Author:

Héctor Campos

Senior Attorney

Bustamante + Freyre

Over the past decades, companies and governments have undertaken several actions against environmental issues, such as: climate change, deforestation, biodiversity loss, air pollution and water scarcity, among others. Said actions have been driven mainly by three main factors: regulatory mandates, voluntary measures and social pressure – which, although they have remained consistent in the day-to-day speech of stakeholders, have proven not to be enough to address all the problems that afflict our planet.

As example of these, in early 2020, COVID-19 raged swiftly through the world, affecting existent social, economic and health systems. Suddenly, worldwide governments and companies came back with a fast and strong answer, which came in form of stimulus packages and recovery plans. As a collateral consequence of these, such measures have bolstered already existing trends such as: zero waste, net zero emissions, carbon tax, electromobility, circular economy and sustainable investment, to name just a few. Likewise, they also boosted legal enforcement around the world, as well as social awareness in the development of mid- and high-scale projects, especially in Mexico.

Having mentioned such circumstances, in the case of Mexico, although we are living through a complex political situation, these trends cannot be disregarded, and much less ignored, particularly the benefits that come with them.

Additionally, it must be noted that our country has a very robust environmental legal framework that goes back since the late ’80s and has been evolving and adapting ever since. This includes the basis regarding legislation about: forestry matters, environmental impact, biodiversity, water and climate change; also, there can be found several standards for sectors such as energy, mining, tourism, real state, agriculture and industry.

Under this context about the adoption of new environmental standards and policy tools to address economic growth and green recovery, it must be highlighted that those companies who are positive, aware and conscious of their environmental duties will certainly have a much better performance, and this is because it is directly related to the profit they make. As an example, such companies will seize the opportunities that come from a competitive lead. For instance, these entities have access to resources coming from banks, asset downers, asset managers seeking to place their money on sustainable investment, tax incentives, and they experience a stimulus workflow arising from a serious engagement of their employees, managers, supply chain and their customers. And last – but not least – they have low exposure to risks stemming from fines and also from claims of NGOs that may lead into a potential reputational damage.

In summary, only those companies who are resilient with these new trends and responsible with their duties will secure a future visibility of their operations. This is the case because such companies offer value in what they do, and this is perceived in the status of compliance that they might have, the policies set at the inside and outside of the company, as well as the level of consciousness for getting their proposal on the right path.

If all these are duly executed, it will be reflected in four main characteristics:

• They will experience top-line growth;
• Product uplift;
• Cost reduction;
• Investment enhancement as well as asset optimization.

Finally, the best legal strategy or defence in case of an incident is to be in compliance with the legal framework – because this encourages companies to manage risks in all the operations they have. Given all that, at the inside of our firm, we have chosen to guide our clients from a preventive perspective, building a support scheme that considers the legal and a technical point of view in the project development process.