ESG Trends and Strategies in Mexico

Carlos Escoto and Marianela Romero of Galicia Abogados discuss the drivers behind, trends in, and application of ESG factors in Mexico.

Published on 17 June 2024
Carlos Escoto, Galicia Abogados,  Expert Focus Contributor
Carlos Escoto
Ranked in Chambers Latin America: Environment
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Marianela Romero, Galicia Abogados, Expert Focus Contributor
Marianela Romero
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The Drivers of ESG in Mexico

Carlos highlights that Mexico faces significant environmental, social, and economic challenges, including deforestation, water scarcity, inequality, and insecurity. This awareness has led to increased scrutiny from stakeholders, driving businesses to operate sustainably. International investors and capital markets have played a crucial role, with foreign investors increasingly considering ESG factors in investment decisions, pressuring Mexican companies to align with global ESG standards. Consumer preferences are also shifting towards sustainability, pushing companies to adopt ESG practices to enhance brand reputation and loyalty. Additionally, there is a broader recognition that addressing ESG factors is essential for long-term business success.

Adapting Policies to Comply with ESG

Marianela discusses how Mexican companies can adapt their policies to comply with ESG principles. Key actions include conducting comprehensive ESG assessments, setting clear goals and targets, integrating ESG into corporate governance, enhancing environmental sustainability, promoting social responsibility, strengthening stakeholder engagement, enhancing ESG reporting and disclosure, and fostering a culture of ESG leadership. Effective governance and a committed board are essential for implementing these policies and avoiding greenwashing.

The Role Played by the Board of Directors and the Mexican Government

The role of the board of directors in Mexican public companies is crucial in guiding ESG adoption. Boards must integrate ESG factors into strategic planning, oversee ESG-related risks, monitor performance against ESG metrics, ensure compliance with relevant laws, engage with stakeholders, and promote diversity within the boardroom. Stock exchanges in Mexico also play a significant role in promoting ESG practices by recognising and supporting companies that prioritise sustainability.

The Mexican government’s commitment to ESG has been limited, with substantial regulations lacking and sustainability often sidelined. Despite some efforts, such as publishing a sustainable taxonomy and strategy for sustainable financing, the current administration’s track record on sustainability issues has been poor, with support for fossil fuels and attacks on renewable energy.

Future Trends

Looking ahead, several key trends are expected to shape the ESG landscape in Mexico. These include the rapid growth of sustainable finance, influenced by foreign legislation; expanded ESG reporting and disclosure; integration of ESG into business strategies; and a focus on climate change mitigation and adaptation. By embracing these trends, Mexico can advance its ESG agenda and promote a more sustainable and responsible business environment.

Galicia Abogados

Galicia Abogados, Chambers Expert Focus contributor
15 ranked departments and 33 ranked lawyers
Learn more about the firm’s ranking in Chambers Latin America
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