Research on Sustainability and Competitiveness in Mexico* Dennis Aigner, UC Antonio Lloret, ITAM *Project funded by UCMEXUS 1
Main Objectives 1) Generate a baseline about sustainability practices in Mexican companies. 2) Understand how environmental performance has influenced competitiveness. 3) Identify changes in relation to better environmental performance in Mexican firms and its drivers. 2
Competitiveness* Whereby the firm has the ability to maintain operations, survive and prosper Business value creation Economic growth ** No need for a single definition at the international or national level as each firm is capable of defining its own reference markets to remain competitive. 3
Sustainability • Whereby firms integrate in their business operations stakeholder, environmental, and societal expectations. 4
Competitiveness Expectations • Reputation • Branding • Innovation • Productivity • Economic benefits 5
Environmental Expectations • Efficient use of natural resources • Pollution control • Governmental regulation and adaptation • Energy Efficiency and security • Carbon restrictions • Green economy 6
Methodology • Interview/Survey the most important companies in Mexico. • Sample drawn from Expansión 500 for 2008, 2009 and 2010 • 84% of Expansión top 500 are located in and around Mexico City´s or Monterrey´s metropolitan area. • Response rate of approximately 25% • Expansion attitudinal survey, February 2011 issue: Main results are 5/10 adults in Mexico believe that business has a bigger responsibility toward the environment. 70% of Mexican consumers would pay more for a green product if it will help the environment. 7
Survey application • Original list of 600 companies that have been listed in Expansion 500 for the last one year during the last 3 years. • Reduce the list to consider conglomerates, to exclude subsidiaries and to be geographically feasible to reach. • 400 companies contacted by phone or email, then made appointments to explain survey and clarify scope of same. • Confidentiality letters were sent to companies that requested them. • Main non response issues were lack of interest, limitations to share data, sustainability not prioritary for the company . 8
Survey sections 1. Companies main characteristics. 1. 71% more than 1000 employees. 2. Sales in million dollars and most have international operations. 3. 86% have written ethical codes and 70% have included sustainability in their mission. 2. Environmental sustainability 1. Type of environmental sustainability practices 2. Drivers of sustainability practices 3. Decision makers 4. Stakeholders and internal and external challenges. 3. Climate change and water resources challenges. 1. Awareness 2. Risk perception 4. Competitiveness 1. Sustainability impact 9
Distribution of Companies that answered the survey/interview Distribución por sectores en UCMexus 15% 3% 3% 41% 30% 8% A - Agropecuario, Alimentos y Bebidas B - Recursos Naturales y Minería C - Construcción D - Industrias Manufactureras E - Comercio F - Transportes, Comunicaciones y Servicios 10
Comparative Expansión 500 BMV Distribución por sectores de BMV Distribución por sectores 500 Expansión 13% 7% 12% 13% 41% 7% 3% 57% 13% 14% 7% 13% A - Agropecuario, Alimentos y Bebidas B - Recursos Naturales y Minería A - Agropecuario, Alimentos y Bebidas B - Recursos Naturales y Minería C - Construcción D - Industrias Manufactureras C - Construcción D - Industrias Manufactureras E - Comercio F - Transportes, Comunicaciones y Servicios E - Comercio F - Transportes, Comunicaciones y Servicios 11
Comparative surveys • Economist: Online survey of 566 US based executives (39% VP or above) in Sept. 2008. 29% public companies in 17 different industries . Self selected, but population is not specified. • McKinsey: December 2007. 2192 executives worldwide (27% CEO´s or other “C” level executives). Data are weighted to reflect representation in the population. No mention of what the population is, however. • MIT: Online survey of 2000 respondents taken from March to April 2009. Report concerns 1560 responses from for-profit companies worldwide. No indication of population. Self selected responses. • Delmas: Oct-Nov 2003. Population consisted of 3255 facilities in 8 industrial sectors. 562 responses (17.2% response rate). No indication of how the list was compiled. 12
Section 2. Environmental Sustainability 13
