Board Dialogues on Climate Governance

BoardDialogueson ClimateGovernance CHAPTER ZERO MEXICO’S EVENT REPORT APRIL 7, 2025 TABLE OF CONTENTS 1 Message from Emily Farnworth, Executive Director, Climate Governance Initiative 5 Andrés Conesa. Challenges of Decarbonization in the Industry 2 General Panel: Moderated by Jimena Marván Board Dialogues on Climate Governance 3 Lourdes Melgar. The Path Forward: Principles of Climate Governance 4 Daniel Servitje. The Importance of a Culture Aligned with Climate Governance The Climate Governance Initiative (CGI) is a non-profit organization founded in 2019 to strengthen corporate governance amid the challenges of climate change. Based on the World Economic Forum’s Principles for Effective Climate Governance, it provides a framework for boards of directors to integrate climate-related risks and opportunities into their corporate strategies. CGI currently operates 34 chapters across more than 70 countries, comprising a network of over 100,000 board members overseeing companies responsible for one-third of global carbon emissions. According to its 2024 Global Impact Survey, 89% of directors acknowledge their responsibility in guiding their companies’ climate action. Chapter Zero Mexico was established as a platform for board members to engage in highlevel discussions, share insights, and access resources tailored to the Mexican context. The country faces unique climate challenges and opportunities, and effective leadership from boards is essential. By joining Chapter Zero Mexico, you will connect with peers both nationally and internationally and gain access to global best practices. Together, we can ensure that climate governance becomes a core element in Mexican boardrooms, contributing to a more resilient and sustainable future. Board Dialogues on Climate Governance Chapter Zero Mexico Emily Farnworth, Executive Director, Climate Governance Initiative GeneralPanel: BoardDialogueson ClimateGovernance Introduction - Jimena Marván We are living through a period of global transformation marked by geopolitical, economic, and environmental tensions. The climate crisis is now an undeniable reality: 2023 was the warmest year in 175 years, with visible consequences such as rising sea levels, heatwaves, and significant economic losses. In this context, climate governance is not optional but a strategic imperative. Board Dialogues on Climate Governance Chapter Zero Mexico Perspective of Lourdes Melgar – Strategic board approach: Climate change is a cross-cutting risk that must be addressed with strategy, vision, and robust data. It should not only be discussed at the board level but also managed by an informed and aligned executive team. Integrated reporting that combines financial and sustainability data is essential. Remarks by Andrés Conesa – Aeroméxico: The aviation industry faces complex challenges in achieving decarbonization due to its heavy reliance on fossil fuels. Aeroméxico has implemented a fleet renewal strategy, incorporating Boeing 737 MAX aircraft that emit 20% less CO₂. Despite its higher efficiency compared to other transport alternatives, the sector continues to face a negative public perception and increasingly stringent regulations, including environmental taxes with limited effectiveness. Conesa emphasized the need for coherent policies and incentives to support an orderly energy transition. He cautioned against premature divestment from transitional energy sources such as natural gas and called for a greater focus on disruptive technologies like green hydrogen. Daniel Servitje – Grupo Bimbo: With a personal conservationist vision, Daniel Servitje has driven sustainability at Bimbo since the 1990s. Today, 97% of the electricity used in its operations across 35 countries comes from renewable sources, and the company operates the largest electric vehicle fleet in Latin America. Its investments are economically justified, even when some entail slightly higher costs. One of the major challenges is reducing Scope 3 emissions. The company is currently working with 300,000 hectares of regenerative agriculture to achieve net-zero impact within 25 years. Transforming traditional agricultural practices is complex, but essential. Examples: Cemex: A transformation driven by a 100-year vision, investment in R&D, and a corporate strategy backed by the board. Smurfit Westrock: Establishment of a sustainability committee, integration of environmental metrics, and responsiveness to consumer demands. Banco Santander: Achieved local alignment with the ambition ofits global climate strategy, led by directors with specialized knowledge. The board must be willing to learn and evolve, even in areas that were previously beyond its expertise. Board Dialogues on Climate