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23 July 2012
Sustainability has become an ever-increasing necessity in the global economy. Finding the means to distribute natural, economic and social resources efficiently and rationally for the wellbeing of society and prosperity of future generations has become a key way for companies to access additional investment capital. Green companies are no longer the exception, but rather the rule for the future.
Making note of the trend in favour of environmentally and socially responsible investment in Mexico over the past few years – and owing to the fact that even with 34% foreign investment, no Mexican company has formed part of any existing international sustainable index – the Mexican Stock Exchange Market (BMV) has launched a sustainability index similar to the Dow Jones Sustainability Index and the FTSE4GOOD Index Series in order to remain competitive in the global economic market. This project was led and created by the risk rating agencies Empowering Responsible Investment (EIRIS) and the Universidad Anahuac del Sur, respectively.
Since the Dow Jones Sustainability Index analyses both developed and developing world markets, BMV has recognised the possibility that Mexican companies will one day form part of the Dow Jones (along with Brazilian, South African, Colombian, Indian and Chilean companies). The index allows BMV to group Mexican companies whose environmental, social and corporate governance goals mirror those of the growing number of investors concerned with the environmental and social impact of their investments on future generations.
BMV found that 27 Mexican companies were currently above the median level of the 3,500 issuers that form the 26 global markets to which the Mexican companies were compared. These companies include:
The index allows investors to identify and acknowledge companies quickly and effectively at a national and international level for their commitment to sustainable causes and compliance with environmental laws. It also provides incentive for companies that do not currently engage in sustainable practices to do so or else risk losing value and investment capital. It provides the means by which to establish a sustainability industry standard that encourages economic growth within sustainable limits.
The index evaluates companies on environmental sustainability, social sustainability and corporate governance. For the environmental sustainability evaluation, the index considers compliance with standards in the following areas:
The environmental evaluation constitutes 50% of the final index grading.
BMV believed it was time to position itself as a stock exchange that is committed to a socially and environmentally responsible market. To reach this standard, BMV's expert team will choose only companies with either a reported float of more than 30% or a capitalised float value of more than Ps10 million. BMV will publicise these findings in order to promote Mexican businesses that embody the goals of social, environmental and corporate governance mediation and to incentivise companies that do not meet these standards to do so.
Finally, the sustainability index seeks to promote the BMV according to international standards and tendencies regarding sustainability indexes and to encourage the delivery of and easy access to environmental information that has lately become a priority for investors in Mexico.
For further information on this topic please contact Juan Francisco Torres Landa, Jorge Yanez, Brenda Rogel Salgado or Jeanett Trad Nacif at Barrera, Siqueiros y Torres Landa, SC by telephone (+52 55 50910157 or +52 55 50910165), fax (+52 55 50910123) or email (firstname.lastname@example.org, email@example.com, firstname.lastname@example.org or email@example.com).
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