STRATEGIC COMPLIANCE. The importance of implementing ESG March 8, 2023

The term ESG (“Environmental, Social and Governance”) is a globally accepted concept in the administration and management of a legal entity consisting in fundamental and sustainable Criteria to measure its profitability and growth level, to create solutions of value, to positively impact its productivity and, consequently, underpin its image and reputation in its environment.

Comments

The ESG Criteria imply reviewing and analyzing the business model in order to draw up the appropriate strategy to develop the set of practices focused on Environmental, Social and Corporate Governance aspects, which will influence intangible assets and investments, among others.

Some of the indispensable actions to implement the ESG Criteria are:

a) Environmental Criteria

  • Reduce the gas emission.
  • Use renewable energies.
  • Implement circular economies.
  • Manage the natural resources.
  • Responsibly manage hazardous substances.
  • Streamline the life cycle of the products.

b) Social Criteria

  • Provide labor well-being to human capital.
  • Protect the human rights.
  • Promote the diversity, inclusion, and equity.
  • Connect with the community (social responsibility).
  • Take measures related to clients and suppliers.
  • Take care of personal data.

c) Corporate Governance Criteria

  • Define the responsibilities of the three levels of the corporate structure.
  • Prevent risks or contingencies in tax, corporate, criminal, operations with resources of illicit origin, etc.
  • Fight corruption and undue practices.
  • Guarantee the transparency of their actions.
  • Eliminate conflicts of interest.
  • Observe the market trends.

Recommendations

A legal entity with ESG Criteria, or that intends to implement them, must carry out permanent legal audits (due diligence), create, modify and/or improve its guidelines, measures, protocols and/or internal regulations, carry out training, drills, etc., which will add value to their daily activities, operations, and relationships.

If you have any questions regarding the foregoing, please do not hesitate to contact us.

Mexico City, March 8, 2023