The sustainable financing represents a strategic opportunity for the economic growth from Mexico and the transformation of its companies, however, the country is still far from reaching the investment levels required to comply with the Sustainable Development Goals (SDGs) set forth by the United Nations (UN).
According to UN estimates, Mexico needs to invest at least 1.7 trillion pesos annually to make progress in its sustainability goals. The Economic Commission for Latin America and the Caribbean (ECLAC) suggests an investment equivalent to 4.9% of the Gross Domestic Product (GDP), but the current figures reflect a significant lag, emphasizes ESG Expansion.
In 2024, the government budget allocated to environmental issues was 73,232 million pesos, while the private sector placed 81,796 million pesos in green, social and sustainable bonds in the Mexican Stock Exchange (BMV). Overall, this investment amounts to a little more than 155 billion pesos, which represents only 8.8% of the amount recommended by the United Nations.
Barriers limiting access to green finance
One of the main barriers to the growth of the sustainable financing in Mexico is the lack of access to credit by small and medium-sized enterprises (SMEs), which make up more than 90% of the country's business fabric.
According to a report by American Chamber MexicoIn addition, many of these businesses lack the information, tools and capabilities needed to link their projects with green financial products.
"One of the challenges is the lack of access to sustainable financing for key sectors such as resilient infrastructure and clean energy. Also, the lack of financial education and the lack of knowledge of sustainable financial products limit the growth of this market, especially among small and medium-sized companies," he says.
In addition to this problem, there is a need for standardized metrics that will allow the evaluation of the environmental and social impact of investments. This lack of uniformity complicates decision-making by investors and financial institutions.
The Bank of Mexico has recognized these challenges and is working on strategies to encourage greater capital mobilization towards sustainable sectors. Among its objectives is the development of common impact assessment methodologies, as well as the promotion of innovative financial solutions in both the public and private sectors.
Sustainable investment from the stock market
The Mexican Stock Exchange (BMV) has been a key player in the promotion of the sustainable financing. In the last nine years, more than 400 billion pesos in green, social, linked and sustainable bonds have been issued by 38 public and private issuers.
Juan Manuel OlivoThe BMV's Director of Promotion and Issuers, explains that the market has shown a growing interest in these instruments.
"Thematic bonds have proven to be an effective channel for raising financing. These issues often have high credit ratings (many are triple-A) and are attractive to investors looking for good risk-return, facilitating placement and sometimes experiencing over-demand from investors," he explains.
Adapt or be left behind
The success of the sustainable financing in Mexico will depend on the ability of companies to adapt to new reporting regulations and ESG criteria (environmental, social and governance). Transparency and impact measurement will be key factors in attracting investment and generating market confidence.
"The success and speed of growth of sustainable finance in Mexico will be intrinsically linked to the ability of companies to adapt and comply with the new reporting regulations, which allow for greater transparency and homogeneity in ESG information," adds Olivo.
Companies that fail to integrate sustainability into their business strategy run the risk of falling off the radar of investors, he says.
The challenge is to close knowledge gaps, improve access to financing and accelerate the development of instruments that will enable more Mexican companies to join the sustainable transition.
Source: ESG Expansion
