need the infrastructure to get themselves there.

You can download a full copy of the “2024 Tax Firm Technology Report” from the 成人VR视频 Institute by filling out the form below:

For background, the Caribbean nation of Haiti, home to more than 11 million people, fell into full collapse on March 11, 鈥� a resignation forced by his inability to even return to Haiti due to the deteriorating security there. On April 24, , but the council is so far lacking in direct military support and has an incredibly difficult task ahead, with no guarantee of success.

Haiti鈥檚 core challenge has been a rise in gang violence in the nation, in which gangs control an and have killed hundreds of people in recent months in their fight to control more territory.

Gangs, however, may be a severely misleading term that understates the potential threat. The organizations currently operating and spreading violence in Haiti are much closer to small paramilitary and insurgent forces than they are typical street or criminal gangs. Importantly, they have , who have regularly used the gangs鈥� violence to secure business and political interests. With the dissolution of the military in 1995 due to repeated coups and with a police force too weak to maintain order, these paramilitary organization have become the preferred instrument for maintaining local interests across at all levels of Haitian society. Now, they are out of control, with . Sadly, the nation of Haiti is quickly evolving into a Caribbean version of Somalia, a failed state that will leak its instability into the rest of the region like an oil spill.

21^st century Caribbean pirates

Anyone with a romanticized vision of piracy should rethink that right now. As demonstrated in Somalia and increasingly in non-piracy attacks on commercial shipping in the Red Sea, modern piracy is exceptionally dangerous and destructive, both to the lives of the mariners operating in these routes and the global economy itself. For example, global trade between November and December 2023 as a result of Houthi attacks on commercial shipping in the Red Sea.

Haiti鈥檚 core challenge has been a rise in gang violence in the nation, in which gangs control an estimated 80% of Port-au-Prince, the nation’s capital.

When a state collapses into chaos, piracy in some form is likely due to the blend of the activity鈥檚 high potential income and a lack of viable alternatives. Ransom payments for captured vessels and their crews often reach millions of dollars, not to mention the value of plundered cargo. Further, piracy can often be undertaken with relatively few resources. For people in failed states, where formal employment opportunities are rare and governance is poor, the high rewards from piracy can be unavoidably attractive.

Yet, there is a notable difference between Haiti and Somalia that is likely to at least mitigate the economic potential of piracy. Haiti, and by extension the Caribbean, is the backyard of the United States Navy, the largest navy in the world. To put it simply, the US has a vested interest in maintaining stability in the Caribbean region and ensuring safe passage for ships traveling through these waters. This deterrence factor, coupled with the extensive surveillance and maritime patrol capabilities of the US, significantly reduces the window of opportunity for piracy to flourish near Haiti as compared to the more remote and less monitored waters off the coast of Somalia. A full-blown return to the golden age of piracy is thus substantially impossible, although attacks small enough to disrupt trade and push up transportation prices are somewhat more plausible.

A complicating factor however is that the U.S. Navy and Coast Guard are almost certain to have their hands full with another, potentially larger problem.

Another refugee crisis, another dangerous water crossing

With the collapse of public services and the economy, Haitian residents face dire shortages of food, clean water, fuel, and medical care, compelling many to flee the country in search of safety and basic necessities. The exodus is not likely to just be a trickle but rather a swelling tide of individuals and families risking perilous journeys by sea, desperate to escape the burgeoning anarchy. The United Nations has already tracked an upswell of refugees fleeing the island of Hispaniola, which Haiti shares with the Dominican Republic.

Given its proximity to Florida and other parts of the US, a large portion of these refugees are likely to attempt to seek refuge here. Past history, including the exodus from Cuba as well as more recent experiences with the refugee crisis in the Mediterranean, shows just how dangerous this type of crossing is to the people attempting it, as well as the political impact it can inspire in the intended destinations.

The Biden administration is already considering using Guantanamo Bay, located only 200 miles from Haiti, . Yet the US immigration system is already strained and the failure of a major immigration bill to pass early this year suggests any kind of action is unlikely until 2025.

