The evolution of ESG in Mexico

Mexico

César Pindado, managing partner for Mexico, Colombia, and the Caribbean at ERM, talks to The Energy Year about helping companies incorporate international ESG considerations into their business plans and the company’s growing clientele in the energy transition and renewables segments. ERM is a global sustainability consultancy with offices in more than forty countries and territories.

What is your assessment of the evolution of ESG in Mexico, and how do you help your clients incorporate sustainability considerations into their business?
Progress on ESG is happening at a global level, and this momentum is extending to Mexico, driven by the presence of large multinationals that adhere to international ESG standards. This progress is not only encouraging multinationals to place focus on sustainability, but local companies as well, as these are part of the ecosystem and the supply chain of multinational entities.
Our clients are multinationals, and we support them across a wide range of social and environmental subjects to ensure they meet the necessary legal and environmental requisites, enabling them to operate successfully in Mexico.
Once our clients are operational, we help them measure their sustainability indicators to ensure they meet their internal standards. We help clients collect information, develop their sustainability strategies, and write annual reports — not just in the energy industry, but across a wide range of other sectors as well. We are a one-stop shop for all sustainability-related needs.

Where are you seeing the most demand for your services?
There is growing demand for sustainability services across all sectors – from the oil and gas to renewables, mining, and banking, just to name a few. For instance, the CNBV, Mexico’s financial regulatory authority, recently announced that all companies listed on the Mexican stock exchange will be required to report under IFRS [International Financial Reporting Standards] and disclose sustainability information in their corporate reports. This is an area where we have strong experience and can provide a differentiator for our clients, bringing locally our global expertise.
In addition, we also support our clients in providing advice on their ESG data storage. Within the next five years, European companies under CSRD (Corporate Sustainability Reporting Directive) will need to store their sustainability information and KPIs in a digitally, traceable, and auditable format. There is not even one of our clients, domestic or multinational, which is not taking this issue seriously, and that is not starting to plan around this, even if not under the umbrella of the Directive.

How important is Mexico within ERM’s global operations and what is the weight of the energy industry in the company’s strategy in the country?
Although Latin America represents only around 5% of ERM’s global activities, Mexico is key for the company because of its proximity to the US and the business synergies between both countries through the US MSCA.
Regarding our strategy in the Energy Sector, in addition to continuing to serve our traditional global oil and gas clients, we are expanding our clientele in the energy transition and renewables space. We will also continue and expand our work with domestic and international banks and the financial sector that provide sustainable financing and that generate a Sustainable Impact through their lending process.
We anticipate that the incoming Sheinbaum administration may create new opportunities for our business. With the government expected to provide greater clarity on the role of private investment in Mexico’s energy industry, we see the potential to engage with a broader range of clients moving forward.

Does ERM also provide technology to help clients meet ESG targets?
Although in the past we created proprietary technological solutions for the digitalization of sustainability, today we are moving fast towards partnerships with companies such as Microsoft, Salesforce or Workiva, because it gives us greater flexibility. They develop the software, and we, as Sustainability experts, provide advice in the implementation phase.

What will ERM be focusing on over the next 18 months?
Over the past three years, the acceleration of Sustainability requirements in different Regions of the World and in Mexico, and particularly the demand for dependable and traceable ESG data has been remarkable. Our priority for the next few years is to help our clients drive through these new global standards and align with them.

Read our latest insights on:

• Colombia
• Mexico
• Multinational