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ESG Latin America & the Caribbean Guide 2024 | Charting Sustainable Futures

Honduras

(Latin America/Caribbean) Firm Gufa Law

Contributors Marcela Barralaga
Sofia Alvarez
Kimberlin Ramos

Updated 22 May 2024
ESG Regulation related to climate change prevention or mitigation, specifically concerning carbon footprint or pollution measurement, decarbonization strategies, and/or mandates and strategies to achieve local carbon neutrality commitments

Laws/regulations concerning climate change prevention or mitigation include:

  • Climate Change Law - Decree 297-2013, Special Law for Climate Justice of Transactions of
    Forest Carbon - Decree 54-2023
    1.) Its main objective is to establish the principles and regulations necessary to plan, prevent and respond in an adequate, coordinated and sustained manner to the impacts generated by climate change in the country, adopting to this end practices aimed at reducing environmental vulnerability and improving the capacity of adaptation, which allow the development of proposals for the prevention and mitigation of the effects produced by climate change resulting from greenhouse gas emissions and other causes of poor environmental management. 2.) Legal framework and administrative, technical and financial conditions for the use and distribution of environmental, social and economic benefits.
    The law aims to achieve climate justice, sustainability, equity, participation, and transparency, allowing the State to be empowered to carry out carbon transactions with national and foreign entities, organizations, and companies.

    Reference: Honduras' Official Newspaper "La Gaceta"

The scope of the application of this law is State.

ESG Regulation regarding energy transition (requirements or promotion and use of new second-generation renewable energy sources such as solar, wind, tidal, H2, geothermal, among others).

Laws/regulations concerning energy transition include:

  • Law to Promote the Generation of Electrical Energy with Renewable Resources
    Its main purpose is to promote public and/or private investment in electricity generation projects with national renewable resources.

    Reference: Honduras' Official Newspaper "La Gaceta"

The scope of the application of this law is State.

ESG Regulation concerning electricity markets, carbon markets, or similar.

Laws/regulations concerning electricity markets, carbon markets, or similar include:

  • Regulations of the General Law of the Electrical Industry, the Electrical Distribution Service Regulations, and Special Law for Climate Justice of Transactions of Forest Carbon - Decree 54-2023
    Develops the provisions of the law; regulate the activities of generation, transmission, operation, distribution and marketing of electricity in the territory of the Republic of Honduras; the import and export of electrical energy, in addition to what is established in international treaties on the subject, entered into by the Government of the Republic, and the operation of the National Interconnected System, including its relationship with the electrical systems of neighboring countries; as well as, with the Regional Electrical System and the Central American Regional Electrical Market.

Reference: Honduras' Official Newspaper "La Gaceta"

The scope of the application of this law is State.

ESG Regulation in the realm of green or sustainable financing, including taxonomies, provisions for mandatory reporting of material financial information on environmental or social matters, as prerequisites for issuing thematic bonds (green, sustainable,

Laws/regulations concerning the realm of green or sustainable financing include:

The scope of the application of this program is State.

ESG Regulation for preventing greenwashing.

Laws/regulations concerning the prevention of greenwashing include:

  • Consumer Protection Law and Regulation of the Protection Law to the Consumer
    Create a protection for the everyday consumer covering the greenwashing.

    Reference: Honduras' Official Newspaper "La Gaceta"

The scope of the application of these laws is State.

Regulation on ESG Due Diligence applicable to value chains (MRV protocols to ensure the environmental integrity of products and services, etc.).

Not applicable. Honduran companies have their own sustainability report to ensure the environmental integrity of products and services, but we do not have a regulation or law regarding the Due Diligence.

Regulation in the field of circular economy.

There is nothing specifically regarding the circular economy, but the Regulations for the Comprehensive Management of Solid Waste covers it in a broad spectrum.

Reference: Honduras' Official Newspaper "La Gaceta" 

ESG Regulation related to stakeholder well-being and social impact.

In Honduras, there are specific laws related to environmental, social and governance, although they are not integrated into an overall ESG regulatory framework, including:

The scope of the application of these laws is State.

ESG Regulation concerning non-discrimination.

Laws/regulations concerning non-discrimination include:

The purpose of these laws is to coordinate the actions that the state and civil society must take to eliminate all types of discrimination against women, any discrimination that may alter equality of opportunity or treatment in employment and occupation, as well as any type of discrimination based on race.

The scope of the application of these laws is State.

ESG Regulation pertaining to the prevention of modern slavery.

Laws/regulations concerning the prevention of modern slavery include:

  • Criminal Code
  • Labor and Social Security Law
    This law regulates and punishes as a crime labor exploitation whoever restricts the rights that workers have legally recognized in public or private employment.

The scope of the application of these laws is State.

ESG Regulation regarding Diversity, Equity, and Inclusion - DEI.

Laws/regulations concerning Diversity, Equity, and Inclusion include:

The purpose of these laws is to coordinate the actions that the state and civil society must execute to obtain equality of men and women before the law, as well as equal remuneration between male and female labor for work of equal value, in addition to regulating the inclusion in the educational process of persons with disabilities.

The scope of the application of these laws is State.

Regulation on ESG-linked compensation.

Not applicable, however, the Regulations of the Law on Public Finance Management, Control of Exemptions and Anti-Evasion Measures incentivize companies and institutions in Honduras that choose to implement ESG-related compensation practices on a voluntary basis as part of their social responsibility policies, but there are no laws regulating these practices.

ESG Regulation for the protection of vulnerable or minority communities.

