Effective ESG integration: An investor road map to promote ESG considerations in Mexico’s capital market
Goals & Objectives: Develop a road map to improve ESG integration in investor engagement and proxy voting in Mexico, identifying barriers and opportunity areas in current regulations and processes.
Theoretical Justification, Social Benefit, or Significance:
Social, environmental and governance serves to enhance the effective deployment of shareholder capital that ultimately contributes to growth and positive long-term performance. By acting as responsible investors, long-term shareholders help to protect not only their clients but the capital markets as a whole.
At Grupo Financiero Banorte, as the third largest diversified financial group in Mexico, we consider it is our fiduciary duty to ensure that the companies we invest in manage appropriately their financially material ESG issues.
It is important to us, as the largest institutional investor in Mexico, to expand the knowledge on responsible investment related issues with the objective to provide guidance to other investors looking to integrate ESG criteria in their investment decisions in Mexican capital markets.
We believe that the development of a Road Map will guide investors to exercise their shareholder rights in raising material ESG issues with company management. Simultaneously, the development of a sustainability best practice guide for Mexico´s biggest industries will help investors engage companies and drive best practice adoption.
Specific Activities & Duration:
The scale of the project is reasonable for a 16-month project for 5-6 student team.
The research methodologies appropriate to tackle the problem are:
- Policy analysis ( Qualitative / Quantitative approach)
- Market analysis & benchmarking
- SWAT / Cost analysis of potential externalities affecting Mexico´s main industries.
- Externalities pricing to develop models to understand potential impacts of upcoming regulation and market dynamics.
The objective of this project is to integrate a diverse set of professional approaches and skills to develop a Road Map to help investors with the integration of environmental, social and governance factors into their investment decision-making process for the main industries driving Mexican GDP. To do this, we required deep knowledge about financial, environmental, social and governance issues. The project brings together different aspects that are financially material to corporate performance, and require a multidisciplinary approach to understand the impact of the interdependence of the different disciplines.
A team with a diverse professional background is needed to excel in the development of the roadmap and the analysis of the main financially material aspects relevant to the main industries driving Mexican GDP. It is not only essential for the team to develop an understanding of the financial market, the obligations and rights of shareholders, the corporate governance tools, national regulations and stewardship codes but also to comprehend the role of corporate environmental and social performance as a driver for investment decision making. As the team will need to develop a set of environmental and social recommendations for Mexico´s main industries (to be defined with the team) it is essential for this team to have a diverse set of backgrounds that will allow it to develop a business case for investors in Mexico to adopt ESG investment criteria and provide the companies in the market with best adoption practices.
More information at:
Carolina Fernandez Maestri