How active is your company in terms of the following areas of environmental sustainability? Regularly Rarely Do not Very active Sum Not active Answer Options active active know % % % % % % Energy resources conservation 41.0 37.6 78.6 14.6 5.6 1.2 Water resources management 45.5 27.2 72.7 14.1 9.1 4.1 Other natural resources conservation and management 32.3 38.5 70.8 21.3 5.2 2.6 Waste reduction 47.5 28.1 75.6 19.3 2.5 2.5 Waste recovery 39.0 35.1 74.1 13.5 9.7 2.8 Environmental risk control 39.7 35.1 74.8 14.2 2.8 8.2 Eco-design products 20.8 43.5 64.3 29.1 4.1 2.4 Product manufacturing 30.8 36.6 67.4 24.9 5.2 2.6 Supply chain reduction of environmental impacts 24.8 43.7 68.5 22.3 7.7 1.5 Community collaboration in terms of environmental practices 28.0 28.4 56.4 27.6 13.1 2.8 14
How$active$is$your$company$in$terms$of$the$following$areas$of$environmental$ sustainability? 100% 80% 60% Do:not:know Not:active 40% Rarely:active Regularly:active: Very:active: 20% 0% Energy Water Other:natural Waste Waste Environmental Eco>design Product Supply:chain Community resources resources resources reduction recovery risk:control products manufacturing reduction:of collaboration conservation management conservation environmental in:terms:of and impacts environmental management practices 15
Does your company use metrics to measure environmental performance? Comparative results from Economist Ours Economist Answer options % % Yes 59 31 No 31 38 Do not know 10 31 Among the metrics used: Triple Bottom Line (21%), ISO 14001 or 14031 (24%), Global Reporting Initiative (31%), other (17%). 16
Approximately what percentage of your company’s annual operating budget is invested in the implementation of environmental sustainability practices? None 17% Do not know 52% Some 31% 17
Does your company have a written business plan or project to address environmental sustainability issues? Response Answer Options Percent Currently has an environmental sustainability project 52.9% Does not have an environmental sustainability project 18.0% Is currently developing an environmental sustainability project 22.8% Think will soon develop an environmental sustainability project 11.2% No future plans for developing an environmental sustainability project 1.8% Do not know 1.2% 18 18
What are the main reasons for your company to adopt environmental sustainability practices? (“most important” rankings only) Answer Options Ours % MIT % Revenue growth 21.3 8 Increased profits 14.3 N/A Cost savings 25.2 10 Public relations 12.0 N/A Internal pressure (i. e. employees) 4.2 9 Environment protection 63.6 N/A Brand/image improvement 16.0 35 Recruitment and retention of employees 13.7 9 Opening new markets 34.6 10 19 19
How does your company perceive environmental organizations (NGO or local organizations), as an opportunity or a challenge for its business? Great extent + Response Answer Options Some extent count % Business opportunity 81.5 88 Challenge for the company 86.2 85 Problem for the company 23.0 79 20
To what extent are your company’s employees involved in environmental sustainability strategies? Answer Options Great extent Some extent No extent Voluntarily 42.3 50.7 7.0 Motivated or forced by the company 24.1 44.9 31.0 Average 33.7 47.9 18.4 Economist 16.0 63.0 21.0 To what extent are your company's employees involved in environmental sustainability strategies? 100% Economist 80% Average 60% Motivated or forced by the 40% company Voluntarily 20% 0% Great extent Some extent No extent 21
How do the following groups and/or organizations influence the environmental sustainability strategy of your company? Greatly affects % Af Affects to some Does not Do Response Re An Answer Options Gr Su Sum % extent ex ent % af affec ect % Co Count 35.2 47.7 17.1 Government 82.9 92 Employees 21.7 58.7 80.4 19.6 93 Shareholders 40.2 45.1 85.3 14.6 90 Consumers 32.1 46.4 78.5 21.5 92 Suppliers 12.7 60.4 73.1 26.9 93 Environmental support groups 14.8 48.0 62.8 37.1 91 NGO 10.4 50.1 39.6 60.5 91 Educational institutions 10.6 42.9 46.4 53.5 91 National regulations 50.6 33.1 83.7 16.3 93 International regulations 39.4 34.7 74.1 25.9 91 Media 12.8 57.6 70.4 29.6 92 Competitors 15.8 43.9 59.7 40.3 92 Socially responsible investment 11.6 31.7 43.3 56.7 87 funds Local community 31.4 47.4 78.8 21.1 92 Industry, trade or business 6.5 60.2 66.7 33.3 91 associations Others 12.6 15.4 72.0 28.0 8 22
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