Laws/regulations concerning the protection of vulnerable or minority communities include:

The purpose of these laws is to fully guarantee persons with disabilities the enjoyment of their rights and to promote and provide for their integral development within society in an equitable manner, in addition to guaranteeing the protection and rights of women and children in Honduras. Nevertheless, there is no regulation regarding the LGBTQ+ community.

The scope of the application of these laws is State.

ESG Regulation for economic development of vulnerable or minority communities or groups.

Laws/regulations concerning the economic development of vulnerable or minority communities or groups include:

The scope of the application of these laws is State.

Regulation on Personal Data Protection, concerning data usage transparency, limits on data usage to prevent discrimination issues, and corporate digital responsibility.

Laws/regulations concerning Personal Data Protection include:

The scope of the application of this law is State.

ESG Regulation regarding the integration of the board of directors, board of trustees, or management body of the company (minimum participation/representation of women or minority groups, guidelines on the composition of board members with expertise in ES

Laws/regulations concerning the integration of the board of directors, trustees, or management body of the company include:

  • Code of Commerce
    All Merchants including shareholders, president of the board of directors, secretaries, sole administrators, and other figures in any company for acts of commerce and commercial things will be governed by the provisions of the Code of Commerce and of the other commercial laws in their absence, for commercial uses and customs and in the absence of these, by the rules of the Code Civil.

The scope of the application of this law is State.

Regulation on fiduciary responsibility and administrators' roles in environmental and social risk management (standards or interpretations regarding the scope of fiduciary responsibility or administrator's duty concerning the company's social purpose, bas

Laws/regulations concerning fiduciary responsibility and administrators' roles in environmental and social risk management:

The fiduciary may be established by act or by will, depending on the circumstances, and as a unilateral act, or as a contract between two or more people. In addition to what is established in the Honduran Commercial Code regarding fiduciary trusts, in 2017 the National Banking and Insurance Commission issued CNBS Circular No. 007/2017, containing the “Rules for the Administration and Supervision of Trusts", whose main purpose is to regulate operations related to the constitution and administration of trusts carried out by banking entities and savings and loan associations ("authorized entities"), to act as fiduciaries in accordance with the law. In Honduras, fiduciary trusts are widely used as instruments of public administration to finance projects developed with State funds; Likewise, they are used by natural persons for the proper management of their personal assets.

ESG Regulation concerning corporate purpose.

The laws/regulations concerning corporate purpose include:

  • Code of Commerce
  • Decree No. 48-2022 containing the Law for the Economic Recovery and Reactivation of Micro and Small Businesses

The Honduran government may enact laws and regulations aimed at promoting ESG principles in corporate activities. These regulations could encompass environmental protection, labor rights, corporate governance, and other social considerations. Regulatory bodies or industry associations in Honduras may develop corporate governance codes that include guidelines for incorporating ESG factors into corporate purpose and decision-making processes.

The scope of the application of these laws is State.

Regulation on types of Benefit and Collective Interest Companies (certifications like B Corps, specific regulations for BIC companies).

Laws/regulations concerning types of Benefit and Collective Interest Companies include:

Honduras may not have specific regulations tailored specifically for Benefit and Collective Interest ("BIC") companies or certifications like B Corps. However, the concept of B Corps and similar models align with global trends in corporate social responsibility and sustainable business practices, Governments and civil society organizations may work to raise awareness among consumers about BIC companies and certifications like B Corps. This can help create demand for socially and environmentally responsible products and services, driving the adoption of BIC models by businesses.

The scope of the application of these laws is State.

ESG Regulation regarding supply chains from the perspective of ESG risk governance.

Laws/regulations concerning supply chains from the perspective of ESG risk governance include:

  • Companies Statutes
    Companies can incorporate ESG requirements into supplier contracts, including provisions related to labor standards, environmental protection, and social responsibility. By formalizing these obligations, companies can hold suppliers accountable for their ESG performance and provide recourse in case of non-compliance.ESG risk governance in supply chains often involves conducting due diligence to identify and assess potential risks associated with suppliers and business partners. This process may include evaluating factors such as labor practices, environmental impact, human rights records, and compliance with relevant regulations and standards.

The scope of the application of these statutes is State.

ESG Regulation in the context of M&A (ESG due diligence).

Not applicable, however, ESG due diligence helps ensure compliance with relevant regulations and identifies any potential liabilities or non-compliance issues that could affect companies' transactions on a daily basis.

ESG Regulation related to Corporate Digital Responsibility.

Not applicable, however, while specific ESG regulations related to Corporate Digital Responsibility may still be evolving, companies can proactively integrate digital responsibility principles into their ESG strategies and practices to mitigate risks, enhance stakeholder trust, and contribute to long-term sustainability.

Specific mandates related to national alignment with specific reporting standards.

Laws/regulations concerning specific mandates related to national alignment with specific reporting standards include:

The scope of the application of these laws is State.

Standards regarding the scope and frequency of such reports.

Laws/regulations concerning the scope and frequency of such reports include:

  • Transparency and Access to Public Information Law & Regulations of the Law of Transparency and Access to Public Information
    The Institute will prepare an annual report on compliance of the governmental institutions.

The scope of the application of these laws is State.

ESG Latin America & the Caribbean Guide 2024 | Charting Sustainable Futures

Honduras

(Latin America/Caribbean) Firm Gufa Law

Contributors Marcela Barralaga Sofia Alvarez Kimberlin Ramos

Updated 22 May 2024