ESG Reporting in Mexico: What Companies Need to Know

Sustainability Reporting Is Becoming a Business Priority

Environmental, Social and Governance (ESG) considerations have become an increasingly important topic for businesses worldwide. Investors, financial institutions, customers and business partners are placing greater emphasis on how companies manage sustainability-related risks and opportunities.

In Mexico, this trend is also reflected in the regulatory environment. Effective January 1, 2025, the Mexican Financial Reporting Standards framework incorporated the Sustainability Information Standards (NIS A-1 and NIS B-1), introducing new reporting requirements related to sustainability matters. Although the standards have already entered into force, many organizations continue to assess how ESG-related risks and opportunities may affect their reporting obligations. As sustainability expectations continue to increase, companies should evaluate whether their current reporting processes, governance structures and available data are sufficient to meet stakeholder and regulatory expectations.

What Is ESG?

ESG refers to a set of Environmental, Social and Governance criteria used to evaluate a company’s sustainability performance, risk exposure and long-term resilience. The environmental dimension focuses on issues such as emissions, resource consumption and environmental impact. Social factors include employee wellbeing, diversity and inclusion, human rights and community relations. Governance addresses corporate oversight, accountability, transparency and ethical business practices. Together, these factors provide stakeholders with a broader understanding of how a company manages risks and creates sustainable value over time.

New Sustainability Reporting Requirements in Mexico

As of January 1, 2025, two Sustainability Information Standards issued by CINIF entered into force:

• NIS A-1 – Conceptual Framework for Sustainability Information Standards
• NIS B-1 – Basic Sustainability Indicators

These standards establish the obligation to inform shareholders and other stakeholders about the actions and measures implemented to address sustainability matters. This includes initiatives aimed at reducing environmental impacts, promoting employee wellbeing and strengthening governance structures that support transparency, accountability and responsible business practices. The standards also encourage organizations to communicate projects related to environmental protection, pollution reduction and circular economy initiatives.

Which Companies Must Comply with ESG Reporting Requirements in Mexico?

All companies that prepare financial statements under Mexican Financial Reporting Standards (NIF) fall within the scope of NIS A-1 and NIS B-1. However, the reporting requirements are based on the principle of materiality. Sustainability-related information must be disclosed only when identified ESG risks or opportunities have a real or potential impact on the company’s financial position, operating results, cash flows or significant accounting estimates. Where no material impacts are identified, qualitative disclosures may be sufficient. As a result, companies should assess how environmental, social and governance matters may affect their operations and long-term business strategy.

What Sustainability Information Must Companies Report in Mexico?

Depending on the company’s circumstances, sustainability disclosures may include information regarding:

• Environmental protection initiatives
• Measures to reduce pollution and environmental impact
• Sustainability projects and long-term objectives
• Employee wellbeing and social responsibility initiatives
• Governance and corporate oversight structures
• Transparency and accountability mechanisms
• Responsible business practices
• Circular economy initiatives

The objective is to provide investors, shareholders and other stakeholders with meaningful information regarding how sustainability-related risks and opportunities are being managed.

The Main Challenges Companies Face

Implementing ESG criteria requires more than producing a report. In many cases, it involves integrating sustainability considerations into business processes and decision-making structures.

Some of the most common challenges include:

Data Standardization and Quality

Unlike financial reporting, ESG reporting frameworks continue to evolve and there is currently no single universal methodology. In addition, many companies struggle to collect reliable information from different internal systems, making consistency and comparability difficult.

Regulatory Complexity

The sustainability regulatory landscape continues to evolve at both local and international levels. Multinational organizations often need to navigate different reporting requirements across jurisdictions, increasing the complexity of compliance efforts.

Supply Chain and Social Impact Management

Assessing sustainability impacts throughout the value chain can be challenging. Measuring indirect emissions often requires information from suppliers and third parties, while social topics such as human rights, diversity and inclusion can be difficult to translate into measurable performance indicators.

Governance and Corporate Culture

Many organizations also face internal challenges, including a shortage of professionals with sustainability reporting expertise and resistance to organizational change. Successfully implementing ESG initiatives often requires long-term commitment from management and the establishment of effective governance mechanisms.

What Are the Risks of Not Preparing?

Companies that fail to address ESG considerations may face financial, legal and reputational risks. Today, neglecting sustainability practices can ultimately result in a loss of competitiveness and long-term business viability.

Potential consequences include:

Reduced Access to Investment

Many investors and financial institutions increasingly evaluate sustainability performance as part of their decision-making process. Organizations with limited ESG information may face challenges in attracting investment or accessing sustainability-focused financing opportunities.

Compliance Risks

As sustainability reporting requirements continue to evolve, companies that delay preparation may face increased compliance and regulatory challenges.

Reputational Impact

Customers, communities, employees and business partners increasingly value responsible business practices. A lack of transparency or weak sustainability performance can affect stakeholder trust and potentially impact commercial relationships.

How to Prepare for ESG Reporting in Mexico

Organizations should begin assessing ESG-related risks and opportunities as early as possible. As sustainability reporting requirements continue to evolve, companies should continuously assess their ESG-related risks and opportunities, strengthen internal reporting processes and ensure that relevant sustainability information is available when required.

Practical first steps include:

1. Conducting an ESG risk and opportunity assessment
2. Identifying available sustainability-related information and data sources
3. Establishing governance responsibilities and reporting processes
4. Reviewing reporting obligations under NIS A-1 and NIS B-1
5. Aligning business practices with sustainable and ethical operating principles

Companies that start preparing today will be better positioned to respond to future reporting expectations and stakeholder demands.

Conclusion

The introduction of NIS A-1 and NIS B-1 marks an important step in the evolution of sustainability reporting in Mexico. Although the extent of disclosure depends on the materiality of identified ESG risks and opportunities, companies should not underestimate the growing importance of sustainability information. Beyond compliance, ESG reporting provides organizations with an opportunity to strengthen transparency, improve governance and build confidence among investors, customers and business partners. As sustainability expectations continue to increase, organizations should continue strengthening their ESG reporting processes and governance frameworks to support long-term transparency, compliance and business resilience.