Governance Chapter Zero Mexico Aeroméxico and its Critical Path: The aviation sector continues to face technological constraints, as electric aircraftremain unfeasible for long-haul operations. The sector will continue to depend on “molecules,” such as green hydrogen, which still emit CO₂, though their emissions occur within a more carbon-neutral life cycle. The innovation cycle is long; a new engine typically takes 20 years to amortize. The pandemic, however, provided an opportunity: under Chapter 11 ofthe U.S. Bankruptcy Code, Aeroméxico renewed nearly 70% ofits fleet. Andrés Conesa underscores the need to seize every opportunity to enhance efficiency and to participate in global forums such as IATA, SkyTeam, and ICAO, where industry regulation and technological innovation are shaped. Although Aeroméxico operates a modern fleet, European and North American carriers continue to hold greater leverage thanks to their scale and purchasing power. Lourdes Melgar – Sectoral Competitiveness: A company committed to the energy transition cannot operate in isolation. It must monitor the actions of key competitors and establish realistic, evidence-based targets. A deep understanding of the competitive landscape is essential. Beyond political debates, climate change is an urgent scientific challenge. Addressing it requires a clear, flexible, and long-term vision that ensures both profitability and sustainability. Daniel Servitje – Long-term Commitment: Bimbo’s five-year sustainability plan is embedded in a twenty-five-year climate roadmap. A strong organizational structure across all its markets enables the local execution of global strategies, with its Ventures division driving the transition forward. Servitje acknowledges the challenges of navigating diverse regulatory frameworks. While the European Union imposes rigorous standards, the United States requires tailored communication approaches that uphold values such as diversity and human dignity. The company’s strategy rests on firm principles that ensure adaptability with purpose. Board Dialogues on Climate Governance Chapter Zero Mexico Sustainability must be a business decision supported by genuine commitments. Strategy and culture must go hand in hand to ensure an authentic transformation. Each company should act in accordance with its scale and capabilities. Ambitious commitments are necessary to achieve meaningfulresults. Education and capacity building are fundamental. Climate governance is essential for both corporate and social development. Panel Conclusions Board Dialogues on Climate Governance Chapter Zero Mexico ThePathForward:Principles ofClimateGovernance LourdesMelgar The session, moderated by María Angela Ramirez Zablah, focused on the strategic role of boards of directors in addressing climate-related risks. Based on the World Economic Forum’s Principles for Effective Climate Governance, key findings were presented: 40% of board members surveyed by the Climate Governance Initiative reported having no knowledge of climate issues, and 27% indicated they lack sufficient data to make informed decisions. This diagnosis highlights the urgent need to strengthen climate literacy within boards. Boards face the challenge of ensuring long-term business resilience and sustainability without compromising short-term profitability. To achieve this balance, they require clear, timely climate information that enables informed and strategic decision-making. The climate crisis must be addressed with conscious, informed, and proactive leadership—bringing the issue regularly to the board agenda, asking questions, benchmarking, and acting with a long-term vision. Board Dialogues on Climate Governance Chapter Zero Mexico Four Key Perspectives for Addressing Climate Governance: 1.Governance: The board and its committees have a fiduciary duty to integrate climate considerations into decision-making. 2.Strategy: Climate change must be embedded across the entire corporate strategy. 3.Risk Management: Climate-related events and shifts in consumer preferences should be treated as material risks. 4.Metrics and Targets: Decisions must be grounded in clear indicators, as sustainability has already become an integral part of financial reporting and accounting frameworks. Climate governance is not a choice but a strategic imperative. As CEMEX illustrates, confronting climate change requires forward-looking investments that deliver both environmental and financial returns. Three Essential Principles of Climate Governance: Climate Responsibility The board mustintegrate a climate-focused vision into its long-term strategy. Subject Matter Competence While not all members are expected to be experts,there must be solid climate knowledge within the board. Ongoing training is essential. Knowledge Sharing The exchange ofinsights and best practices enhances corporate action and promotes greater alignment of initiatives. Take the 30-minute course on the eight principles here. Board Dialogues on Climate Governance Chapter Zero Mexico Key Topics Addressed: 1. Cultural Transformation and Sustainability: The case of CEMEX demonstrates how a long-term vision —grounded in the ambition to remain relevant for the next century—can transform a traditional business model. Even in the absence of a strong initial climate conviction, there are compelling economic reasons to act. Informed and forward-looking leadership remains a decisive factor. 