The Role of Capital Market Service Providers in Corporate Governance

4. Case study: Chile

Abstract

This case study chapter examines Chile’s corporate governance framework in relation to Principle III.D. of the G20/OECD Principles, which calls for proxy advisors, ESG rating and data providers, as well as index providers, to disclose and minimise conflicts of interest and ensure transparency in their methodologies. The chapter reviews the practices of these service providers in Chile. The chapter concludes by identifying policy considerations for each type of service provider.

4.1. Introduction

Chile’s public equity market totals 184 companies with a market capitalisation of USD 163 billion by the end of 2024. Financial companies account for 25% of the country’s market capitalisation, followed by utilities (18%), basic materials (14%) and consumer non-cyclicals (14%). The market capitalisation to GDP ratio stands at 49%, above Latin American country peers such as Brazil (30%), Colombia (17%), Mexico (22%) and Peru (30%), but below the OECD average (57%). Chile’s ownership structure is dominated by corporates that own 50% of the country’s listed equity, followed by strategic individuals that hold 14% and institutional investors with a 13% share. Almost two‑thirds of the institutional investor ownership is attributed to investors domiciled outside Chile. The ownership concentration in the Chilean listed sector is significant. The single largest shareholder owns 59% of the equity shares on average, and the three largest own almost 80%.

In 2023, the stock exchanges of Chile, Colombia and Peru merged into a group called “Holding Bursátil Regional S.A” as part of a project of market integration (NUAM). However, they continue to operate as three independent infrastructures within their respective jurisdictions, under the same holding company (OECD, 2025[1]).

Chile’s Financial Market Commission (CMF) aims at ensuring the correct functioning, development and stability of the financial market, facilitating the participation of market agents and promoting the protection of public trust (CMF, 2025[2]). CMF began its functions in 2017, following the enactment of Law No. 21 000, which made it the legal successor and continuation of the Superintendency of Securities and Insurance. Since 2019, CMF is the legal successor of the Superintendency of Banks and Financial Institutions, pursuant to Law No. 21 130, which mandated its integration into CMF.

CMF is responsible for supervising entities in the securities markets, insurance companies, banks, financial institutions and other entities established by law, ensuring they comply with laws, regulations, bylaws and other provisions that govern them. To date, CMF does not regulate proxy advisors, ESG rating and data providers, or index providers.

4.2. Market practices of proxy advisors, institutional investors and listed companies

CMF does not directly regulate proxy advisors or proxy voting platform providers. However, the General Rule No. 435 of 2020 that regulates the participation and remote voting at shareholders' and bondholders' meetings stipulates that the board of directors, the fund managers or the bondholders’ representatives are responsible for implementing the required systems or procedures to verify the identity of the persons participating remotely in the meeting. This includes verifying who has the powers that allow them to act on behalf of the shareholder or bondholder, as appropriate, if they are not acting on their own behalf, and to reserve the votes cast remotely until the end of the counting of the other votes on the day of the meeting or assembly (CMF, 2020[3]).

Decree Law No. 3 500 establishes that pension funds are required to exercise their voting rights, disclosing both the voting policy and the actual voting records. They are also responsible for the management of conflicts of interest by setting a policy and disclosing it (Congreso Nacional de Chile, 1980[4]). While fund managers are not required to exercise their voting rights, they must set a policy on management of conflicts of interest and disclose it (Congreso Nacional de Chile, 2013[5]; CMF, 2018[6]; CMF, 2024[7]; CMF, 2021[8]).

Chile’s listed equity market is dominated by large companies. By the end of 2024, the largest 25 companies accounted for 75% of the country’s total market capitalisation of USD 163 billion. Proxy advisors have only a limited presence in the country’s capital market, and no domestic proxy advisory firm has been established. Stakeholders generally see no compelling need for the development of local proxy advisory firms, given the size of the market and the fact that most companies have a dominant controlling shareholder. At the same time, some market participants recognise that a more substantial presence of proxy advisors in Chile could be beneficial for the market, incentivising shareholders to exercise their voting rights more often.

