Climate Governance Initiative


3 August 2023

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Climate change and environmental degradation constitutes a challenge at national and global levels and is a source of financial risk.” 

Climate-related risks are a source of financial risk. Therefore it is within the mandate of central banks and supervisory bodies to ensure that the financial system is resilient to these risks.

Banco de México considers it is imperative to promote, throughout the financial sector, the best assessment of climate, environmental and social risks and opportunities.

Alejandro Díaz de León, Governor of Banco de México

Mexico City, 19 November 2021

XLIX IMEF National Convention


The focus of the economic recovery should be on reducing social gaps and climate change.

We need to move towards sustainable finance in order to mobilize resources to address climate change risks and achieve sustainable development goals.

We would like Mexico to begin to mobilize capital in the medium and long term to move more quickly towards a green growth path, for banks to disseminate information on risks associated with climate change but also to evaluate the impact of climate change on their projects and portfolios.

Gabriel Yorio, Undersecretary of Treasury and Public Credit of The United Mexican States

Mexico City, 20 November 2020

XLVIII° Convention of the Mexican Institute of Finance Executives


In November 2022, Mexico submitted its updated National Determined Contribution (NDC) to the UNFCCC.1 Under the updated NDC, Mexico commits to an unconditional target of a 35% reduction in greenhouse gas emissions (30% with own resources and an additional 5% from agreed international support) by 2030 and from 36% to 40% conditional on additional international support, compared to a ‘business as usual’ baseline.

Banco de México (Banxico) is a founding member of the Network of Central Banks and Supervisors for Greening of the Financial System.2 In 2020, Banxico proposed the creation of the Sustainable Finance Committee within the Financial System Stability Council in Mexico (the Committee), which is chaired by the Ministry of Finance.3 The Committee is tasked with matters such as improving climate disclosures and creating a taxonomy for sustainable finance. 

Banxico is also leading on an ESG disclosure and risk capacity-building and financial education programme aimed at financial institutions and financial market participants with the Committee, producing a framework for climate-related macro-financial risks, and has created the Directorate of Analysis and Policies of Environmental and Social Risk, which can work with a range of parties to create sustainability regulations, alongside various other mandated activities. The effect of the activities of the Committee include, among others: (i) new regulation for financial and non-financial entities; (ii) development of a sustainable financial taxonomy that favours sustainable development in the activities and services carried out in the financial system; (iii) the integration of climate and ESG risk factors in supervisory and financial market activities, (iv) improvements in the amount and quality of disclosures and reporting by non-financial and financial institutions, (v) and the enabling of conditions to increase sustainable capital mobilization.4

During 2022, the National Banking and Securities Commission (CNBV) worked on assessing the integration of ESG disclosures in financial decision-making, and participated in the workgroups and workstreams of the main international initiatives and organizations regarding sustainability. The CNBV has also coordinated the Information Disclosure and ESG Standards Adoption Working Group, which aims to analyse and potentially adopt non-financial disclosure frameworks related to ESG indicators.5

In addition to the foregoing, in March 2023 before the Mexican Banking Convention, Mexico’s Sustainable Taxonomy was presented. The Taxonomy is a system intended to classify and promote economic and financial activities that contribute to sustainable development and the achievement of Mexico's environmental, climate and social objectives. Currently, the use of this system is voluntary, however, it is expected to provide an influential framework to guide capital flows in jurisdictions focused on sustainability.

Directors’ Duties and Climate Change

Directors’ duties and liabilities are regulated by different legal frameworks depending on whether a company is private, listed, or prudentially regulated, such as financial institutions.

A. Private companies

The Companies Law (Ley General de Sociedades Mercantiles) regulates corporate governance in private non-regulated companies, setting forth the role, duties, obligations, authority and liability of their directors.

Directors’ liabilities pursuant to the Companies Law are threefold. Directors are liable for any breach of: (i) their obligations under the company by-laws; (ii) their obligations under applicable laws and regulation; and (iii) the obligations inherently stemming from their position as directors of the company.

Directors not only have a responsibility to comply with objective duties established in the by-laws of the company and applicable laws and regulation, but also have a fiduciary duty to comply with all those obligations inherent to their responsibility to manage the company.

Pursuant to article 142 of the Companies Law, directors are “mandatarios” of the company. Under the concept of mandato, an agency relationship entailing particular responsibilities between the directors and the shareholders is established.

The legal concept of a mandatario in commercial law is regulated by the Third Title of the Commercial Code under the concept of “comisión mercantil”. Pursuant to articles 286 and 287 of the Commercial Code, a comisionista must follow the instructions of its principal; in the event that there are no express instructions, the comisionista must consult with the principal, and if that is not possible, the comisionista… shall act prudently, taking care of the business as if it were his own.” The duties of a director entail a personal responsibility and demand utmost due care.

