Corporate responsibility is progressing in Mexico mostly in spite of – not because of – governmental efforts
For a fortnight at the end of 2010, climate change was in the public eye in Mexico. Policymakers and climatologists flocked to the Mexican holiday resort of Cancun for the United Nations’ annual climate change jamboree.
Mexican officials were keen to clarify their commitment to cut national carbon emissions by 50m tonnes in 2012 and to halve the national total by 2050. Mexico’s president, Felipe Calderón, made much of his administration’s five-year National Development Plan, which includes impressive targets on emissions, waste, water use and similar green indicators.
The 20 million residents of Mexico City may be forgiven for being a little sceptical. For years, the Mexican capital was reputed to be the “world’s most polluted city”, with air pollution particularly acute. So bad was it that, legend has it, pigeons would fall lifeless from the sky.
The situation has improved in the capital over the past decade, as it has in other parts of the country, but Mexico’s relatively progressive legislation can only go so far. And what’s true for the environmental sphere is mirrored in the social arena too.
Mexican law and general practice radically diverge. The country suffers from the classic paradox of having “world-class regulation” but little enforcement power, according to Marc de Sousa Shields, managing partner at Mexico City-based specialist consultancy ES Global.
Labour activists complain that government compliance officers are vastly overstretched, for instance. Meanwhile, when examples of non-compliance are identified, they say fines are too small.
The enforcement problem is exacerbated by widespread corruption. Mexico ranks 98th in Transparency International’s benchmark Corruption Perception Index, below Bosnia and Swaziland and only marginally above Algeria and Kazakhstan.
Unlike in most advanced economies, where corporate responsibility is measured by a company’s willingness to go beyond the legal minimum, proven compliance in Mexico is itself judged as meritorious.
Egade Business School’s Bryan Husted points to the “Clean Industry” certificate by way of example. Many companies publicise their achievement of the award, which is granted by third-party auditors for proven compliance with national legislation.
Voluntary mechanisms
Although certain labour and environmental provisions were strengthened in the run-up to the North American Free Trade Agreement with the US and Canada in 1994, Mexico has no specific legislation relating to corporate responsibility. Historically, the Mexican government has lent more towards voluntary measures – what Husted refers to as “little carrots”.
Various recognition programmes exist to promote family-friendly polices or progressive equal opportunity practices. Some initiatives, such as those promoting the employment of the elderly or disabled people, also come with a tax-relief incentive.
In general, however, the state is widely perceived as taking a “spectator” role in the promotion of corporate responsibility, according to Luis Béjar Fuentes, director at specialist Mexican consultancy firm SPE.
The onus for voluntary governance mechanisms has, instead, fallen on the non-profit and private sectors. Standardisation is a clear example. Back in 2004, the non-profit Mexican Institute of Standardisation and Certification developed guidelines for implementing best practice.
The impact was minimal. “Such a CSR standard was practically unknown and no companies paid attention to it since it was voluntary,” says Béjar Fuentes.
In recent years, similar international standards have gained more traction. The global ISO 26000 standard for corporate responsibility, for example, has sparked interest in the private sector – largely because of the wide take-up of ISO 14000, its precursor in the environment space.
“In Mexico, people have more confidence in international certification standards than national standards,” says ES Global’s Sousa Shields.
The Global Compact and, more particularly, the Global Reporting Initiative (GRI) have both capitalised on such thinking. In 2009, Mexico counted 18 GRI-compliant sustainability reports. The number increased to 38 in 2010 and is expected to top 50 in 2011.
“Regional companies want to be seen as global players. To be a leader, you need these attributes,” Sousa Shields adds, in reference to the GRI criteria for responsible practice.
BNV Index
Another powerful driver in terms of non-regulatory governance comes from the investment field. Almost two years ago, the Bolsa Mexicana de Valores (BNV), Mexico’s main stock exchange, announced its intention to launch its own Sustainability Index.
Due to be unveiled in December 2011, the index takes its lead from the Global Compact, as well as other green indexes around the world, such as the UK’s FTSE4Good. An initial 70 large companies have been invited to participate, with assessments carried out by be Ecobanca, the Mexican partner of UK rating organisation Eiris.
“Since [the index’s introduction], several big Mexican companies have been working seriously on their sustainable disclosure,” says Béjar Fuentes.
Arturo García Bello, a partner at accountancy firm Deloitte Mexico, concurs. The index promises to push forward greater transparency as well as improved performance, he says.
“If companies want to increase their credibility and [if they want] investors to continue to invest, they need to be part of the index,” he says.
As incentives go, it sounds a whole lot more effective than the carrots or sticks currently in use.
Special Climate Change Programme (PECC)
Launched in 2009 by president Felipe Calderón, the Special Climate Change Programme focuses on long-term plans aiming to reduce greenhouse gas emissions by 50% across Mexico by 2050 (against the baseline year of 2000). The programme concentrates principally on reducing the GHG inventory of two of Mexico’s main polluters, the state-owned oil company Pemex and the state-owned electricity utility CFE. The measures for the latter include permission to CFE to submit plans for ten hydroelectric powerhouses projects; the commercialisation of emissions reduction certificates by CFE under the UN-backed Clean Development Mechanism; and major investment in wind energy.
Government awards
Organised by the National Institute for Women, this certified award process is designed to encourage affirmative actions to decrease inequalities between women and men within the workplace.
Introduced in 2007 by the Secretariat of Work and Social Provision, this award recognises proactive measures to include vulnerable groups, such as the disabled, the elderly and HIV/Aids sufferers.
Family Responsible IndustryAward
A product of the Labour Ministry Secretariat, this award is now in its ninth year. It highlights efforts to improve areas such as gender equity, flexible working and the prevention of workplace violence and sexual harassment.
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