Renato Urrest
Principal Consultant
Jaime Martínez
Jaime Martínez
Business Development Director
View from the Top

A Twofold Challenge for Social Licences

Wed, 01/18/2017 - 13:15

Q: What do you consider to be the greatest challenge regarding social responsibility in Mexico?

RU: Regarding corporate social responsibility I believe that the challenge is twofold. The first challenge is in obtaining the social license, a permit that encompasses the governmental authorization and community consensus to develop projects. Second comes land access. A good social management system complies with land access without generating population displacement or negative outcomes for the communities.

Q: What hurdles do foreign companies entering the Mexican market face and how does ERM assist them?

RU: The main challenge for foreign companies is knowledge of the territory, community idiosyncrasies and understanding Mexico’s political, economic and local context. We are experts in different national and international locations and we have experience operating social management projects. Our role lies in facilitating dialogue and mutual understanding between private companies and local communities, with a particular emphasis on generating transparency between the involved parties.

Q: How does ERM collaborate with the World Bank and other international institutions?

RU: The World Bank and IFC (International Finance Corporation) have designed a lot of guidelines and standards to develop investment projects. Those include social and environmental management components. These guidelines are meant to safeguard investments and establish clear rules of the game so invested money does not generate social or environmental conflicts that result in investment losses. We have had the opportunity to work with these institutions by absorbing their policies, providing feedback and adjusting those policies according to Mexico’s specifics and our empirical experience with on-site projects. Private banking institutions go one step further with their traditional risk analysis. They no longer consider solely the technical and viability aspects and include nontechnical risk variables such as social and environmental impact. We help our clients in considering these standards and sometimes help financial institutions in due diligence processes.

Q: How can we ensure private companies efficiently manage the social and environmental components if not through regulation?

JM: There are two factors: collaboration between all parties involved, particularly the public and private sphere, and trust. For example, in the oil industry there are thousands of oil wells in the northern part of the Gulf of Mexico. The facilities and technology used there are authorized and operating. We are not dealing with an industry that is inventing or designing new things. There should be a certain amount of trust in what we already have. Sometimes I am under the impression that we want to start from scratch, which I do not think is necessary. About 20 years ago, independently from regulation, companies started thinking in terms of systems not because it was imposed but because companies were driven by the need to obtain better, cheaper and more efficient processes. That is how we developed environmental quality systems. Now there is much talk about sustainability because companies recognize business opportunities in being sustainable, backed by modern legislation that is simple and clear.

Q: How can the public sector have a more efficient role in this?

JM: Collaboration, flexibility, outreach, dialogue and teamwork with the authorities and above all, trust. We are not enemies, we both have the same objective: protecting people and the environment at the lowest cost and with pragmatic and efficient regulations.

RU: More often than not, the private sector possesses more technology and know-how than public institutions, so if you are trying to regulate or generate a new practice, you need to listen to the experts, to invite the people dealing directly with these subjects to the discussion.