Mexican Panorama in CSRD Times

Abstract

The introduction of the CSRD by the EU directly impacts thousands of EU and non-EU companies and indirectly affects thousands of others due to global market dynamics, bringing Mexican companies a complex array of challenges as they adapt to external requirements. The research question guiding this study is: How does the CSRD impact Mexican companies? This study explores the current landscape of reporting practices in Mexico, the perceived impact of the CSRD, as well as the companies’ readiness, challenges, and the resources necessary for successful implementation. Findings reveal that the CSRD's impact varies based on European presence and involvement in the EU value chain. The overall readiness is generally inadequate, but it varies according to international exposure experience with ESG reporting and capabilities. The main challenges are the Mexican business dynamics, regulatory complexities, mindset barriers, knowledge gaps, data gathering issues, and associated costs. Their resource needs include regulatory improvements, awareness, education, infrastructure, collaboration, and economic support. The CSRD introduces standardised reporting practices for ESG disclosures, facilitates benchmarking, commitment confers market access benefits, promotes ethical practices in GVCs, future guidance facilitates adoption of ESG reporting and enhances transparency and stakeholder engagement while promoting ethical supply chain management. However, it also presents negative potential outcomes such as straining resources, especially for SMEs, widening the gap between large and small firms, increased barriers to market entry, diminished market opportunities, decreased competitiveness and risks disrupting innovation and proactive sustainability initiatives. Therefore, a more flexible approach is required for successful implementation.