Mexico Leads the Way as the Sole Emerging Economy to Enforce Mandatory Regulations for ESG Disclosure

By Alfonso Teramoto Lemus
Managing Partner & Co-Founder, GRUNER

Mexico became the first emerging economy to enforce mandatory ESG reporting standards for non-listed companies as the freshly published “Normas de Información de Sostenibilidad” (NIS) came into effect on January 1st, 2025, following CINIF’s approval in May 2024, the country’s governing body on financial information standards.

Prior to this milestone, only the European Union, Switzerland, the United Kingdom, and Australia had ESG reporting requirements in place. Nevertheless, it is relevant to note that most of these jurisdictions only require large companies to disclose such information (i.e. organizations employing more than 250 individuals, or annual revenue that exceeds €40 million euros) whereas the Mexican NIS’s umbrella covers all non-listed companies. This means that SMEs of any sector, and regardless of their revenue or number of employees, are expected to report 30 ESG-themed indicators as of fiscal year 2025 as part of their financial statements.

While it is true that there will be no fines nor sanctions for not complying with the NIS, companies that issue financial statements on a regular basis will face broader scrutiny from the users of their financial information, such as banks, clients, investors, and shareholders, as they will begin to require the complementary note with the 30 ESG indicators that cover a broad range of topics including carbon footprint (Scope 1, 2, & 3), renewable energy consumption, water usage, waste management, as well as other governance and social inclusion practices. As of FY 2025, financial statements issued in Mexico that do not attach such complementary note, will be deemed as incomplete. Without a doubt, a significant burden will be laid on every single entity that does not participate in the stock exchanges, although public companies are notexempt, as they have another set of requirements to comply with as of this year too but fully aligned with international sustainability reporting standards like ISSB – IFRS S1 & S2.

Companies of all sorts will have to dedicate resources to gather and prepare the information to comply, but in many occasions, organizations lack sustainability-savvy human capital that is, for instance, able to calculate their carbon footprint under the Green House Gas Protocol’s guidelines, especially Scope 3, which requires an overwhelming effort to browse and access the needed data, as well as the technical know-how to do so. Nonetheless, to their relief, sustainability consulting firms, such as GRUNER, are ready to support all sorts of organizations operating in Mexico with their ESG reporting needs and broader sustainability initiatives.

As the local and exclusive partner of Anthesis Group in Mexico, GRUNER is able to facilitate digitally-enabled and science-based solutions such as MERO, a Software-as-a-Service platform that, together with the support of expert sustainability consultants, enables companies to centralize and manage their ESG data to prepare reports in the way that their stakeholders expect them, while adhering to the standards that apply, such as NIS, for Mexico. Anthesis is a leading corporate sustainability consulting firm with a team of more than 1,500 experts, and 44 offices in 23 countries, guiding some of the largest companies and their value chains to sustainable performance.

In a nutshell, NIS represents a major turning point for the world’s 13th largest economy, as the users of financial information will now have data that not only reflects the financial performance of a given company, but rather a broader perspective on its overall and operational performance. For instance, an entity’s governance and social inclusion practices, as well as its environmental impact will now become visible, which in turn will enrich the users’ ability to assess risk profiles depending on the sector that the company operates in, and their exposure to climate-related risks in some cases.

Therefore, this context will have the possibility to influence the perspective and valuation of Mexican companies and other entities that operate in this market, but more importantly, it sets the stage with opportunities for companies to access capital with softer rates, such as sustainability-linked loans, or other investors, and clients that have an appetite for working and partnering with organizations that align with their values, but also with international standardsand frameworks.