Institutional investors in Chile are not frequent users of proxy advisors in their voting processes. Pension funds report conducting their own analysis and voting accordingly. For their direct investments in Chilean companies, they exercise their voting rights in shareholder meetings, particularly in board member elections. For their indirect investments (e.g. those made through UCITS funds and ETFs), voting rights are exercised by the asset managers. Although they do not vote directly in these cases, their due diligence processes reportedly include an assessment of the asset manager’s stewardship practices, including their voting and engagement policies.

From the companies’ perspective, large listed companies in Chile report that they do not engage directly with proxy advisors on their benchmark policies. Ahead of the proxy season, some proxy advisory firms provide the companies with their report at the same time as they are shared with investors, while others charge an additional fee for that report. These companies noted that proxy advisory firms have, in some cases, revised their recommendations following discussions with the company. They also reported awareness of a proxy advisory firm offering consulting services to help companies improve their ESG ratings.

4.3. Market practices of ESG rating and data providers, institutional investors and listed companies

CMF does not regulate ESG ratings and data providers. Nevertheless, the Public-Private Green Finance Roundtable, created in 2019, aims to define the country’s agenda among the government, regulators and financial market institutions, focusing on incorporating the risks and opportunities related to climate change into their strategies. The Roundtable is led by the Ministry of Finance and comprised of representatives from CMF, the Central Bank of Chile, the Superintendency of Pensions, Banco del Estado de Chile, NUAM (formerly the Santiago Stock Exchange), the Electronic Stock Exchange of Chile, the Association of Pension Fund Administrators, the Association of Banks and Financial Institutions, the Chilean Insurers Association, the Chilean Association of Investment Fund Administrators, the Association of Mutual Fund Administrators and the Los Andes Compensation Fund (Ministerio de Hacienda, 2025[9]).

In this context, the Chilean Insurers Association published recommendations in 2019 that include efforts to incorporate elements into management processes that contribute to minimising adverse social and environmental impacts. It is recommended for key executives to use quantitative tools such as information provided by risk rating agencies, ESG indexes, sectoral reports and information delivered by specialised data providers (Asociación de Aseguradores de Chile, 2019[10]).

In 2024, the Public-Private Green Finance Roundtable issued the second Green Deal (Acuerdo Verde), whose four pillars are (i) governance, (ii) strategy and opportunities, (iii) risk management, and (iv) objectives and metrics. With regard to the latter, it is recommended for financial authorities to identify information and data gaps that persist regarding climate risks, and then move forward with closing them and, whenever possible, make this information publicly available (Ministerio de Hacienda, 2024[11]).

The progress report published in June 2025 by the Public-Private Green Finance Roundtable highlights challenges associated with access to quality data, regulatory obstacles and financial costs related to the implementation of measurement and reporting tools. In this report, participating institutions acknowledged the need to develop infrastructure to automate ESG data collection, analysis and reporting processes. They mention that the diversity of sources and methodologies could benefit from an increased use of technology and automation (Ministerio de Hacienda, 2025[12]).

The 2025 progress report also highlights that CMF is monitoring the progressive implementation of General Rule No. 461, recently updated by General Rule No. 519, which establishes the adoption of International Financial Reporting Standards S1 and S2 developed by the International Sustainability Standards Board, with the aim of generating and disseminating structured data that facilitates access to and analysis of environmental information (Ministerio de Hacienda, 2025[12]).

In 2022, the Superintendency of Pensions issued General Rule No. 276, which establishes that pension funds should adopt a policy that identifies the appropriate management of opportunities and risks arising from climate change and ESG factors (Superintendencia de Pensiones, 2020[13]).

Pension funds report requesting information annually from their investee companies in line with Sustainability Accounting Standards Board (SASB) standards, which they aggregate into an annual risk report. They do not necessarily consider the ESG ratings for Chilean issuers in their portfolios. Some pension funds note that they choose not to use ESG ratings for Chilean direct investments due to limited transparency in methodologies, insufficient coverage of Chilean issuers and potentially inaccurate information, as data from the parent company for multinational issuers is often reflected. However, they report using raw ESG data from external providers as input for their internal ESG analysis.