2. Climate Traceability and SMEs: In addressing the challenge of integrating sustainability into value chains, the discussion emphasized the importance of building capacity among SMEs. Walmart was highlighted as an example for its supplier inclusion strategy. 3. Visibility of Sustainable Efforts: Many companies have already made significant progress but fail to communicate their achievements. Lourdes Melgar stressed that showcasing these advances can open access to green financing opportunities. 4. Success Stories and Strategic Communication: Participants were encouraged to document and share successful cases, contributing to those already published by the Climate Governance Initiative (CGI), such as CEMEX’s example. The aim is to inspire through conviction, notregulatory pressure. 5. Carbon Credits and the Risks of Greenwashing: Carbon credits can be a valuable tool when integrated responsibly into a broader strategy. Otherwise, they may resultin unnecessary costs and potential legal risks. 6. Active Leadership: Boards should keep climate issues consistently on the agenda, assess them from diverse perspectives, and benchmark their progress againstindustry peers. Session Closing: Lourdes Melgar concluded by encouraging participants to stay closely connected with the Chapter Zero Mexico network, deepen their expertise, and lead the climate transformation from their boards. “The board cannot remain a spectator; it must enable corporate transformation through vision, strategy, and responsibility.” Lourdes Melgar Board Dialogues on Climate Governance Chapter Zero Mexico TheImportanceofa CultureAlignedwith ClimateGovernance DanielServitje Daniel Servitje, Chairman of Grupo Bimbo, addressed the challenges, responsibilities, and opportunities that boards of directors face in integrating sustainability into corporate strategy, emphasizing that climate leadership must begin within the board itself. Board Dialogues on Climate Governance Chapter Zero Mexico Finance and Climate Vision: Servitje emphasized that sustainability must be directly linked to profitability. In contexts such as the United States, a rollback in climate financing policies has been observed, making it essentialfor boards to remain informed and adaptable. Internal Barriers: The main obstacles do notlie atthe executive level butrather within middle management, where agile decision-making can be hindered. Servitje urged board members to remain closely connected to the company’s day-to-day operations. Cultural Change Without Imposition: Since its international expansion in the 1990s,Bimbo has developed a flexible corporate culture. The company continues to prioritize people while recently strengthening its social and environmental dimensions. Generational Integration and Corporate Culture: The inclusion of younger board members has facilitated the adoption of sustainability initiatives atBimbo,though challenges remain, such as developing biodegradable materials. Cultural change requires internal coherence and a long-term strategic vision. Leadership in Adverse Contexts: In politically challenging environments, such as those under conservative administrations, boards must actresponsibly and maintain strategic direction without direct confrontation. Climate Communication as a Tool for Transformation: Communication is as important as action. Showcasing progress reinforces both internal and external narratives and helps accelerate transformation. Servitje noted that business chambers must play a leading role in this effort. Rural Development and Social Purpose: Investing in rural development enables the alignment of corporate purpose with social impact. To achieve this, companies must identify priority issues fortheir stakeholders. Suppliers and the Value Chain: Bimbo promotes sustainability fairs and active collaboration with its suppliers. The key lies in sharing knowledge without monopolizing competitive advantages and in maintaining a clear plan that translates discourse into tangible results. International Adaptation: Bimbo operates under global policies that are adaptable to each market. Transparency