Afore XXI Banorte Outlines 2025 Climate Oversight and 2026 Audits

Afore XXI Banorte is advancing Mexico’s fiduciary landscape by adopting SBTi-validated decarbonization targets and TCFD reporting, aligning its US$90 billion portfolio with global climate standards. Leveraging the Mexican Sustainable Taxonomy and geolocation-based risk modeling, the fund tackles systemic financial risks from water stress and biodiversity loss, marking a major step in integrating sustainability into institutional investment.

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Afore XXI Banorte has released its 2025 Climate Risks and Opportunities Report, detailing the integration of climate management into its fiduciary oversight of Mexican workers’ retirement savings. The report was prepared in line with recommendations from the Task Force on Climate-related Financial Disclosures (TCFD).

In the report’s opening statement, David Razú Aznar, Director General, Afore XXI Banorte, emphasized the institution’s long-term commitment to sustainable development: “This report reflects our conviction to transform climate challenges into opportunities for sustainable value creation for the workers of our country.”

Razú Aznar highlighted a key technical milestone in 2025: the fund’s decarbonization targets were validated by the Science Based Targets initiative (SBTi), making it one of the first pension funds globally to adopt science-based climate commitments. The fund also plans to implement external audits to verify financed emissions data starting in 2026. “Climate change is not only an environmental and social challenge, but a systemic financial risk that can impact the profitability and well-being of millions of workers,” he added.

Climate Risk Governance and Oversight

The report outlines Afore XXI Banorte’s climate risk governance framework. The Board of Directors oversees operations and ensures investment decisions align with the Paris Agreement, supported by monthly reports from the Investment and Financial Risk Committees.

In 2025, the institution strengthened internal oversight with its first climate-focused internal verification conducted by the Internal Audit team. Formal sustainability responsibilities were assigned across the Administration and Finance Directorates and the Unit for Integral Risk Management (UAIR). Executive performance is now partially tied to climate objectives through three ESG-related KPIs integrated into variable remuneration, focusing on responsible investment and climate target achievement. Comprehensive training, including board-level masterclasses, accounted for 1,935 technical training hours across the organization.

Investment Strategy and Portfolio Resilience

Afore XXI Banorte manages MX$1.6 trillion (US$90 billion) in assets, of which MX$180 billion (US$10.1 billion) are subject to emission reduction targets, including MX$120 billion (US$6.8 billion) aligned with science-based goals. For Scopes 1 and 2, operational GHG emissions are targeted to decrease 42% by 2030, using 2023 as the baseline. For Scope 3 (investments), the Implied Temperature Rise (ITR) for equity and corporate debt is expected to fall from 2.34°C in 2023 to 1.99°C by 2030.

The fund also applies the Mexican Sustainable Taxonomy (TSM) to classify activities contributing to climate mitigation and adaptation. This enables the Financial Risk Committee to monitor SIEFORE exposure to sustainable activities and supports progressive convergence toward positive-impact assets.

Managing Physical and Transition Risks

The report evaluates the vulnerability of physical assets and financed projects using geolocation tools and geospatial modeling. Among 98 operational properties, 21% are significantly exposed to physical risks, with flooding posing the highest threat. Within the investment portfolio, water stress affects 71% of assets under a high-emissions scenario (RCP 8.5), projected to rise to 74% by 2040.

Afore XXI Banorte developed the Climate Exposure Integrated Score (CEIS), weighting physical risk (60%) and sectoral sensitivity (40%), prioritizing real estate, energy, materials, and utilities. The fund is also integrating the Taskforce on Nature-related Financial Disclosures (TNFD) framework to assess biodiversity and natural capital impacts.

Metrics, Objectives, and Financial Performance

In 2025, financed emissions fell 15% from 2023, while Weighted Average Carbon Intensity (WACI) declined 41%. Operational emissions totaled 1,336 metric tons of CO2e, and fleet fuel consumption decreased 15%.

Investment in thematic bonds reached MX$67 billion (US$3.8 billion), up 26% from 2024: 49% in sustainable bonds, 26% in social bonds, and 13% in green bonds, financing projects in renewable energy, water efficiency, and climate adaptation aligned with the UN Sustainable Development Goals.

A pilot analysis found a moderate positive correlation between active ESG engagement and financial performance, indicating that science-based sustainability commitments can support long-term value creation and improved Return on Equity (ROE).