Mexico stands at a crossroad. As the country prepares to co-host the 2026 FIFA World Cup, its tourism sector remains a vital economic pillar and its manufacturing industry has recently surpassed China as the top trading partner for the United States.[1] Also for the EU, Mexico is very relevant, as it is the second largest trading partner after Brazil.[2] In the context of Germany, Mexico’s role is even more significant as it is the most important trading partner in Latin America, while Germany is Mexico’s largest trading partner in the EU.
However, behind these economic opportunities lies a serious and evolving security crisis that has turned parts of Mexico into a conflict-affected and high-risk area (CAHRA). And this is a critical aspect that companies must pay special attention to as part of their human rights risk management.
As nearshoring accelerates and Mexico’s economic significance deepens, willful ignorance of the conflict dynamics shaping its markets is no longer a viable strategy, nor a legally defensible one.
The Current Security Situation and Its Impact on Business in Mexico
Recent outbursts of violence, particularly following the killing of El Mencho, the leader of the Jalisco New Generation Cartel (CJNG) by Mexican Armed Forces in February 2026, have sent shockwaves through the Mexican economy.
Organized crime groups control approximately one-third of Mexico’s territory, operating more like insurgent groups than traditional criminal networks.[3] In parts of Mexico, criminal organizations now operate systems of “criminal governance,” filling gaps left by weak state institutions. In territories under their control, they regulate daily life, provide security, resolve disputes and sometimes manage basic services, presenting themselves as the only source of order and stability.
The economic consequences are substantial. The cost of crime for firms was recently estimated at 0.67% of Mexico’s GDP, with businesses spending more than 8% of their operational budgets on private security.[4] Beyond these direct costs, cartels have systematically disrupted supply chains, causing global price inflation for essential good
The Transformation of Criminal Groups and Territorial Control
The violence impacting Mexico today is not the “war on drugs” of previous decades. Historically, cartels were transactional, focused on the logistics of trafficking marijuana and cocaine. However, the rise of synthetic narcotics like fentanyl and the legalization of cannabis in several U.S. states forced these groups to diversify their portfolios.
They are no longer merely “gangs” but are a massive economic force. Collectively, cartels are estimated to be Mexico’s fifth-largest employer, recruiting approximately 175,000 people and requiring over 350 new recruits every week, above Mexico’s largest companies such as Pemex or Oxxo, and only surpassed by FEMSA (Coca Cola bottler), Walmart, Manpower and América Móvil.[5]
Today’s cartels like Sinaloa Cartel and The Jalisco New Generation Cartel, follow a territorial business model. They seek total control over a region and every profitable activity within, legal or illegal. This has led to the “criminalization of the economy,” where cartels act as de facto political authorities, imposing “criminal taxes” (known as derecho de piso) on businesses of all sizes, from small local businesses to multinational corporations.
By 2026, the tactics of these groups have reached the level of a non-international armed conflict (NIAC). They now employ military-grade technology, including explosive-dropping drones, improvised explosive devices (IEDs) and up-armored civilian vehicles.[6] This shift into militarized insurgency represents a fundamental change in the risk landscape for international businesses, moving Mexico from a high-crime area to a conflict-affected and high-risk area (CAHRA). This puts business activities increasingly at risk of being entangled in conflict dynamics, including financing armed actors, exposure to violence and heightened human rights impacts.
Commodities Affected by Criminal Infiltration
As cartels diversify their economic activities, their influence increasingly extends into legitimate markets. This has turned a number of everyday goods into “conflict commodities”:
Key examples include:
- Avocados (”Green Gold”): Mexico is the world’s top producer. The industry moves over $3 billion annually, but cartels now fight for dominance over the trade, clearing protected woodlands for groves and extorting growers.
- Limes: In regions like Michoacán, cartels systematically “tax” crates of limes, forcing farms to shut down if they refuse to pay, directly causing global price inflation for citrus.
- Gold and Mining: Cartels have infiltrated both artisanal and large-scale mining, using the sector for money laundering and extortion.