Pursuant to article 157 of the Companies Law, directors “have the responsibilities inherent to their mandate”. Shareholders are the principals of the directors, who give them the mandate of managing the company. Therefore, the board of directors is ultimately accountable to the shareholders, and only shareholders and the company are entitled to demand compensation for damages caused by breaches of directors to their duties.

Mexican Courts have issued persuasive (non-binding) precedents (tesis aislada) that provide guidance on what may be interpreted to be the obligations inherently stemming from the position of directors. The precedents provide a test to confirm if the directors have complied with their fiduciary duties. Accordingly, it shall be deemed that directors are in compliance with their fiduciary duties: (i) if they are following and complying with the instructions expressly given to them; (ii) if they have no express instructions, then they shall act based on proper advice and consultations; and (iii) in case there are no express instructions and it is not possible for them to act under proper advice and consultations, then they must act prudently and with utmost due care, considering the business purpose of the company. Considering that the directors are the legal representatives of the company, and their authority is established in the bylaws, the directors’ authority is limited by the business purpose of the company.

The precedents further clarify that if this test is not met and there is a causal link between the conduct of the director and a damage to, or loss of profit by, the company, then it shall be deemed that the director is liable for the damages caused as a consequence of his/her actions or omissions in breach of his/her fiduciary duties.

In view of these precedents and the development of a doctrine on the scope of the fiduciary duties of directors and in particular, those duties of diligence and care, it follows that directors are liable for any damage caused to the company by their actions or inactions; provided, however, that directors are released from liability if (i) they received express instructions by the shareholders, and either: (ii) they acted based on proper advice and after having made the appropriate consultations on the manner in which they must take actions, or (iii) they acted prudently and with utmost due care.

Mexican law does not establish objective parameters with regard to the scope of fiduciary duties. The scope of the directors’ fiduciary duties, for example, in terms of having a long-term or medium-term perspective, is relative and would depend on the industry or business in question and the specific risks the business is subject to.

There are certain industries and regions in Mexico that are highly susceptible to the physical effects of climate change. These physical effects of climate change are notorious facts, since they are widely known and documented, for example, in publications of Banxico and other authoritative sources;6 therefore, no director could reasonably claim that he/she was unaware of this risk. Based on Mexican precedents, notorious facts are those that by human knowledge are considered certain and indisputable, whether they pertain to history, science, nature, related to current public life or circumstances in a certain place that are well known. It therefore follows that any such risks shall be deemed material for both short-term and long-term decisions, and that directors will be held responsible for giving them due consideration in their oversight of risk management and strategic planning. 

Considering that scientific research and evidence are clear on the irreversible effects of these physical risks and the necessity to reduce transition and liability risks on climate-related changes, it is our opinion that directors who do not explicitly take into account the risks and opportunities resulting from the effects that climate change will have on the operations, finances, credit, market, liquidity, profitability and reputation of their companies are in breach of their fiduciary duties, and may be held liable accordingly. 

The liability of directors is contingent on the business suffering the negative effects of climate change and damages or losses caused therefrom. The fact that these negative effects have not been materialized might preclude directors from taking immediate action or being sensitive to their fiduciary duty in the long-term; however, directors’ lack of awareness of the urgent need to take immediate and ambitious action does not exempt them from having such liability, because such need is now a notorious fact, inasmuch as information regarding climate change risks is now ubiquitous.

To illustrate the foregoing, we could consider the following cases of physical risks in Mexico. 

  1. Hurricanes, droughts, landslides, extreme temperatures, torrential rains, floods and fires have increased in Mexico, including:
    1. The overflowing of the Tula River.
    2. The loss of the Ayoloco glacier of the Iztaccihuatl volcano.
    3. Floods in the States of Coahuila, Sinaloa, Oaxaca, Tamaulipas, Veracruz and Morelos in 2022.
    4. Drought of dams in a large part of the country, such as Lake Cuitzeo in Michoacán.
    5. Fires consumed 617,142 hectares in 2021, which is almost double the previous year's figure.
    6. In 2021, fires consumed 7,000 hectares of forest in Coahuila and Nuevo León.
    7. The Atlantic tropical cyclone season broke a record with a total of 30 hurricanes. 

These cases, the likelihood and impact of which were increased by climate change, had an impact on multiple sectors in Mexico, affecting their operations, finances, and profitability. Directors have had to take actions to compensate the effects of these events, even if they did not acknowledge that such events were caused by climate change. The lack of interest and recognition of these events as a consequence of global warming could make the directors liable for their omissions in identifying and implementing measures to reduce transition risks.

