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Will Mexico Grab Its Nearshoring, AI and ESG Opportunities?

By Hugo Hernández-Ojeda Alvírez - Hogan Lovells in Mexico
Partner, Labor and Employment and ESG Practices


Hugo Hernández-Ojeda Alvírez By Hugo Hernández-Ojeda Alvírez | Partner, Labor and Employment and ESG Practices - Wed, 05/17/2023 - 12:00

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Every day it is increasingly common to hear in all social and professional spheres that nearshoring is an opportunity that our country should not miss in order to achieve sustainable growth, generate an unparalleled number of new jobs, and develop skills of the personnel employed by the new companies that start to invest. I agree. This is undoubtedly an example of a true win-win for the country, its inhabitants and companies.

This opportunity that we Mexicans have today also has collateral benefits that can and should be noted: compliance not only with local legislation to prevent injustices, abuses, and economic risks and, in general, to change the culture of no-compliance that exists in this country (and frankly, I do not understand the reason for it), but also with the guidelines, requirements, policies and international practices that are an important focus of compliance to achieve sustainable growth among the companies and businesses that are coming and which should follow the example that many companies, national and international, established in Mexico have been carrying out for years.

On other occasions, I have mentioned that global Environmental, social, and governance (ESG) requirements must be observed by Mexican companies and businessmen or entrepreneurs. Today more than ever, it is vital for the sustainable development of companies in the value chain and the supply chain that these requirements are fully complied with. The lack of complete legislation in Mexico and Latin America generates an obligation for the private sector to implement and comply with these international standards, which, from any point of view, generate benefits for the environment, society, companies, entrepreneurs, workers, communities, cities, states and the country in general. 

Fortunately, today in Mexico, the Ministry of Finance and Public Credit  (SHCP) has taken a giant step forward in this matter by proposing the Sustainable Taxonomy, which is an incredible and unprecedented advance in this area. I hope we continue to grow in these matters and that people, who I know dedicate a lot of time, effort and part of their personal lives, feel proud of the efforts that have been made and that continue to bear fruit in this Mexico that can be. Today is its moment, the spearhead for Latin America to continue developing this great benefit for businesses, countries and for humanity.

It is also a good opportunity to reinforce diversity and inclusion policies in the industries that are benefiting from this great moment in Mexico and, specifically, in the north and center of the country. This is a debt that society worldwide has to itself. It is important to take advantage of this moment to reduce in Mexico all kinds of gaps: salary, gender, opportunities, among others. If we can mitigate these types of discrimination against vulnerable groups it will also generate a better reputation for companies, entrepreneurs and industries, not only in Mexico but worldwide.

Reviewing some articles and legal publications, arbitration and international litigation on breach of contract in Latin America by service providers or companies that are part of the value or supply chain of various public entities in the US, Canada, Europe, and Asia, grew by almost 300% and the vast majority has to do with lack of compliance with clauses that are directly related or related to compliance with contractual obligations corresponding to ESG.

This reality, which many companies and their employees have yet to recognize, leads us to think that the training and specialization of people will be a plus for their hiring and the continuation of the employment relationship. This is a truth that no one can refute; today, on a daily basis, we see, read or hear news about the advances of artificial intelligence (AI) that is already being applied in many of the industrial processes and by service providers (ChatGPT achieved what many law students in the US have not achieved: it passed the New York Bar exam), which will certainly reduce job opportunities for people. However, we must see this as a formula for the growth of new opportunities for people who take advantage by obtaining new skills and to create institutions that train the population in these issues. 

The range of traditional programs universities offer their students will change faster in the next five years than in the last 30 years. Failure to stay current on these issues will lead many professionals and service providers to lose jobs or contracts to either AI or to those who invest in themselves and stay current and to keep up with the issues that each profession, position, industry, or service requires. Let's not see the implementation of AI in industrial and professional activity as an enemy of the creation of jobs and laboral opportunities for people, in Mexico or the world; rather, let's see it rather as an opportunity to change and update our daily activity in labor and personal issues, because let's be honest, this is not going to stop. It is a reality so better to get on the train at the station than walking after it has left.

In my opinion, nearshoring will bring many benefits to the country that we may or may not take advantage of; frankly, to let this key moment in the country's development pass us by would be to throw away a catalyst for Mexico's growth — and the North American region will take advantage of it in some way that would not benefit Mexico.

I firmly believe that this moment will be taken advantage of by the private sector, local and international, and by Mexican civil society so that our beloved Mexico will have exponential growth in the coming years. Let us take advantage of the opportunity and put our efforts, small or large, toward achieving  a real benefit for society and the region.

Let us not let this historic moment pass us by. Let us be part of it and take Mexicans and the country to a better place.

Photo by:   Hugo Hernández-Ojeda Alvírez

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