With the collapse of public services and the economy, Haitian residents face dire shortages of food, clean water, fuel, and medical care, compelling many to flee the country in search of safety and basic necessities.

What this means is that the US is likely to experience a major surge of refugees coming via a dangerous water crossing at a time when the US is less able to absorb the flow. This refugee crisis is certainly a human catastrophe on its own, but such a mass immigration movement also tends to increase risk more broadly.

The potential for broader risk

While a collapse in Haiti presents challenges concerning piracy and refugees, the most dangerous risks likely would be the potential secondary effects in terms of regional security. A failed state in Haiti could open doors for a spread of illicit activities, such as drugs and weapons trafficking, human trafficking, and terrorism, all ways to exploit the disorder to undermine regional stability and commerce.

Many nations in the region already face high levels of violence and adding a haven for illicit activities would only worsen matters. A collapse in Haiti could also destabilize other fragile states in the Caribbean and Central America, leading to increased migration and political turmoil, creating a domino effect.

One of the most dangerous possibilities involves the discovery of significant oil reserves off Guyana’s coast. While this discovery could greatly improve Guyana’s economy and enhance the region’s geopolitical significance, instability in nearby Haiti could deter investment and raise security costs for oil exploration and production. A deteriorating security situation in the Caribbean might increase the risk of sabotage or terrorist attacks on oil infrastructure, impacting the global energy market. Given Guyana鈥檚 territorial dispute with Venezuela over this same oil-rich region, there is the possibility for the situation to further spiral.

Ignoring the risks stemming from Haiti’s collapse into a failed state would be unwise. Regional disruptions are likely, and there’s a real possibility of a catastrophic chain reaction. While there are a number of steps between the collapse of Ariel Henry鈥檚 government and the full potential chaos outlined here, the dance has now begun in earnest. Therefore, the situation should be carefully watched by every major entity that has a vested interest in the Caribbean or adjacent regions.

For more on the pressures facing global trade and supply chains, listen to .

This is especially important when business seek to expand into other geographic areas or markets. At the early stages of a site selection process, such as taxes, costs, labor and community characteristics, utilities, logistics and transportation, and facility-specific requirements, among others, to choose their best option. Nevertheless, the heightened scrutiny from investors, consumers, and regulatory bodies for sustainable and ethical practices makes it crucial now to factor ESG into the equation. In this sense, companies should take into consideration how their operations in a specific location might impact the local environment, biodiversity, or communities and look for ways to mitigate any adverse effects.

The escalating demand for ESG compliance in the United States and Europe is compelling companies around the world to map their supply chains to ensure a responsible business environment. As part of a broader ESG landscape review, companies should do comprehensive mapping of the supply chains for any new site under consideration, tracing the origins of their raw materials, identifying potential risks, and assessing the environmental and social impacts of their operations.

Relevance of ESG in site selection in Latin America

Latin America, with its rich biodiversity, abundance of natural resources, and diverse social groups, presents a unique opportunity for companies looking to set up a project. Latin America鈥檚 comparatively lower labor costs make it an attractive destination for manufacturing and service industries seeking cost-efficient operations without compromising quality. Additionally, the region鈥檚 increasing infrastructure developments, trade agreements, and strategic geography greatly contribute to a conducive business environment, making the region a promising option for investors.

Further, Latin America has made strides to address ESG concerns, with notable advancements. For example, , and most recently have adopted green taxonomies, while other countries, like Brazil, are expected to follow in the near future. Indeed, Brazil has made under the International Sustainability Standards Board鈥檚 International Financial Reporting Standards 1 and 2 for all publicly traded companies starting in 2026.

Several other countries in the region have also enacted domestic laws that, although not explicitly labeled as ESG, involve environmental, social, or corporate governance aspects. These regulations carry substantial implications that investors need to acknowledge, some of which should be considered in the early stages of choosing the geographical location for a new project.