  1. Rising sea levels are likely to have an impact on the tourism sector in certain coastal areas in the Southeast of Mexico by 2050 at the latest. In these cases, the directors of, for example, companies developing hotel infrastructure must take into account the effects of global warming and the rise in sea levels to make decisions in the medium and long term. If the directors do not consider such an important risk in their decision-making process, the shareholders may hold them accountable for the damages to the business caused by the sea level rises resulting from the omission in taking actions to prevent any such effects. 

As noted, the liability would not be triggered until such time as the business suffered damages or losses and there were a causal link between the acts or omissions of the directors and the damages or losses. To the extent that the direct and indirect effects of climate change were to start to manifest in the operations, finance and profitability of business, directors would be liable if they failed to meet the test above and there were a causal link between the conduct (act or omission) of the director and damages or loss of profit suffered by the company.

B. Non-listed companies

The Companies Law does not explain what must be understood by “acting prudently and with utmost due care”; however, inasmuch as the Stock Market Law (Ley del Mercado de Valores) does clarify the meaning of the terms ‘duty of diligence’ and ‘duty of care’ for directors of listed companies, these are implied duties for directors of private companies, and may be reasonable to construe such definitions as setting a valid standard for what shall be their duties of directors under the Companies Law as set forth above and in the judicial precedents. 

C. Listed companies 

Corporate governance of listed companies is mainly regulated by the Stock Market Law.

The Stock Market Law expressly regulates the duties of diligence and loyalty borne by directors of publicly-traded companies, and as explained above, the scope of the duty of diligence and duty of loyalty may be used to construe the scope and extent of the obligation of directors to act prudently and with utmost due care, as express duties of directors.

 Pursuant to the Stock Market Law

  1. the duty of diligence requires acting in good faith and in the best interests of the company; being duly qualified, prepared and informed regarding all aspects that are relevant to the correct operation of the company; and using the resources and organisation of the business to achieve the greatest possible efficiency in its operation and management of financial risks; and 
  2. the duty of loyalty refers to putting the interests of the company first at all times, including but not limited to the inherent obligation to keep company information confidential, and to make decisions devoid of conflicts of interest.


D. Regulated companies

Corporate governance of regulated entities, such as financial institutions, is subject to specific regulation contained in the law applicable to the respective entity.

General fiduciary duties are also applicable to regulated companies in relation to their specific regulations.

As at the time of writing, there is no explicit regulation regarding the obligations of financial entities or their directors to address environmental risks, with the notable exception of private pension funds (Administradoras de Fondos Para el Retiro - AFORES) being subject to a requirement to assess the ESG factors of their investments as of January 2022.

Extra-Contractual Duties

The fiduciary duties that have been described above are in all cases contractual duties, as they derive from the contractual relationship between the shareholders and the directors, and therefore, only the shareholders are entitled to demand compensation if directors breach their duties causing financial damage to the company.

Mexican law also considers extra-contractual liability that may be attributed to the directors for a breach of the law or of good practices (buenas costumbres), based on article 1910 of the Federal Civil Code. Moreover, the Mexican Constitution provides the general obligation of the private sector to act with “social responsibility”, as it states in article 25 that “The public, social and private sectors shall concur, with social responsibility, to the national economic development …

From the environmental perspective, Mexico has legislation that imposes sanctions on companies for damaging the environment, either by action or omission of their board of directors. Article 24 of the Environmental Responsibility Federal Law (Ley Federal de Responsabilidad Ambiental) states that companies are liable for the environmental damage caused by their managers, officers, directors and employees, and any staff with control over the operations of the company if they omit or act within their authority in representing the company, or when they order or agree on actions that damage the environment.

Irrespective of their contractual obligations under the by-laws of the companies in which they serve as directors, directors shall, in all cases, act in accordance with good practices and assume their social responsibility.

As of this writing, there are no judicial precedents or guidance on what shall be deemed good practices or assuming one’s social responsibility.

Directors’ Disclosure Obligations and Climate Change

The Companies Law establishes that directors must present an annual financial report to shareholders, including financial statements and information describing the financial state of the company.7 There is no explicit obligation to disclose information about potential climate risks; however, such an obligation may be inferred as part of the fiduciary duty of diligence, and to the extent that the risks of climate change are reasonably considered, as they increasingly are, to be material to the business and purpose of the company.

In the case of listed companies, pursuant to the Stock Market Law, directors must disclose material information or events to the general public. The legislation does not expressly establish the obligation to disclose climate-related risks, but they must be disclosed to the extent that they are considered material events. The omission of any disclosure of material events, or the making of material misstatements, may give rise to financial sanctions.

