Effective ESG integration: An investor road map to promote ESG considerations in Mexico’s capital market

Client Organization: 
Grupo Financiero Banorte (Banorte Financial Group)
Project Location : 
Mexico D.F (Mexico)
Summary of Project Idea: 

Goals & ObjectivesDevelop 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.

Integrative Approach

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: 

SNRE Program Areas: 
Environmental Policy and Planning
Sustainable Systems
Role for each program area: 

Environmental Policy and Planning: Skills/Expertise in regulation analysis, experience in the development of strategies/policies, preferably knowledge about corporate governance processes related to shareholder rights and obligations, proxy voting, and engagement. Capital markets expertise / investment expertise.

Sustainable systems: Skills / Expertise generating integrated solutions for sustainability issues (ESG), knowledge of sustainable best practices across industries, diverse methodologies to measure environmental and social impact. Life cycle analysis expertise. 

Professional Career Development Benefits: 
  • Understand the material issues of leading industries in emerging markets.
  • Develop a network and interact with institutional investors, regulators, and other parties (environmental regulating agencies).
  • Gain management consulting expertise.
  • Develop ability to work and lead in cross-cultural scenarios.
  • Improve communicational skill in a second language (Spanish).
  • Improve communicational skill through interaction with top executives (e.g Conduct ideation and scenario analysis workshops, etc)
  • Develop and gain expertise understanding and analyzing the interaction and dependencies between sustainability and the capital markets.
Funding Sources: 

Full corporate funding committed.  Exact amount to be determined based on agreement between company and Master's Project Team.

Identify expected products/deliverables: 

Deliverables

  • Barriers and Opportunity areas for ESG integration in Mexico’s regulations: Investor Road Map.
  • ESG Material Issues Guides for Principal Industry Sector in Mexico: Best Practice of Sustainability.
    • Principal Industry sector according to INEGI by %GDP:
      • Massive media
      • Hotels, and restaurant and bar services
      • Trade
      • Transport, post and storage
      • Financial and insurance services
      • Professional, scientific and technical services
      • Cultural and recreational services
      • Construction
      • Manufacturing industries
      • Distribution of electricity, water and gas supply to the final consumer
Contact full name: 
Marcos Mancini
Job title: 
Head of Corporate Sustainability and Responsible Investment
City: 
Mexico D.F.
State or Country: 
Mexico D.F (Mexico)
Contact Phone: 
+52 044 45954272
Contact information: 
SNRE alum
Master Students Involved in Project: 

Carolina Fernandez Maestri

Project Status: 
In Progress