and cultural coherence are essentialto maintaining a unified strategic vision across its international operations. Key Topics Addressed Communicating is as important as taking action. Showcasing progress strengthens both internal and external narratives and helps accelerate transformation. Board Dialogues on Climate Governance Chapter Zero Mexico Conclusion - Key Messages: Sustainability mustlie atthe heart of business strategy. Organizational culture is the driving force of change. Green financing is essentialto move forward. Well-planned sustainability is profitable. Communicating progress is a fundamental part of climate action. “Sustainability is a longterm path founded on principles, not political circumstances.” Daniel Servitje Board Dialogues on Climate Governance Chapter Zero Mexico Challengesof Decarbonizationinthe Industry AndrésConesa In his remarks, Andrés Conesa, CEO of Aeroméxico, outlined the key challenges and opportunities facing the aviation sector in its pursuit of sustainability. He underscored the importance of board-level leadership in steering an effective transition. Board Dialogues on Climate Governance Chapter Zero Mexico Key Topics Addressed 1.International Regulatory Challenges: Operating globally requires compliance with diverse and constantly evolving regulations. Conesa emphasized that the lack of coordination among regulatory frameworks creates competitive disadvantages—for instance,the European ban on airlines flying over Russian airspace benefits Asian carriers. These asymmetries underscore the urgent need for more equitable global climate regulation. 2. Impracticality of Uniform Standards Across Industries: Each sector faces distinct operational realities, making the application of homogeneous regulatory criteria unfeasible. In aviation, factors such as emissions, biofuel use, and weather conditions present unique challenges. For example, nighttime flights require temperature adjustments thatreduce operational capacity. 3. Technological Evolution and Efficiency: Innovation has dramatically transformed the aviation sector’s consumption patterns and efficiency. Aeroméxico has evolved from operating short, low-efficiency flights to transporting thousands of passengers with significantly lower per-person fuel use. On longhaul routes,fuel consumption per passenger has decreased by 85% since 1948 thanks to modern aircraft. 4. Efficient Fleet: With an average aircraft age of six years, Aeroméxico operates one of the youngest and most efficient fleets in the industry, with 70% composed of next-generation models. It is crucial that regulatory frameworks evolve to recognize and reflectthese efficiency gains. Board Dialogues on Climate Governance Chapter Zero Mexico “It is not only about sustainability; it is about ensuring the long-term viability of the business.” Andrés Conesa 5. Incentives and Measurement of Environmental Performance: Fuel consumption remains the primary measurable impact in aviation; however, incentive mechanisms must be carefully designed to avoid operational disruption. Aeroméxico applies a daily cost index that incorporates multiple variables—such as weather, exchange rates, and oil prices—to optimize routes and minimize emissions without compromising safety or punctuality. 6. Transparency and Participation in Global Standards: Aeroméxico actively participates in the Carbon Disclosure Project (CDP), continuously improving its reporting practices and positioning itself among the highest-rated airlines in sustainability. Nonetheless, challenges persist due to the lack of clear and uniform standards for assessing environmental performance. 7. Voluntary Commitments and Strategic Vision: Aeroméxico has committed to achieving netzero emissions by 2050. Conesa emphasized that this goal stems from a corporate conviction that goes beyond regulatory compliance, demonstrating that climate leadership must originate within the boardroom rather than from external pressures. Conclusion: Aeroméxico exemplifies how a company can advance toward sustainability through informed decisions, strategic investments, and proactive leadership. Conesa made clear that in complex sectors such as aviation, specific solutions, realistic metrics, and a long-term corporate vision are essential to achieving meaningful progress. Board Dialogues on Climate Governance Chapter Zero Mexico WWW.CHAPTERZERO.MX LEARN MORE ABOUT US BECOME A MEMBER TheBoard Dialogues on Climate Governance event was recognized as a strategic platform for driving board-level climate action atthe 2025 Stevie® Awards and the 2025 SABRE Awards Latin America. These distinctions once again affirm the relevance and impact of our community of directors committed to advancing the transition toward a low-carbon economy.