Strong ESG Strategies Help Lead to Successful Companies
Environmental, sustainability and governance (ESG) matters have been, for quite a few years now, gaining significant relevance for investors seeking options to allocate their resources as well as within corporate boardrooms of companies across the world. Even though responsible investing approaches have been around since the 1960s, there has been a stronger penetration of ESG investing lately, mainly driven by new generations of people with significantly more awareness of such affairs.
Using an ESG approach, investors aim to align their portfolios to follow companies with strong strategies in place. Currently, the largest and most important asset managers around the world have established strict ESG policies and guidelines that have driven companies to act accordingly to properly disclose such matters.
Consequently, publicly traded companies have been committing to implement robust ESG strategies to be able to capture money from the most sophisticated funds in the world. There are several different non-financial metrics, KPIs, and indicators that are specific to companies and sectors as well as several reporting and rating platforms that gather information and provide easier-to-analyze data.
ESG metrics seek to measure a business’ impact on its community and the way its stakeholders interact. Among the most important concerns of ESG investing is climate change and environmental damage conducted by the natural course of progress.
There is evidence of a close correlation between successful companies and those that have strong ESG strategies in place. In financial markets, during the past few years, many sustainable-driven indexes have consistently outperformed their benchmarks.
Since TRAXIÓN became a publicly traded company, management has grasped the importance of having a strong ESG strategy in place to ensure that investors from around the globe were able to become shareholders. Moreover, since TRAXIÓN is the most important player in the logistics and mobility sectors in Mexico, it also has the commitment to remain the national leader on ESG issues.
In 2019, the company implemented a full-scale, robust ESG strategy that has evolved swiftly and has rendered very gratifying results in many areas.
At TRAXIÓN, we seek to mitigate our environmental impact and our contribution to climate change by offering resource-efficient transportation and logistics solutions. In 2020, TRAXIÓN launched several initiatives, such as the creation of the TRAXIÓN Foundation, which serves as the main vehicle to properly channel resources with an institutional approach.
The main ESG metrics are related to the consumption and use of fuel and its emissions. The company constantly renovates its fleet and carries out exhaustive maintenance programs to always have units running in optimal condition. Furthermore, TRAXIÓN utilizes state-of-the-art technology in processes, fleet, and warehouses. There are constant training programs on fuel-efficient driving, and close relationships with suppliers to conduct trials on more eco-friendly engines and technologies.
The implementation of these strategies has resulted in the fleet’s continuous fuel efficiency improvement, which directly implies lower carbon dioxide emissions, the main greenhouse gas that contributes to global warming and climate change.
As a result of TRAXIÓN’s ESG efforts, three of its largest business units in the freight mobility segment, participated in the Ministry of the Environment and Natural Resources’ (SEMARNAT) voluntary Clean Transportation program, and were awarded the "Good Environmental Performance," and "Excellent Environmental Performance" distinctions for having jointly reduced 105,897 tons of carbon dioxide, equivalent to 20% of TRAXIÓN's total emissions in 2021.
TRAXIÓN has aligned its strategy with leading ESG disclosure frameworks and standards: Sustainability Accounting Standards Board (SASB), Task Force on Climate-related Financial Disclosures (TCFD) and Global Reporting Initiative (GRI). In 2020, TRAXIÓN joined the United Nations Global Compact and adhered to its 10 principles, which represents one of the most important milestones in terms of ESG practices.
Additionally, in late 2021, TRAXION was included in the Dow Jones Sustainability MILA Pacific Alliance Index, which rates the ESG performance of leading companies in Chile, Colombia, Mexico, and Peru, and provides investors with comparable information for the management of sustainable investments in the region. TRAXIÓN is one of only four transportation companies included in the index. Moreover, in July 2022, the company was included in the S&P/BMV Total Mexico ESG index, placing it among the most prestigious companies recognized for ESG efforts and achievements in Mexico. The new composition of the index has 30 issuers and aims to provide international exposure to the Mexican market and boost the performance of companies that meet sustainability criteria.
Finally, TRAXIÓN responds and discloses ESG information through two of the leading international reporting platforms: Standard & Poor's Corporate Sustainability Assessment (S&P-CSA) and the Carbon Disclosure Project (CDP), which facilitates and homologates information so that it can be analyzed by all the most important players in the asset management arena worldwide.
Even though TRAXIÓN has one of the strongest ESG strategies in place, both in the sector and in Latin America, there is still a long way to go. ESG matters will continue to evolve, and Mexico still faces many challenges, but the company’s management has a strong commitment to remain the ESG benchmark in Mexico.