Mariuz Calvet
Director of Sustainability and Responsible Investment
Grupo Financiero Banorte
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Banorte Sees Greater Focus on Sustainability in Mexico

By Cas Biekmann | Wed, 07/28/2021 - 09:11

Q: How has Banorte structured and shifted its strategy over time to become an ally for Mexico in the fight against climate change?

A: Banorte is part of Mexico’s second-largest financial group, which includes the Banorte bank, Mexico’s biggest and Latin America’s fourth-largest pension fund, as well as a mutual fund and insurance company. Our sustainability strategy covers the bank and all subsidiaries. As an entirely Mexican bank, Banorte has always had a commitment to the country’s people and its environment, pushing the envelope on sustainability since its early days. Our strategy became formally institutionalized around 2009, when we began to report on the market changes spurred by sustainability expectations. We participate on stock exchanges and sustainability indexes, so stakeholders expect a high amount of accountability and transparency from us. Since 2008, we have reported on environmental, social and governance (ESG) elements, as well as on sustainable finance because of its implications on sustainability. These four pillars still form the basis of Banorte’s operations.

We have a sustainability committee in which the group’s CEO and C-level executives meet twice a year to devise the year’s objectives, all based on internal norms and regulation aimed at pushing this effort. Banorte has also committed to different worldwide initiatives, principles and certifications, working with peers and investors to understand trends, best practices and opportunities to improve our sustainability. For instance, Banorte was a founder of the UN’s Principles for Responsible Banking and the Principles for Responsible Investment. We are also committed to the UN Sustainable Development Goals’ 2030 agenda, tracking our numbers, indicators and impact directly to avoid “SDG-washing.” Banorte has a strong sustainability culture promoted by its ambassadors around Mexico and in all parts of its operations. The largest recent commitment we made was to become a founder of the Net-Zero Banking Alliance. We are committed to decarbonizing our credit portfolio and our operations before 2050, another effort that proves our ambition and long-term commitment to sustainability.

 

Q: How would you assess the push for decarbonization among companies in Mexico?

A: It has been a great task for Mexico to pursue a more sustainable society and capital markets, while addressing the significant challenges the region faces. Mexico and Latin America have a strong inequality and are more exposed to the effects of climate change and air pollution. Rapid urbanization, a lack of clean water, deforestation and resource scarcity are other issues we need to deal with. We should motivate individuals and the public and private sectors to push for a stronger commitment and deeper understanding of sustainability.

This push has become stronger in the last few years in Mexico as an ESG-ecosystem was constructed. We want corporations to be more transparent about their goals and to devise more plans and targets specific to decarbonization. Each year, more companies are reporting their progress, which leads to better performance. Furthermore, the regulator created a Green Finance Counsel that works in subgroups to generate the tools Mexico requires to ensure a more robust and sustainable capital market. The private sector and NGOs have started their own advisory counsel as well. I believe that the market is aligning toward a sustainable mindset. More green and sustainable bonds are released every day, even from the Ministry of Finance. An emissions trading system is being piloted. Companies that emit 70 percent of the country’s CO2 are already a part of this program. It is a good time for sustainability efforts to become more robust.  

 

Q: What criteria does Banorte use to decide what is a sustainable investment in its efforts to prevent greenwashing?

A: For credit, we created an environmental and social risk management unit in 2012. We use the equator principles and IFC standards to determine which sectors are the most sensitive and can pollute or impact the world negatively otherwise. As a result, we work closely with clients to promote a better performance for the projects that we finance, reducing its negative spillovers. We want to focus on projects that are positive for the environment and mitigate any possibility of harm. We apply a similar methodology on the investment side. Banorte applies a rating to the companies it invests in regarding their ESG-performance and transparency. We endeavor to transform the market by using our power as an investor to realize these changes.

 

Q: How has the pandemic shaped the growth of green financial instruments?

A:  The pandemic has created a strong connection between people and what matters most to them. This includes a higher awareness of social and environmental issues. This immediate shift in global priorities brought on by COVID-19 has taken sustainability issues to a higher level. People also understand that the pandemic has taken a heavy toll on the economy but that they need to generate a different mindset about how they consume or purchase products. Various tools, such as green credit, are already benefiting this dynamic. Today, more ESG-friendly bonds are being issued than in all of 2020, which easily beat 2019. Therefore, we are seeing a huge increase in green, social and sustainable bond issuance. This demonstrates how priorities have changed globally. Consumers are also aware of what real sustainability means, making greenwashing an empty marketing strategy and a difficult route to maintain. It is risky for companies not to consider sustainability initiatives. Additionally, stock exchanges are adapting to meet these new demands from some of the world’s most prominent investors.

Grupo Financiero Banorte is a Mexican banking and financial services group. It is one of the four largest commercial banks in Mexico by assets and loans and the largest retirement fund administrator.

Cas Biekmann Cas Biekmann Journalist and Industry Analyst