Happy New Year! Plus our first in depth ESG report

Happy New Year! We wish you and your loved ones all the best for 2021.

This week, we are happy to share with you our first in-depth ESG report on the Mexican equities market. In it, we use data we collected over the past few months on all the equities that trade on the BMV (except for those that stopped filing reports for any reason). Find below the Executive Summary, or you can read the full report here.

 Executive Summary

• Many companies in Mexico have by now established ESG teams and strategies. Some others have not yet started. Since we believe all public companies will eventually need to demonstrate at least a minimum ESG effort, we are introducing our ESG Development Heatmaps to analyze where the public companies in Mexico currently stand and how they stack up against each other.
• Measuring and comparing ESG performance in companies in different industries (or even within the same industry, but with different business structures) is difficult. By comparing companies with the same ESG topics, you will have a bias towards the industries that are more exposed to the topics you chose as the relevant ones.
• In our heatmaps we tried to avoid this by focusing on the process of developing an ESG strategy and the communication efforts of their ESG initiatives.
• We understand that companies that tick a lot of ESG boxes are not necessarily truly implementing ESG in day-to-day operations. Also, companies that do not tick such boxes, may in fact be doing great ESG things, but keeping it to themselves.
• On the basis of our heatmaps, the most ESG-mature sector in Mexico is Metals & Mining. The least ESG-mature sector in Mexico is Commercial Services Supplies. FIBRAs are second least mature.
• We clearly still see a lot of room for improvement in ESG Development in the Mexican market.
• We believe eventually most companies will have to catch up as AFOREs (Mexican pension funds) become more serious about ESG integration and global funds increase the pressure on this front.
• It is easy to understand why larger companies (with more resources, larger teams) usually rank higher than smaller companies within the same industry, but ESG strategies can be tailored to different budgets. Smaller companies should not shy away from ESG just because of constrained resources.

We hope you find this report interesting. If you have any feedback or questions on it, please feel free to reach out.

Best,

Marimar

Partner, Miranda ESG