In recent years, the Mexican stock markets and a significant number of listed companies have been active in promoting the disclosure of ESG information and adherence to recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) and the Sustainability Accounting Standards Board (SASB) standards.8 In December 2021, the TCFD Mexico Consortium was launched.9 The Consortium works in support of the integration and disclosure of climate-related financial risks, and along with the then Governor of Banco de México Alejandro Díaz de León, noted the importance of adopting the TCFD recommendations.

At the time of writing, ESG disclosure and adherence to the TCFD recommendations, SASB standards, or any other climate or ESG disclosure standard are voluntary.

Practical Implications for Directors

Notwithstanding the slow pace at which Mexican regulators have been issuing and implementing regulation regarding the adoption of climate resilience measures in business practices and disclosures, companies must act based on their own analysis of risk and scenarios to adopt climate resilience measures and disclosures to prevent potential financial damages. In this sense, well-counselled boards will: 

  1. expressly acknowledge and define the responsibility of the board to identify climate risk and opportunities and appoint a clearly-identified team in management tasked with reporting directly to the CEO and board; 
  2. include in the agenda of the board the development of a climate transition roadmap to 2050 with transparent carbon neutrality and reduction targets, with clear interim targets to 2030 and 2040, and a current rolling multi-year strategic plan, with periodic reporting to the board;
  3. delegate to the appropriate committee(s) of the board, such as risk, audit, legal and governance, scenarios/strategy, nominations/remuneration, or sustainability/corporate responsibility, the task of translating the long-term strategy into a clear decision-making process for each aspect that is relevant to each committee; and
  4. discuss with disclosure counsel, in order to develop an external engagement and communications plan.

As a practical consideration, on 3 November 2021 the International Reporting Standards Foundation (IFRS) Trustees, created the International Sustainability Standard Board (ISSB) to help the demand of an increasing calling of global investment portfolios, for high quality, transparent, reliable and comparable reporting by companies on climate and other ESG matters. Directors must take into consideration that these reporting standards will most likely shape international practice on sustainability-related disclosure standards, considering that they will provide investors and other capital market participants with information about companies’ sustainability-related risks and opportunities.10

The Securities Exchange Commission (SEC) proposed new guidelines in March 2022, to improve and standardize climate-related disclosures in order to meet investor needs. Many issuers are actively attempting to address investor demand for this information, but current disclosure methods are fragmented and uneven. The proposed rules will make it easier for issuers to disclose these risks more homogeneously, which will benefit both investors and issuers.

As of this date, there is no specific date as to when these rules will enter into force, but it is assumed that the proposed rules will be adopted with an effective date in December 2022. 


  • Yves Hayaux du Tilly L., Nader, Hayaux & Goebel Mexico
  • Enrique Salcedo R., Nader, Hayaux & Goebel Mexico
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End notes:

1: Gobierno de México, Contribución Determinada a Nivel Nacional Actualización 2022 (November 2022) <>.
2: Algunas de las empresas que apoyan al Grupo de Trabajo sobre Divulgación Financiera Relacionada con el Medio ambiente y son promotoras activas de la divulgación de los riesgos climáticos son: Afore XXI Banorte, Cemex, BIVA, Citibanamex, Citibanamex Afore, Fresnillo, Orbia y Funo. CONFIRMAR QUE ESTA ACTUALIZADA ESTA LISTA. Raquel Rosas y Gabriela Niño, ‘Lanzamiento oficial del Consorcio TCFD México’ (17 de diciembre de 2021) <>.
3: Banco de México, 2021: Año de la Independencia (4 de noviembre de 2021) <>.
4: Banco de México, 2021: Año de la Independencia (4 noviembre 2021) <>.
5: See Global Green Growth Institute, México, Accelerating green financing through the strengthening of Mexico’s National Banking and Securities Commission (March 2022) <>.
6: See, e.g. Bank of Mexico, Climate and Environmental Risks and Opportunities in Mexico’s Financial System: From Diagnosis to Action (February 2020) <>.
7: Pursuant to article 172 of the Companies Law, at least the following information must be presented to shareholders every year: an explanation of the general state of the company main policies implemented and key projects; an explanation of the accounting standards used to prepare the financial information; the updated finances of the company; a report on the changes of the general finances and assets of the company; and any note or clarification regarding the information provided.
8: Some of the companies that are supporters of the Task Force on Climate-Related Financial Disclosure and are active promoters of disclosure of climate risks are: Afore XXI Banorte, Cemex, BIVA, Citibanamex, Citibanamex Afore, Fresnillo, Orbia and Funo.
9: Raquel Rosas and Gabriela Niño, ‘Official Launch of the TCFD Mexico Consortium’ (17 December 2021) <>.
10:  IFRS, ‘About the International Sustainability Standards Board’ (accessed 18 May 2022) <>.