Sustainable Finance in Mexico: Regulatory Obligations and Applicable ESG Standards

Von Wobeser y Sierra | January 28, 2025, marked a turning point for companies issuing securities in Mexico with the mandatory sustainability reporting requirement. This change, driven by the Sustainable Finance Committee, reflects full alignment with global financial reporting standards (IFRS S1 and S2). While pension funds (AFORES) already manage investments exceeding 110 billion pesos under ESG criteria, the market is closely scrutinizing the implementation of these standards. The success of this transition will depend on the quality of the reports and the serious adoption of the Sustainable Taxonomy, critical tools for transforming environmental challenges into responsible investment opportunities as the decade draws to a close.

I. ESG Context in Mexico

ESG (environmental, social, and governance) refers to non-financial factors that allow for the evaluation of a company’s social and environmental impact, as well as its corporate governance. The concept gained momentum following the 2004 Who Cares Wins report, which aimed to promote the consideration of these factors in investment and regulatory decisions. In Mexico, the concept began to gain greater relevance after the adoption of the 2030 Agenda for Sustainable Development, which was adopted in 2015 and established 17 goals and 169 targets to guide public policies and channel resources toward more inclusive and environmentally responsible growth.
Mexico’s commitment to the 2030 Agenda, along with assessments showing how climate and environmental risks can materialize into financial risks, has driven the development of a more robust institutional framework in the country. A report prepared by the Bank of Mexico in conjunction with the United Nations Environment Programme highlights Mexico’s vulnerability to physical environmental risks, such as droughts, floods, and hurricanes, which can negatively impact the Mexican financial system through disruptions to production, supply chains, and infrastructure. These disruptions subsequently affect portfolios, the value of collateral, and reduce repayment capacity, among other consequences. In parallel, the 2024 National Survey of Financial Inclusion (ENIF) reports that, in 2024, 11.4% of the Mexican population between 18 and 70 years of age recently experienced economic hardship due to a natural disaster or an event caused by another person, thus placing environmental risks within a more concrete context.

II. The Financial System Stability Council and the Sustainable Finance Committee

A key organization within the developed institutional framework is the Financial System Stability Council (CESF). The CESF was created to serve as an evaluation, analysis, and coordination mechanism, aligning diagnoses and priorities among the Ministry of Finance and Public Credit (SHCP), the Bank of Mexico, the National Banking and Securities Commission (CNBV), the National Commission of the Retirement Savings System (CONSAR), and other sector authorities. Subsequently, the CESF created the Sustainable Finance Committee (CFS) to support the development of specialized analyses, evaluations, and recommendations on sustainability. To fulfill these objectives, the CSF produces annual reports on sustainable finance, which, among other things, (i) measure the risks faced by the Mexican financial system as a result of climate change and other environmental issues; (ii) They disclose and promote ESG standards, such as the IFRS Sustainability Disclosure Standards, issued by the International Sustainability Standards Board of the IFRS Foundation; and (iii) they recognize the efforts made by financial sector authorities in matters of sustainability, such as the regulations recently issued by the CNBV and CONSAR in this area.

III. Obligations Incorporated by the CNBV for Issuers

On January 28, 2025, the CNBV amended the provisions applicable to securities issuers to require the preparation of a sustainability report. This report consists of providing information on sustainability risks and opportunities that could reasonably affect cash flows, access to financing, or the cost of capital. This report must be prepared in accordance with the aforementioned IFRS Standards, which currently comprise primarily: (i) IFRS S1, which establishes general requirements for disclosing information on sustainability-related risks and opportunities, and (ii) IFRS S2, specifically focused on climate, which covers physical and transition risks and requires disclosures under the pillars of governance, strategy, risk management, and metrics and objectives.

IV. CONSAR’s Obligations Regarding Retirement Savings Management

CONSAR has directly incorporated ESG criteria into its regulations. The General Provisions on Financial Matters for Retirement Savings Systems require Administrators and Specialized Investment Companies that manage retirement savings to incorporate these criteria into their investment analysis and risk management, as well as strengthen their internal capacities for implementation, including ensuring that staff hold applicable asset management certifications and providing ongoing training for all personnel involved. This is particularly relevant given the scale of the retirement savings system, considering that, according to ENIF data, 42.2% of the population aged 18 to 70 has an AFORE (Retirement Fund Administrator) or retirement savings account. Furthermore, as of the end of September 2024, 75.3 million accounts and 6.8 trillion pesos in total assets were reported within the system.

V. Public Policy Instruments

As part of the implementation of measures and the identification of sustainable instruments, the Ministry of Finance and Public Credit (SHCP) has developed and published two instruments aimed at supporting the Mexican financial system: the Sustainable Taxonomy of Mexico and the Sustainable Financing Mobilization Strategy.
The Sustainable Taxonomy of Mexico primarily serves as a common, non-binding framework for the financial market. That is, it standardizes criteria so that issuers, intermediaries, analysts, and investors can identify and substantiate when an activity, asset, or project can be classified as sustainable or not, improving the quality and comparability of the information used in financing and investment decisions and mitigating the risks of greenwashing.
The Sustainable Finance Mobilization Strategy ("EMFS"), published in September 2024, aims to improve the conditions for financing sustainable projects in the Mexican debt and capital markets, enabling more viable projects to access financing, ensuring comparable information for banks and investors to assess risks and make decisions, and fostering the development of innovative financial instruments.

VI. Sovereign Bonds

One of the main vehicles used in Mexico to mobilize resources is earmarked bonds, whether green, social, sustainable, or sovereign sustainable bonds. The rationale behind these bonds is that issuers must define how the financing obtained will be used. Among them, the Federal Government’s sovereign sustainable bonds linked to achieving the goals of the 2030 Agenda stand out. The resources obtained from these bonds are integrated into the Federal Expenditure Budget and allocated to budgetary programs associated with these goals. Between 2015 and 2024, the public sector issued a cumulative total of 678,025 million pesos in sustainable bonds, with the Federal Government’s sovereign sustainable bonds predominating (55.6% of the total), representing 377,171 million pesos issued since 2020.

VII. Green Bonds

Green bonds have gained traction as a financing instrument for renewable energy, energy efficiency, water, and clean transportation projects, with significant issuances from public entities. Furthermore, there has been growing demand from institutional investors, including AFOREs (Retirement Fund Administrators), which has strengthened the incentive for new issuances. CONSAR (National Commission of the Retirement Savings System) reported that AFOREs invested more than 110.405 billion pesos in bonds with environmental, social, and governance (ESG) criteria by the end of 2022.



In Mexico, ESG criteria are gaining momentum, evolving from commitments to concrete actions and obligations designed to address the risks the financial system faces in relation to natural and environmental disasters. This is reflected in the obligations that the CNBV (National Banking and Securities Commission) has implemented for issuers, aligned with international standards, as well as in CONSAR’s requirements aimed at integrating ESG factors into the investment and risk management frameworks for retirement savings. By 2030, the emphasis on aligning the Mexican financial framework with international standards can be expected to continue, whether through public policies or increased regulation of certain financial entities. In this context, it will be relevant to monitor: (i) the quality of the first sustainability reports and compliance with the new obligations for issuers; (ii) whether Mexico’s Sustainable Taxonomy is seriously adopted as a reference for labeling and monitoring financing (reducing the risk of greenwashing); and (iii) the implementation of the regulatory changes promoted by the CNBV and CONSAR.

vwys.com.mx