- Timber: The Timber Legality Risk Dashboard estimates 30% to 70% of wood harvested in Mexico is illegal. Cartels have taken over sawmills, laundering illegally logged timber into legitimate construction supply chains.[7]
- Fuel and Oil: Around 20-30% of fuel sold in the country is estimated to be stolen (known as huachicoleo), financing cartels.[8]
Human Rights and Environmental Impacts
The human cost of this criminal governance is devastating. Long-standing impacts on the Mexican people include:
- Forced and Child Labor: Criminal groups often coerce agricultural pickers into temporary forced labor. In the timber industry, children are recruited as “watchmen” (halcones) or forced to work in hazardous sawmills.
- Disappearances: Mexico has over 110,000 missing persons.[9] There is a worrying trend of disappearing men to force them into cartel ranks and women for human trafficking for sexual exploitation.
- Environmental Degradation: Cartels clear protected forests for avocado groves and engage in illegal logging and mining operations causing severe environmental damage through deforestation, toxic pollution and resource exploitation.
- Violence and Extortion: Refusal to pay protection money often leads to kidnapping, property destruction or murder.
Conducting Heightened Human Rights Due Diligence (hHRDD)
In a CAHRA like Mexico, standard due diligence is insufficient. Businesses must conduct heightened Human Rights Due Diligence (hHRDD), which adds a “conflict-sensitive” lens to traditional human rights risk assessments. The goal is to ensure that business activities do not inadvertently fuel violence or confer legitimacy on armed actors.
How to Conduct Heightened Human Rights Due Diligence in Mexico:
- Conduct Conflict Analysis: Identify the root causes of local tensions and the specific actors (cartels, corrupt officials or rival factions) operating in your area or the area linked to your supply chain.
- Facilitate Stakeholder Engagement: Consult with local communities, human rights defenders and even the diaspora to understand risks that may be hidden by a “climate of fear”.
- Assess Business Relationships: Map your value chain to ensure partners or security providers are not linked to criminal elements or participating in extortion schemes.
- Prioritize Salient Risks: Use the typology of scale, scope and irremediability to address the most severe impacts, such as forced labor or the financing of armed conflict.
Risk Mitigation Measures for Companies Operating in Mexico:
- Varying Routines: Frequently change travel routes, timings and locations for personnel to minimize the risk of being targeted.
- Due Diligence on Security Providers: Private security providers may, in some contexts, be linked to the diversion of firearms or local criminal networks. Conduct thorough due diligence, incl. regular audits to verify compliance and reduce the risk of contributing to human rights abuses or conflict dynamics.
- Safe-Havens: Identify and regularly assess “safe havens” or emergency shelters for personnel in case of sudden violence. Periodic audits may help ensure these locations remain accessible, secure, and operational.
- Supply Chain Mapping: Use technology like GPS and blockchain to improve the traceability of commodities like timber and minerals.
- Rule of Law Support: Instead of trying to “buy” safety through private guards, invest in community-based programs that prevent criminal recruitment and support local resilience.
- Responsible Exit Strategy: If the human rights costs of staying outweigh the benefits, ensure any exit is planned in advance to avoid leaving vulnerable employees at the mercy of local criminal groups.
For European companies, these realities are increasingly relevant in light of emerging regulatory frameworks such as the EU Regulation on Deforestation-Free Products (EUDR), EU Forced Labour Regulation (EUFLR) and the Corporate Sustainability Due Diligence Directive (CSDDD), which require companies to identify and address environmental and human rights risks throughout their global value chains.
These frameworks reinforce the expectation that companies understand the broader context in which commodities are produced and traded. In environments characterized by criminal governance, illegal resource extraction and systemic human rights abuses, effective due diligence must therefore go beyond traditional compliance approaches.
Due diligence must integrate local contexts and most importantly, conflict sensitivity. Because it is only by understanding their impacts on conflict and human rights can companies be in a position to address those impacts and prevent harms to people and the environment.
Lisa for the CORE team
[1] El País
[2] European Commission Trade and Economic Security
[3] New Lines Institute for Strategy and Policy
[4] Organized Crimе and Violence in Mexico: Considerations for Future Nearshoring FDI
[5] The Guardian, Original Study: International Seven Multidisciplinary Journal
[6] New Lines Institute for Strategy and Policy
[7] Timber Legality Risk Dashboard: Mexico
[8] Financial Times
[9] Organized Crimе and Violence in Mexico: Considerations for Future Nearshoring FDI; Instituto Mexicano de Derechos Humanos y Democracia