For their investments abroad, pension funds reportedly inquire about the asset managers' ESG due diligence, including their engagement with issuers. Some pension funds also use ESG ratings from large providers given their broad coverage of issuers, using the top-level ratings without considering the underlying data collected and analysed by the rating provider. Others report using external ESG ratings to prioritise which funds to analyse more promptly, without including this information in the funds’ final evaluation. Pension funds further acknowledge that when comparing ESG ratings across providers, significant challenges arise due to differences in methodologies, making it difficult to interpret and compare results consistently.

In 2024, CMF published the “First ESG survey in the mutual and investment funds in Chile”, conducted in September 2022 and targeted at 55 mutual and investment fund management companies with assets under management of approximately USD 29 billion that integrate ESG factors and USD 900 million following ESG criteria more strictly. While 91% of these fund management companies consider ESG criteria a relevant issue, 51% report that they do not have policies associated with ESG criteria regarding investment and decision-making for managed funds. When asked about the development of ESG metrics or indicators applicable to the funds under management, half of the fund management companies reported using such metrics. While some develop their own indicators based on international standards, such as SASB Standards, others report using third-party ESG ratings and data providers (CMF, 2024[14]).

In 2024, the investment funds’ association – Asociación Chilena de Administradoras de Fondos de Inversión (ACAFI) – published the second edition of the “Sustainable Investment Guide in Chile”. Among the fund managers surveyed, 68% reported having a sustainable investment policy, with 100 funds that consider ESG factors in their investment decisions (ACAFI, 2024[15]). The guide outlines the characteristics of sustainable investments in Chile as well as the recent global and local regulatory developments, particularly concerning the main reporting standards. It also provides a section listing the international ESG rating and data providers with presence in Chile.

Some fund management companies report high discrepancies in ESG ratings, and do not always understand the metrics used in the methodologies. When engaging with issuers, some of these fund managers find it difficult to grasp what is material in each company. Comparability was cited as one of the main challenges; however, they note that taxonomies have helped to address this issue. Some acknowledge that they do not pay to have access to granular data from ESG ratings, but instead, they rely only on the top-level scores offered by ESG rating providers. Some also report using their own methodology, notably including assessments of non-listed companies.

Listed Chilean issuers with international operations report significant pressure, particularly from foreign investors, to improve their sustainability disclosure. Large issuers in Chile tend to receive comprehensive coverage from ESG rating providers. While some providers require issuers to pay a fee to be considered for inclusion in their rating universe, others base their assessments exclusively on publicly available information.

Issuers report that information requests from different ESG rating providers vary, with some prioritising broader corporate governance aspects and others giving more consideration to climate-related issues. These information requests can often take the form of questionnaires sent by the ESG rating provider. According to issuers, the methodologies for ESG ratings used in Chile – and more broadly across the Latin America region – do not vary depending on the region. Issuers are also aware that some ESG rating providers offer consulting services to help improve their ratings.

Issuers indicate that ESG rating providers charge a fee for more details on the metrics used to calculate ratings. These fees could potentially be perceived as high, particularly by smaller issuers. Issuers can request modifications to a limited number of metrics – often two or three – that feed the ESG rating calculation without paying a fee. However, if they wish to contest additional points, they need to pay a fee to the ESG rating provider. Moreover, issuers acknowledge hiring ESG rating and data providers to review their ESG data.

To date, no local or regional ESG data providers or ESG rating providers have relevance in the Chilean market. International ESG rating and data providers operating in Chile report that they follow international recommendations, such as the IOSCO’s Recommendations for ESG Ratings and Data Product Providers and the ICMA Code of Conduct for ESG Ratings and Data Products Providers (ICMA, 2023[16]; IOSCO, 2021[17]). They also note their engagement with IOSCO’s Sustainable Finance Taskforce, which has focused on promoting high-quality ESG ratings and data products to avoid fragmentation across jurisdictions.

