On January 28, 2025 a resolution amending the General provisions applicable to issuers and other participants in the securities market (the "Resolution") was published in the Federal Official Gazette, to include obligations to issuers regarding sustainability information.
The Resolution became effective on January 29, 2025, which includes the obligation of securities issuers to disclose sustainability information which must be filed with the Mexican Banking and Securities Commission (the “CNBV”) and the corresponding stock exchange, beginning in 2026.
Resolution's objectives:
- Promote the alignment of capital flows toward investments that enhance economic development by promoting environmental and social sustainability, transparency and long-term strategies in financial and economic activity;
- Ensure that sustainability information is measurable, comparable and aligned with the IFRS Sustainability Disclosure Standards issued by the International Sustainability Standards Board; and
- Provide investors with more elements for better investment decision-making, issuers with a more efficient risk management, and promote the growth of the Mexican securities market.
What is a sustainability report?
It refers to information on sustainability-related risks and opportunities of an issuer that could reasonably be expected to affect its cash flows, access to financing or capital costs in the short-, medium- or long-term, and that must include information on governance, strategy and management of such risks and opportunities, as well as metrics and targets.
Obligated entities?
All issuers that maintain securities registered with the Mexican Securities Registry ("RNV").
Certain specific issuers are subject to the following particular requirements:
- Financial entities acting as securities issuers: they must prepare sustainability information according with the legal framework applicable to each financial entity. This is also applicable to issuers that, through their subsidiaries, predominantly perform financial activities1 subject to the supervision of financial authorities.
- SOFOMES E.N.R.: SOFOMES E.N.R. that issue securities other than debt instruments, and issuers whose predominant activity is the granting of credit, financial leasing or financial factoring, must comply with the sustainability reporting standards applicable to SOFOMES E.R.
- Federal entities and municipalities: these are excluded from the obligation to prepare the sustainability report.
- Foreign issuers: they must prepare sustainability information according with the IFRS Sustainability Disclosure Standards, or according with the sustainability reporting standards applicable in the issuer’s country of origin.
Disclosure requirements
The report must be prepared according to the IFRS Sustainability Disclosure Standards issued by the International Sustainability Standards Board, which comprise the IFRS-S described below, which set out the general disclosure requirements to be included in the sustainability information report:
- IFRS S1 – General Requirements for Disclosure of Sustainability-related Financial Information.
It provides the requirements for the periodic disclosure of general information of several sustainability-related risks and opportunities of the issuers, mainly focused on the following: (i) governance;2 (ii) risk management;3 (iii) metrics;4 and (iv) strategies5.
The information must meet, at least, the following qualitative criteria:
(i) relevance; and
(ii) faithful representation of what is intended to be disclosed.
Issuers are subject to additional obligations related to the identification of risks and opportunities, as well as information requirements applicable to sustainability-related risks and opportunities to meet the above-mentioned qualitative criteria.
- IFRS S2 – Climate-related Disclosures.
The objective of IFRS S2 is to set out the disclosure requirements that issuers must perform with respect to its climate-related physical and transition risks and opportunities that could reasonably affect the issuers’ prospects. Issuers must consider the information to be disclosed according to the industry of such issuer.
IFRS S2 set out the following metrics to measure, supervise and manage risks and opportunities:
(i) Greenhouse gas emissions: must disclose, among others, its absolute gross greenhouse gas emissions generated during the reporting period and the approach it uses to measure such emissions.
(ii) Transition risks: amount and percentage of assets or business activities vulnerable to climate-related transition risks.
(iii) Physical risks: amount and percentage of assets or business activities vulnerable to climate-related physical risks.
(iv) Opportunities: amount and percentage of assets or business activities aligned with climate-related opportunities.
(v) Capital deployment: amount of capital expenditure, financing or investment deployed towards climate-related risks and opportunities.
(vi) Internal carbon prices: explanation of whether and how the issuer is applying a carbon price in decision-making, as well as the price per metric tonne of greenhouse gas emissions to assess the costs of its emissions.
(vii) Remuneration: description of whether and how climate-related considerations are factored into executive remuneration, as well as the percentage of executive management remuneration in the reporting period that is linked to the climate-related considerations.
When?
- Effective date: The Resolution became effective on January 29, 2025.
- Date in which the obligation is effective: The sustainability report including the annual information for 2025 must be filed starting in 2026. This is applicable to both new and existing issuers in complying with their periodic obligations.
- Frequency: Annual.
- Sustainability report assurance obligation: The sustainability report must include the reasonable assurance of the information issued by an external auditor, in accordance with the following:
- 2026 report with annual information for 2025 – optional assurance.
- 2027 report with annual information for 2026 – limited assurance.
- Subsequent reports – mandatory assurance.
1 Predominant activity refers to the activity that represents more than 70% of the issuers’ consolidated assets, liabilities, or total revenues at the end of the previous year. An activity will no longer be considered predominant if, for 3 years, the activity represents less than 50% of the issuers consolidated assets, liabilities, or total revenues, or, if in the previous year, that activity represents less than 20%.
2 Governance structure maintained to identify, assess, and supervise sustainability-related risks and opportunities.
3 How risks are managed and mitigated.
4 Metrics adopted to measure and supervise sustainability-related risks and opportunities, the results obtained in the disclosure period, including progress toward any target set by the issuer.
5 Refers to the targets and commitments to mitigate sustainability-related risks that have been identified by the issuer, in other words, the actions to be implemented to meet these goals.
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This article is prepared for the general information of interested persons. It is not, and does not attempt to be, comprehensive in nature. Due to the general nature of its content, it should not be regarded as legal advice.
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