Mexico’s Business Integrity Journey: Progress, Challenges, and the Road Ahead

This blog is part of a two-blog series discussing business integrity initiatives in Mexico. In this blog, we explore the journey of Mexican companies working towards a more compliant and ethical environment, highlighting their achievements and ongoing challenges.

In recent years, Mexico’s government and private sector have made progress in combating corruption by establishing the National Anti-Corruption System, enforcing compliance training for employees, and implementing whistleblowing channels. However, many challenges still remain. As President-elect Claudia Sheinbaum prepares for her first term, it will be essential for her to demonstrate a commitment to these initiatives, the rule of law, and creating an environment where democracy can thrive.

For additional insights about Mexico’s progress and ongoing barriers to a more transparent and accountable business environment, CIPE’s Anti-Corruption and Governance Center’s Program Associate Lydia Roeder spoke with CIPE Consultant Gabriela Blanco Munguia, a compliance and business integrity expert in Mexico. This interview has been lightly edited for length and clarity.

What are the key private sector compliance initiatives implemented in Mexico, and how are they enforced?

In Mexico, private sector compliance initiatives are gaining traction. Key efforts include developing and implementing robust compliance policies and adopting the ISO 37001 standard for anti-bribery management systems. This standard was designed by the International Organization for Standardization, a network of the national standards bodies in 171 different countries, to help organizations implement and maintain effective anti-bribery management systems and promote a culture of integrity, transparency, and compliance.

Embassies, such as the United States, the United Kingdom, and other European Union countries, support these initiatives by providing resources to help enterprises implement these initiatives, which in turn helps attract more investment.

Additionally, larger companies now require companies within their supply chains to implement and showcase effective compliance systems. This promotes integrity within the company and extends ethical practices to suppliers, creating a ripple effect across the industry.

How does the Mexican government collaborate with international organizations and private sector actors to strengthen its compliance and business integrity efforts?

The Mexican government collaborates with international organizations and private sector actors mainly through initiatives led by the Ministry of Public Administration (Secretaría de la Función Pública, or SFP) and the National Anticorruption System (Sistema Nacional Anticorrupción, or SNA). The SNA is a comprehensive framework designed to coordinate efforts among government agencies, civil society, and the private sector to prevent, detect, and sanction corruption. Additionally, there are local efforts to create state compliance systems and local integrity certifications to promote ethical practices at the state level.

However, despite its robust framework, the SNA remains ineffective due to poor implementation and enforcement. While there are visible efforts at collaboration, these often lack concrete actions and follow-through, hindering effective compliance measures.

Are there any changes or obstacles hindering the effective implementation of these policies?

Several obstacles hinder the effective implementation of compliance policies in Mexico. One major issue is the lack of commitment from leadership to address corruption, as political interests often conflict with compliance efforts. Additionally, the weakening of the SNA has undermined government enforcement, creating exploitable gaps in the system.

Beyond these factors, several other challenges complicate the fight against corruption:

• Resistance to Change: Some executives or employees may see compliance and business integrity policies as an additional burden or threat.
• Lack of Resources: Many Small and Medium-Sized Enterprises (SMEs) feel that they lack the funds and time required to implement compliance programs and internal audits.
• Regulatory Frameworks: It is difficult for businesses to comply with all compliance laws, as they can be complex and vary by state.
• Supply Chains: Coordinating compliance efforts is complex in sectors with diverse supply chains due to market competition.
• Lack of Enforcement: Without strict enforcement, these robust policies and frameworks remain theoretical and ineffective.

How do Mexican businesses prioritize corporate governance practices to prevent corruption within their organizations?

Mexican businesses often prioritize corporate governance only when required by external entities or when preparing to go public. Despite recognizing the benefits, many hesitate due to the investment required or the short-term convenience of the status quo. There is a need for a broader understanding and integration of these practices across all sectors.

Although larger companies have set high standards for corporate governance, SMEs face more challenges. However, companies in sectors like industrial, information technology, and food industries are evolving, contributing to stronger corporate governance practices in Mexico.

What role do corporate boards and executives play in promoting ethical behavior and transparency?

Corporate boards and executives are key in promoting ethical behavior and transparency as they set the tone for compliance and business integrity initiatives. Greater awareness and sensitization are needed about these programs’ benefits, including their positive impact on organizational culture and reputation.

Prioritizing ethics and transparency at the board level can inspire a culture of integrity at all levels. Executives’ commitment to ethical practices sets a model for employees, influencing their behavior toward corruption and compliance. However, when top management does not fully commit, it can result in superficial “make-up” compliance programs that lack genuine effectiveness.

Stay tuned for the next blog in this series on business integrity initiatives in Mexico. In part two, we will explore more specific compliance measures and internal controls that companies are implementing and how these practices align with international compliance standards and best practices.