Differing laws throughout the region

Interestingly, countries in Latin America have different environment-related tax laws that won鈥檛 have an equal impact on a company鈥檚 financial performance. With the election of Colombian President Gustavo Petro in 2022 and his green agenda, the country on the oil and gas sectors. And addresses the reduction of atmospheric pollution and greenhouse gases; while in Mexico, , each with different fees and targets.

According to each project鈥檚 profile and needs, companies and firms can also benefit more in certain places than others. Brazil鈥檚 ongoing efforts to 鈥� thanks to a cleaner energy grid and emerging green hydrogen 鈥� present a unique opportunity for procurement of materials with low embodied carbon. While some countries are working to develop carbon markets, in the region that has an active regulated market.

Moreover, companies鈥� carbon footprints and emissions can be reduced if supply chains are brought closer together or located strategically. This information is not only commonly disclosed in ESG reporting but need also required to be reported in and Pollutant Release and Transfer Registry (PRTR).

Due to the growing efforts to promote a sustainable business environment, the European Union requires companies intending to supply the European markets to comply with specific regulations, some involving land use change. The , for example, requires companies that sell seven commodities 鈥� soy, cattle, palm oil, wood, cocoa, coffee, and rubber, most of which are extensively produced in Latin America 鈥� to prove that their production does not come from or result in deforestation or forest degradation.

Regarding social responsibility and community engagement, foreign companies or firms coming into Latin America need to bear in mind the legally binding international treaties and agreements of the region. Latin America is home to numerous indigenous communities, many of which have suffered from marginalization and displacement. For this, was designed to protect their rights and territories. Further, , signed and ratified by many countries in the region, requires not only a certain level of protection of the environment, but also promotes public participation, transparency, and access to justice in environmental matters.

Going beyond traditional procedure to ensure success

Because of the uniqueness of each country鈥檚 legal framework and the advancing dynamics of ESG, today鈥檚 companies should undertake new and effective methods to map and address as many of the ESG aspects of a new project as possible, says , a legal expert with an extensive background on ESG matters. Based on her experience and perspective, Owens says that lawyers should conduct a thorough landscape assessment of the legal ESG parameters that apply to the site selected, looking at rules and requirements related to the environment (including biodiversity), social communities, and governance. As part of the analysis, Owen advises lawyers to ideally look at:

• • • The national, state, and local or municipal regulations around ESG, such as 惭别虫颈肠辞鈥檚 state-level greenhouse gas emission taxes
    • The environmental classification for the area to determine whether it falls within any environmental special zoning
    • The proximity to indigenous communities and whether engagement strategies are required
    • The title to the land to ensure clear title and ownership
    • The projections for carbon emissions, whenever possible, to better understand whether the project would fit within stated corporate targets
    • The local regulations on water, land use, waste management, emissions, and biodiversity

The lawyer on the site selection team can be an integral link between corporate subject matter experts and the new local regulatory requirements, Owens says, adding that companies having professionals who know the laws on their teams would then be in a better position to determine if the proposed location would advance a company鈥檚 sustainability goals as well as its bottom line 鈥� or not.

Considerations for the future

Countries in Latin America not only have their own legal structures that pose relevance for investors, but their ESG-related regulations must be taken into account. The region is rich in biodiversity, but also in regulatory diversity 鈥� and a comprehensive analysis of the different incentives, benefits, and legal obligations will be key for any planned project to thrive.

Countries across the region are not waiting for the US or Europe to lead the way on ESG. They are taking action on their own and will continue to do so, each with their distinct agenda and goals. Discrepancies between laws and enforcement levels across countries will raise further challenges.

Indeed, the resulting compliance patchwork may not necessarily advance ESG goals, but it is a reality that legal practitioners and businesses in the Americas need to be aware of 鈥� and learn how to navigate.

The effect of such regulations is evident in supply chains, for example, where firms and consumers in these countries are becoming more discerning. There is a growing reluctance to import products from companies that engage in operational practices that may involve modern slavery or child labor, or that do not comply with environmental laws and standards.

