Evaluation For The Mexican Stock Exchange
The Mexican Stock Exchange in line with the international trend of sustainability and social responsibility indexes of publicly traded companies, hired the English firm EIRIS (Experts in Responsible Investments) to evaluate environmental, social and governance (ESG) performance of the companies listed on the Mexican Stock Exchange. Ecovalores is EIRIS’ Mexican partner and has been evaluating the companies since the end of 2009.
Socially responsible investing is estimated today to represent about 12% of total investments in United States, approximately US$ 3.07 (trillion), recently responsible investors are migrating to emerging markets and we estimate that around 20% of total assets will be invested in emerging markets, mainly China and India. However Mexico appears as an appealing untapped market and estimations are that between 3 an 6% of those assets may be directed to Mexican responsible companies.
EIRIS History
EIRIS has more than 28 years experience in the ESG research worldwide, it currently researches more than 300 indicators of almost 4,000 companies and some 7,000 in selected indicators globally. EIRIS criteria and methodology has developed through a process of consultation with more than 200 international companies and with the participation of experts in each of the topics and are constantly updated with best practices that are emerging.
EIRIS has offices and representatives in Europe, Asia, Australia, United States, and Mexico and is the provider of information for various sustainability indexes internationally. The representative at EIRIS, Ecovalores Mexico is a social organization dedicated to the analysis and promotion of socially responsible investing.
Sustainability Indices.
Indices of sustainability and corporate social responsibility for companies listed on the stock exchange were developed since the beginning of the 1990s in New York and London market. Noteworthy among these are the Dow Jones Sustainability you indexes, which measure the performance of the most sustainable companies in the Dow Jones, and include companies listed on other stock exchanges as well as the number of indexes FTSE4good and the BOVESPA in Brazil ISE (http://www.bmfbovespa.com.br/indices/ResumoIndice.aspx?Indice=ISE&Idioma=en-us)
Sustainability indexes follow the performance of certain companies which are chosen with criteria of social, environmental and corporate governance and are used by institutional investors to analyse potential investment opportunities.
Below is the methodology and principles that EIRIS conducted the first exercise of rating for the radio stations listed in the MSE.
Sources Of Information.
International investors value that companies report publicly, therefore the EIRIS-Ecovalores analysis is based on public information such as; Annual reports, Social responsibility Report, web page and some sources of reliable information such as some respectable international NGO's.
Timetable Of Implementation.
Areas Of Evaluation And Its Specific Weight
In general sustainability indexes weight more the environmental area many of them have the following relative weights: environment 50%, social / interest groups 30% and corporate governance 20%.
The environmental assessment is based in the impact of the company according to the sector in which operates; the sectors are classified as high, medium and low impact. Companies operating in high-impact sectors are required to work harder on environmental issues; i.e. to have more robust policies, systems and reports in all six key areas that are: water use, air emissions, waste, energy, waste water and biodiversity,
The specific issues we analyse are the following.
International Experience With Sustainability Indexes
The Dow Jones Sustainability Indexes are formed by the top 10% of the companies traded in the Dow Jones and are balanced by sector, this means that the top 10% of each sector is included. However this 10 % has proved to be a very small universe of investment, consequently they expanded to include the top 20% in the World Enlarged Index designed to include a greater number of companies in order to meet the growing demand from investors, this index includes the top 20% of the 2,500 largest companies in the Dow Jones Global Total Stock Market Index.
Some indexes set a limited number of participants as the Dow Jones Sustainability North America 40 which consists of the 40 largest companies in Dow Jones Sustainability North America.
The FTSE4Good Index Series have five benchmarking indexes and four that you can invest in, the first include all companies that meet certain sustainability requirements. .
Monitoring (Convention Watch)
Convention Watch is a service that EIRIS offers to clients to provide a clear understanding of the many serious negative allegations made against companies in press articles and through NGO campaigns. It reviews and assesses allegations of company breaches of the spirit of major international conventions on human rights, labour standards, the environment, corruption, anti-personnel landmines and cluster munitions. Full reports on companies’ performance are provided.
Verification And Audit
EIRIS and their representatives in other countries are audited by AI CSRR Voluntary Quality Standard, (http://csrr-qs.org/content/home.html) international firm that ensures the process and the objectivity of the evaluation.
Principles Of The UN Global Compact
The bag requested EIRIS-Ecovalores this first time focus on the 10 principles of the Global Compact (http://www.unglobalcompact.org/) of the UN are based on:
The universal declaration of human rights
The Declaration of the international organization of work (ILO) on fundamental principles and rights at work
The Declaration of Rio on environment and development and
Convention of the Organization of the United Nations (UN) anti-corruption
Contact.
For any questions or clarification please contact Ecovalores at Información@ecovalores.org or Luisa Montes in Luisa@ecovalores.org
ESG Certification Scheme for Small and Medium Size Companies
Ecovalores though a collaboration agreement with GIIRS and BLAB is looking to create and support a community of for profit companies that though an assessment of key areas in governance, workers, community including supply chain and environment integrated into their core business and product can demonstrate better than average performance.
