State of CSR in Mexico: Humble Beginnings, Promising Future

By Cristina Garza 

Along with the current macro-economic trend of U.S. businesses re-locating major operations south of the border, CSR and sustainability initiatives have boomed among major corporations in Mexico, particularly since 2010. Out of 166 publicly traded companies in the Mexican stock market, more than 50 percent have a system in place for undertaking sustainability-related activities at the operational and administrative level, including the supply chain.

However, just as sustainability is still in its developing stages at the global level, where numerous organizations (including IIRC, TSC, UNGC and GRI) are delivering distinct frameworks and methods to best normalize and develop sustainability standards for corporations, the current state of CSR in Mexico is similarly characterized by a certain level of disjointment among the initiatives leading sustainability at the national level.

On one hand, with more than 1,300 members, the Mexican Philanthropic Center (CEMEFI) has been taking a leading role by providing a platform to prompt organizations to undertake sustainability measures by granting an annual CSR designation to those companies that deliver exhaustive evidence of their sustainability activities. Almost every company that has infused sustainability into its practices seeks to obtain CEMEFI’s recognition. CEMEFI’s matrix of CSR actions, aimed at evaluating company performance, is strongly based on GRI’s social, economic and environmental indicators.

CEMEFI is a member of ALIARSE (Alliance for CSR), that is comprised of the Patronal Confederation of the Mexican Republic (COPARMEX), the Coordinating Enterprise Council (CCE), the Confederation of Industrial Chambers of Mexico (CONCAMIN), the Social Union of Entrepreneurs of Mexico (USEM) and Caux Round Table Mexico. ALIARSE validates both CEMEFI’s matrix of CSR actions and GRI as the main measuring tools to evaluate corporate performance.

At the governmental level, the Federal Attorney of Environmental Protection - PROFEPA  (a branch of the Secretary of Environment and Natural Resources - SEMARNAT) represents the main instance certifying companies as sustainable on a biennial basis through voluntary audit request. Comprised of a total of 3,984 participating companies, three modalities of certification are extended according to the industry sector: Clean Industry for the manufacturing sector (including 1,663 active companies), Environmental Quality for the non-manufacturing sector (including 762 active companies), and Tourism Environmental Quality (with 48 active companies). In general, they all examine compliance with legal regulatory structures, including water, emissions, waste, energy, soil and subsoil, noise, environmental risk and impacts, natural resources and wildlife.

Regarding international standards, it is usually U.S and European affiliates or subsidiaries, as well as companies strongly based in exports, that have chosen to further abide by international frameworks. GRI has been the de-facto reporting framework, with 37 percent of Mexican publicly traded companies reporting according to GRI guidelines during 2012. In absolute terms, a total of 44 Mexico-based companies (both private and public) published in GRI’s sustainability disclosure database, representing 48 percent growth from 2009.

Although this number might seem relatively low, (note that around 800 Mexican companies have received CEMEFI's CSR distinction) it indicates that GRI has played an indirect, vital role in providing guidance to measure and evaluate corporate sustainability performance in the country. Also, Mexican corporations usually seek to obtain certifications such as ISO 9001 (quality management), ISO 14001 (environmental management), OHSAS 18,000, Great Place to Work; as well as complying with UNG's principles and other industry-specific certifications.

Furthermore, the Mexican Stock Exchange (BMV) considers UNGC, OECD, the World Bank and ISO 14,000 as the key international standards to evaluate companies’ performance in terms of social responsibility, environmental commitment and corporate governance. With the collaboration of EIRIS and IDEARSE (hosted by University of Anahuac), BMV developed a green index in 2010 that is based on achieving a “higher grade” than the average of 3,500 global publicly traded companies that have a minimum float of 30 percent or superior to 10 million pesos (around 75K USD). As of today, only 17 percent of Mexican publicly traded companies have qualified for this index; yet there is a strong correlation between the development of this index and the rise of sustainability in Mexico.

On the other hand, the academic sector has also been a major player in opening the path to CSR and sustainability. The Tecnológico de Monterrey, in partnership with Arizona State University, developed the Global Institute of Sustainability (IGS) which, besides providing a platform for the advancement of sustainability in México and Latin America through education, technology, and promoting the development of public policies, is serving corporations with research and training on the best methods to address sustainability.

In partnership with Yale School of Management, IGS is providing companies with a case-study approach to sustainability, starting with Walmart Mexico and its investments in renewable energy. IGS is also hosting a set of conferences that address supply chain aspects for MNEs through its Green Business initiative, involving more than 80 companies, including those that subscribed to their Agreement for a Sustainable Mexico. Universidad de Anahuac, through IDEARSE, also represents one of the key institutions providing research and business intelligence in CSR and sustainability, and has served as a platform for MNEs to evaluate their practices and improve their competitiveness, business opportunities, and scalability in the market.

If we consider the total number of Mexican-based companies, which is around 247,000 (considering only SMEs, MNEs, and large companies and excluding around 4.8 million micro-enterprises), only around 1.6 percent are seeking to abide by national regulations thru PROFEPA, and only around 0.3 percent seek to obtain CEMEFI’s recognition, not to mention those publishing to GRIs sustainability disclosure database.

These figures give a strong indication that there is still a very long way to go for Mexico in terms of sustainable representation. Despite governmental, academic, and organizational initiatives in place, a truly strong launching pad for sustainability in this country is necessary. A lot of education is needed regarding the benefits of undertaking such initiatives including reduced risks, efficiency in the use of resources, better competitiveness, and investment stimulation. The advent of integrated reporting, supported thru GRI’s guidance, is expected to provide a real boost to the sustainability that is to follow.

[image credit: Anirudh Roul: Flickr cc]