MEXICO Law and Practice Contributed by: Fernando Hernández G., Elvia Ríos Saldaña, Ana Karen Inzunza Sánchez and Luis Andrés Estrada Intriago, Vázquez Aldana, Hernández Gómez & Associates (VAHG)
6.2 Risk Management and Internal Controls There is no specific legal provision requiring compa - nies to report geopolitical risk to regulatory authorities. However, the National Banking and Securities Com - mission and the Ministry of Finance and Public Credit through its Financial Intelligence Unit, oversee risks related to anti-money laundering, counter-terrorism financing, and compliance with international sanc - tions, all of which are directly linked to geopolitical factors. From a corporate governance standpoint, the board of directors bears responsibility for identifying and man - aging strategic risks, including geopolitical risks, as part of its fiduciary duties. Audit and risk committees are typically tasked with monitoring such matters and reporting to the board. With respect to compliance with international sanc - tions, Mexico is bound to adhere to sanctions issued by the United Nations Security Council. Although there is no legal framework mandating compliance with unilateral sanctions imposed by other jurisdic - tions, Mexican companies with international opera - tions are, as a practical matter, required to observe such sanctions in order to mitigate the risk of market exclusion or the imposition of economic penalties. Accordingly, the board of directors is expected to over - see the implementation of internal controls designed to prevent transactions with sanctioned entities or jurisdictions, in alignment with the requirements of the Financial Intelligence Unit and recognised best practices in corporate governance.
risks and opportunities that may affect a company’s financial position. Entities that prepare their financial statements under Mexican GAAP must include the disclosures required by the NIS to comply with the NIS conceptual frame - work, which may pose a significant challenge for organisations in 2026. Meanwhile, regulated entities – such as financial or insurance institutions, as well as entities listed on the Mexican stock exchange – must comply with the sustainability reporting requirements set out by their respective regulators. Any other entity may choose to adopt the NIS to report sustainability information voluntarily. Importance of Data Collection and Disclosure • Regulatory compliance: Collecting the 30 BSIs (Basic Sustainability Indicators) and disclosing them within financial statements demonstrates that an entity is aligned with industry best practices and compliant with current regulatory frameworks. • Enhancement of corporate governance: Docu - menting internal controls, risk assessments, and operational processes strengthens the control environment. This facilitates effective oversight by governing bodies, such as the board of directors or the audit committee. • Reputation and trust: For third-party stakeholders (investors, financial institutions, and tax authori - ties), a robust analysis of the BSIs serves as an indicator of operational maturity and regulatory adherence. However, due diligence must be exer - cised to avoid “greenwashing” risks. • Risk mitigation: The data collection process com - pels the entity to identify material weaknesses, enabling the implementation of remedial actions before these weaknesses escalate into significant financial or legal liabilities. Furthermore, the integration of these sustainability disclosures is deeply rooted in the principles of the Mexican Code of Principles and Best Corporate Gov - ernance Practices. By aligning ISSB standards with the Code’s recommendations, entities reinforce their commitment to transparency, professional ethics, and institutional stability. This synergy ensures that the board of directors and specialised committees have the high-quality, verifiable data necessary to fulfil
7. Environmental, Social and Governance 7.1 ESG Requirements
In January 2025, the National Banking and Securities Commission announced an amendment to the regula - tory framework applicable to issuers in the securities market, mandating the adoption of the international standards IFRS S1 and S2, issued by the International Sustainability Standards Board (ISSB). These stand - ards establish criteria for the disclosure of climate- related information, as well as sustainability-related
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