Mexico in focus

We travelled to Mexico City and met with a variety of companies, as well as the Mexican Stock Exchange.
April 2019

Juan Salazar

Vice President, Analyst, Responsible Investment

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Risk Disclaimer

The value of investments and any income derived from them can go down as well as up as a result of market or currency movements and investors may not get back the original amount invested.

Views and opinions have been arrived at by BMO Global Asset Management and should not be considered to be a recommendation or solicitation to buy or sell any companies that may be mentioned.

In Switzerland, this document is issued by BMO Global Asset Management (Swiss) GmbH, which is authorised and regulated by FINMA.

We travelled to Mexico City to meet a small number of large and influential Mexican companies, including Walmart de México, América Móvil, FEMSA and Grupo Lala. We also had the opportunity to meet with the Mexican Stock Exchange, which has been actively working to promote better ESG practices amongst listed companies.

Political bliss?

 
The country seemed in a state of collective bliss 100 days after Andrés Manuel López Obrador (AMLO) came into office vowing to transform Mexico. Despite some controversial moves to make good on his promises for change, he continues to have high levels of popularity. However, companies and investors are more apprehensive that the president’s policies, including those related to energy and labour, could have an adverse effect on competitiveness.
 

ESG in action

 
We found that the evolving political environment has not negatively impacted companies’ responses to growing public awareness around a number of environmental and social issues. In fact, we would argue it has turbocharged those responses, particularly when it comes to corruption, air pollution, plastics and inequality. While the policy context to address these issues remains relatively weak, all the companies we met asserted that the long-term success of their businesses depends on addressing material environmental and social risks and opportunities head on.
 
Governance is also an area companies continue to focus on, and the notion that good governance practices are critical to success is widely held. However, as is the case in a lot of emerging markets, governance is largely seen as a compliance exercise – i.e. follow the letter of the law rather than its spirit. A generational transfer of power amongst the business elites has started to take place. This, together with the perceived urgency for change brought upon by AMLO’s rise to power, could help set the stage for a change in mindset that could in turn lead to more open and diverse boards, better transparency and stronger internal controls.

Risk Disclaimer

The value of investments and any income derived from them can go down as well as up as a result of market or currency movements and investors may not get back the original amount invested.

Views and opinions have been arrived at by BMO Global Asset Management and should not be considered to be a recommendation or solicitation to buy or sell any companies that may be mentioned.

In Switzerland, this document is issued by BMO Global Asset Management (Swiss) GmbH, which is authorised and regulated by FINMA.

Use our handy glossary to look up any technical jargon you are unfamiliar with.

All the companies we met asserted that the long-term success of their businesses depends on addressing material environmental and social risks and opportunities head on.

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Responsible Investment