ESG rating providers note that Chile, along with Brazil, Colombia, and Mexico, represent the Latin American markets showing the strongest demand for their services. One provider reports developing ESG scores for more than 60 mapped industries, resulting in different questionnaires for each sector. In addition, ESG rating providers use publicly available information and can also receive confidential information. They operate within defined review windows during the year, and issuers can choose which window to use. Issuers that complete the questionnaire may dispute up to three criteria without charge; disputes beyond this limit require a fee.

One ESG rating provider states that the methodologies used are consistent across regions and that it employs a double materiality approach. The provider also notes that issuers can hire their services for a new assessment of their ESG score, including suggestions on how to improve their ESG score. Insurance companies and asset managers are the main clients among investors in Chile. There is a high interest from insurance companies in estimated GHG emissions.

4.4. Market practices of index providers, institutional investors and listed companies

CMF does not regulate indices. Since 2018, the Santiago Stock Exchange has outsourced the management of its indices to a third‑party provider. This provider calculates the S&P/CLX IPSA index, which seeks to measure the performance of the largest and most liquid stocks listed on the Santiago Exchange. The S&P/CLX IPSA index counts 30 constituents, as of September 2025, of which 27% are financials, 13.7% are in the materials sector and 13.6% are consumer discretionary (S&P Global, 2025[18]). The provider also offers a range of additional indices, such as the S&P/CLX Chile Dividend Index and indices covering Chilean peso‑denominated sovereign bonds broken down by maturity, as well as inflation-linked bonds (S&P Global, 2025[19]).

NUAM (formerly the Santiago Stock Exchange) also has an agreement with MSCI to provide the MSCI NUAM index, designed to represent the performance of the equity markets of Chile, Colombia and Peru. As of June 2025, the index includes 56 issuers – 36 in Chile, 13 in Colombia and 8 in Peru – and is rebalanced quarterly (NUAM, 2025[20]). Stakeholders note that the methodology was discussed with the issuers in the region.

International index providers operating in Chile report that they follow international recommendations, such as the IOSCO Principles for Financial Benchmarks, and publish annual reviews of their adherence to these principles.

Other index providers also operate in the local market. The Chilean Benchmark Facility (CBF) – a company within the group Global Rated Systems, recently acquired by Euronext Group – is an independent reference rate administrator. CBF calculates Chilean indices, including interbank rates and overnight rates between banks. Since 2018, CBF has assumed responsibility for calculating these indices from the Chilean Banking Association.

Currently, there is no regulation for financial benchmarks in Chile. As such, CMF and the Central Bank do not monitor CBF. However, CBF complies with the IOSCO Principles for Financial Benchmarks. In 2021, CBF introduced a Panel Bank Code of Conduct for CBF benchmarks, along with the public disclosure of governance documents, such as their calculation methodology, including crisis scenarios and a re‑determination policy. An independent committee reviews that methodology, and CBF conducts public consultation when proposing changes to its indices. The indices’ input data are primarily provided to CBF by the Central Bank and commercial banks, which are required to maintain a code of conduct regarding their role as data providers. In addition, commercial data providers make available information produced by CBF in real time.

Dedicated ESG indices are also available in the Chilean market. The S&P IPSA ESG Tilted Index, launched in 2021, measures the performance of eligible securities in the S&P IPSA that meet sustainability criteria, seeking to improve the overall S&P Global ESG Score with respect to the S&P IPSA by overweighting or underweighting ("tilting") issuers based on their S&P Global ESG Scores (S&P Global, 2025[21]). The index comprises 27 constituents, of which 28% are financial companies, 14% are in the materials sector, and 14% are in the consumer discretionary sector. Exclusions apply to companies involved in thermal coal, tobacco, controversial weapons and to those that do not comply with United Nations Global Compact Principles (S&P Global, 2025[22]).