The alignment of the EU with these new laws reflects the growing trend in which the demand for ethically produced goods is becoming a non-negotiable aspect of international trade, emphasizing the global impact of ESG considerations in shaping commerce and cultivating a more sustainable global economy. Not surprisingly, enterprises in Latin America are beginning to face the evolving reality that, in order to maintain access to lucrative markets and especially those throughout the EU region, they must align their production processes with the global ESG agenda.

At present, most businesses across Latin America that choose to embrace ESG principles often do so voluntarily, recognizing the potential for unlocking greater financial and commercial opportunities. A significant change of paradigm is on the horizon, however, as several Latin American governments have made the enforcement of mandatory ESG disclosure requirements for companies part of their agenda.

Progress towards a more responsible business climate

Over the past few years, Latin America has witnessed significant advancements in fostering a more responsible business environment, marked by the implementation of local and global frameworks and collaborative initiatives aimed at promoting sustainability and corporate governance. To enhance transparency and encourage sustainable business practices, the Colombian Stock Exchange collaborated with the Global Reporting Initiative and jointly launched the in July 2020. The Guide serves as an instrument to encourage the disclosure of sustainability reports aligned with international standards.

In a parallel effort, 颁丑颈濒别鈥檚 Financial Market Commission (CMF) issued in November 2021 the , which requires targeted issuers to disclose their sustainability and corporate governance performances 鈥� which must be aligned with the Sustainable Accounting Standards Board framework 鈥� in their annual reports. In addition, the for better practice and compliance of Rule No. 461.

Brazil, the biggest economic powerhouse in the region, has recently announced one of the most important developments on its ESG agenda. In October, the Brazilian Ministry of Finance and Securities and Exchange Commission declared its the International Sustainability Standards Board’s International Financial Reporting Standards (IFRS) Sustainability Disclosure Standards (IFRS S1 and IFRS S2) into the country’s regulatory framework, becoming the first country in the region to do it. Brazilian authorities have outlined a comprehensive plan, initiating a voluntary adoption phase starting in 2024 and progressing towards mandatory implementation by January 2026. This strategic approach underscores Brazil’s commitment to aligning the business landscape with international sustainability norms, setting a precedent for responsible corporate conduct in Latin America.

Pressure on businesses to comply with ESG

There is no question about the benefits that flow down to society and the environment when more companies adopt ESG strategies. Still, pressure from the markets and the imposition of new mandatory regulation to comply with ESG can poses certain challenges and concerns for companies.

鈥� a legal expert on ESG with significant experience in anti-corruption, antitrust, and corporate remediation 鈥� identifies two potential risks that firms in Latin America will face under this landscape: greenwashing and greenhushing, along with unsubstantiated and fraudulent assessments impacted by corruption, lack of adequate legal oversight, and poor corporate governance.

Companies in the region, in order to be competitive for external markets or comply with the law, could be motivated to make exaggerated or misleading claims about their environmental and social friendliness, explains Camargo. In contrast, other companies could be incentivized to under-report their sustainability practices in order to avoid criticism and scrutiny, or for other particular reasons. Additionally, the urge to establish a presence in the green business arena may push organizations to perform transactions as they have always done without the adequate legal lenses that will shape their future impact and sustainability. These measures will be key for doing business with the European Union, for instance, as soon as early 2024.

Lawyers will play an essential role

Importantly, legal professionals will perform a critical part in advising companies for best practices, according to Camargo. As professional guidance, he recommends that lawyers engage in a pivotal role by which they substantiate their clients鈥� reports and also provoke them to disclose their results when they act properly and could benefit from such disclosure. This is crucial to balance risk and opportunities to ensure that ESG initiatives contribute meaningfully to a sustainable and responsible corporate environment in the region, Camargo adds.

The change in the business dynamics in order to promote better transparency, accountability, and responsible corporate practices is unavoidable. As corporations in Latin America adapt to the new landscape, the convergence of voluntary ESG initiatives and coming mandatory regulation is poised to reshape the region’s economic landscape, emphasizing the link between sustainable business practices and long-term international success. Not incidentally, law firms and their lawyers will have a significant role to play in the transition.