While index providers report responding to client requests for information on their methodologies, some stakeholders note the methodologies for calculation for some indices are not always clear, for instance, citing difficulties in understanding how free-floats are calculated. Issuers report that they do not get informed about their inclusion in or exclusion from indices; instead, they monitor the index composition through commercial data providers.

Institutional investors similarly indicate that they verify index compositions through commercial data providers rather than directly with index providers. They report having no direct relationship with these service providers but consider their methodologies are often easy to understand and generally trusted. Some institutional investors note that they operate passive funds that track the IPSA index, while others observe that financial institutions may be overrepresented in the index.

4.5. Policy considerations

While Chile’s market capitalisation-to-GDP ratio is the highest among its Latin American peers, it still stands below the OECD average. Ownership of listed companies is highly concentrated, with institutional investors holding less than 15% of the equity shares. Notably, almost two-thirds of the institutional investor base is non-domestic. By the end of 2024, the largest 25 companies accounted for 75% of the country’s total market capitalisation.

These characteristics may partially explain the limited presence of some market service providers within the scope of this report, such as proxy advisors. Major international index providers operate in Chile, focusing primarily on large issuers, including for the development of ESG-related indices. Locally, other index providers exist but tend to specialise in services such as the provision of interbank rates. Similarly, the ESG rating and data providers active in Chile are major international firms that follow international practices and methodologies.

Thirty per cent of the jurisdictions covered in this peer review do not have a framework in place for proxy advisors. One-third of jurisdictions do not regulate ESG rating providers, and a few address ESG data providers. Almost one-third of jurisdictions have not established regulatory frameworks for index providers, and some regulate only indices of significant or systemic importance, while specific requirements for ESG‑orientated indices are uncommon. Currently, in Chile, there is no regulatory framework applicable to proxy advisors, ESG rating and data providers, or index providers.

Market participants consider that new regulations for service providers would not be strictly required, but they believe that regulatory authorities may monitor the transparency of existing methodologies in co‑ordination with foreign market regulators. Market participants also highlight that CMF plays an indirect but essential role through sustainability-related disclosure regulation. They note the progress in this area can largely be attributed to CMF rules, and to a lesser extent to market pressure. Participants highlight that the corporate sustainability disclosure regulation enhances the availability, readability and comparability of data, which in turn supports the information available for ESG data and rating providers.

In this context, regulatory authorities may issue a set of good practices providing guidance for market services providers. This set of good practices would aim at addressing conflicts of interest and improving methodology transparency, while avoiding market entry barriers.

Regulatory authorities could provide guidance on disclosing and minimising conflicts of interest that might compromise the integrity of the analysis or advice of market service providers. Such conflicts are of particular concern when firms provide services to issuers they also assess whether through ESG ratings, proxy voting advice or index construction.

Regulatory authorities could recommend that proxy advisors share their reports with issuers without undue costs, providing them with a reasonable timeframe for review. To strengthen transparency, regulatory authorities may also recommend that issuer commentary be appended to the final report.

Regulatory authorities may call for greater transparency in ESG rating methodologies to build trust and reduce box-ticking. Their guidance can help ensure that disclosures of methodologies enhance service providers’ accountability to their clients without compromising proprietary models, while encouraging sector-specific criteria.

Regulatory authorities could provide recommendations for ESG rating providers’ engagement with issuers. This could provide for clarity on avenues for correction mechanisms for ESG ratings, allowing issuers to contest factual inaccuracies through a dedicated and clear process.

Regulatory authorities could call for enhanced transparency in the disclosure of index providers, particularly when these providers exercise discretion. To further increase methodology transparency, additional guidance may be needed where index providers exercise discretion, particularly in ESG indices or during corporate events.

References

[15] ACAFI (2024), Guía de Inversión Sostenible 2023-2024, https://acafi.cl/wp-content/uploads/2024/04/Guia-Inversion-Sostenible-2024-11_4.pdf.

[10] Asociación de Aseguradores de Chile (2019), Recomendaciones para el Cumplimiento de los Compromisos del Acuerdo Verde, https://portal2.aach.cl/descargaarchivos/?archivo=Recomendaciones%20Cuplimiento%20Acuerdo%20Verde.pdf&gerencia=82b3cd0c5662a3c1e755c5394753cbf6%C3%860.

[2] CMF (2025), Presentación y Reseña Histórica, https://www.cmfchile.cl/portal/principal/613/w3-article-23900.html.

[7] CMF (2024), Norma de Carácter General No. 507, https://www.cmfchile.cl/normativa/ncg_424_2018.pdf.

[14] CMF (2024), Primer sondeo ESG en la industria de Fondos Mutuos y de Inversión en Chile, https://www.cmfchile.cl/portal/estadisticas/617/articles-80663_doc_pdf.pdf.

[8] CMF (2021), Norma de Carácter General No. 461, https://www.cmfchile.cl/institucional/mercados/ver_archivo.php?archivo=/web/compendio/ncg/ncg_461_2021.pdf.

[3] CMF (2020), Norma de Carácter General No. 435, https://www.cmfchile.cl/normativa/ncg_435_2020.pdf.

[6] CMF (2018), Norma de Carácter General No. 424, https://www.cmfchile.cl/normativa/ncg_424_2018.pdf.

[5] Congreso Nacional de Chile (2013), Ley 20712, https://www.bcn.cl/leychile/navegar?idNorma=1057895.

[4] Congreso Nacional de Chile (1980), Decreto Ley 3500, https://www.bcn.cl/leychile/navegar?idNorma=7147&idParte=.

[16] ICMA (2023), Code of Conduct for ESG Ratings and Data Products Providers, https://www.icmagroup.org/assets/DRWG-Code-of-Conduct-for-ESG-Ratings-and-Data-Products-Providers-v3.pdf.

[17] IOSCO (2021), Environmental, Social and Governance (ESG) Ratings and Data Products Providers, https://www.iosco.org/library/pubdocs/pdf/IOSCOPD690.pdf.

[9] Ministerio de Hacienda (2025), Mesa Público-Privada de Finanzas Verdes, https://www.hacienda.cl/areas-de-trabajo/finanzas-internacionales/finanzas-sostenibles/mesa-publico-privada-de-finanzas-verdes.

[12] Ministerio de Hacienda (2025), Primer Informe de Progreso, https://www.hacienda.cl/areas-de-trabajo/finanzas-internacionales/finanzas-sostenibles/mesa-publico-privada-de-finanzas-verdes/documentos/primer-informe-de-progreso-2025-.

[11] Ministerio de Hacienda (2024), Acuerdo Verde, https://www.hacienda.cl/areas-de-trabajo/finanzas-internacionales/finanzas-sostenibles/mesa-publico-privada-de-finanzas-verdes/documentos/acuerdo-verde-2024.

[20] NUAM (2025), MSCI NUAM Index, https://www.nuam.com/en/nuam-index-msci.

[1] OECD (2025), OECD Corporate Governance Factbook 2025, OECD Publishing, Paris, https://doi.org/10.1787/f4f43735-en.

[19] S&P Global (2025), América - Chile, https://www.spglobal.com/spdji/es/regional-exposure/americas/chile/#overview.

[18] S&P Global (2025), Factsheet: S&P IPSA, https://www.spglobal.com/spdji/en/idsenhancedfactsheet/file.pdf?calcFrequency=M&force_download=true&hostIdentifier=48190c8c-42c4-46af-8d1a-0cd5db894797&indexId=92353857.

[22] S&P Global (2025), Factsheet: S&P IPSA ESG Tilted Index, https://www.spglobal.com/spdji/en/indices/sustainability/sp-ipsa-esg-tilted-index/#.

[21] S&P Global (2025), S&P IPSA ESG Tilted Index, https://www.spglobal.com/spdji/en/indices/sustainability/sp-ipsa-esg-tilted-index/#overview.

[13] Superintendencia de Pensiones (2020), Norma de Carácter General No. 276, https://www.spensiones.cl/apps/GetFile.php?id=003&namefile=NCG-SP/NP0000276.pdf.