Mexico Sustainability Funds Shrink; Banorte Leads Inflows

Mexico’s sustainability-mandated fund industry contracted 12.17% year over year, with assets shrinking to just 0.31% of the country’s total mutual fund market. The sector remains highly concentrated, with 72% of assets managed by BlackRock and Grupo Financiero Banorte, while many funds continue to underperform comparable local exchange-traded funds. The decline, coupled with a heavy reliance on international equity exposure, underscores the challenges facing asset managers and institutional investors seeking to expand Mexico’s domestic sustainable finance ecosystem.

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The Mexican sustainability-mandated fund industry showed signs of contraction in April, with assets under management (AUM) accounting for just 0.31% of the country’s total mutual fund market. Despite the sector’s overall decline, Grupo Financiero Banorte emerged as the leading source of positive capital inflows, according to a report by Morningstar.

Data from Morningstar Sustainalytics showed that Mexico’s 15 identified ESG funds managed a combined MX$15.4 billion (US$887 million) in assets, representing a 12.2% year-over-year decline. During the same period, the segment recorded cumulative net outflows of MX$3.7 billion (US$213 million).

Defying the broader trend, Banorte’s NTEESG fund attracted MX$195 million (US$11 million) in net inflows year to date, the highest amount in the domestic market. The fund also posted the strongest asset growth, adding MX$523 million (US$30 million), equivalent to a 33% increase.

Morningstar highlighted the high concentration of sustainable assets in Mexico. Nearly 72% of ESG assets are held in just three funds—two managed by BlackRock and one by Banorte. In addition, all sustainable funds in Mexico are equity-based strategies, while only two maintain a specific focus on the domestic market.

Performance data showed that most local ESG funds underperformed comparable exchange-traded funds (ETFs). One exception was SAM Asset Management’s SAM-ESG fund, which generated an annual net return of 22.9%.

Mexican ESG portfolios also maintain significant international exposure. Approximately 50.3% of assets are invested in US-based companies. Technology, financial services, consumer defensive, consumer cyclical and industrial sectors account for 68% of total portfolio allocations. NVIDIA represented the largest international holding at 3.12%, while Banorte was the largest domestic holding at 2.04%.

Morningstar Sustainalytics classified the average Mexican ESG fund as carrying low ESG risk, while eight funds received a “Low Carbon” designation. However, the report noted that 11.5% of assets remain exposed to companies involved in animal testing for research and development. In terms of alignment with the United Nations Sustainable Development Goals (SDGs), investments were concentrated in clean energy, health and climate action, while gender equality received no measurable allocation.

Corporate Committments Face Growing Credibility Challenges

The contraction in sustainable investment products comes as public skepticism toward corporate ESG commitments continues to grow. According to an April 2026 report by the UN Global Compact and GlobeScan, 86% of consumers expect companies to take stronger action on environmental protection, human rights and anti-corruption efforts. This credibility gap persists despite the fact that 88% of companies in Mexico report having formal sustainability commitments.

The study analyzed 432 companies operating in Mexico, including 54% SMEs and 46% large corporations. More than 90% reported having formal codes of conduct and designated personnel responsible for overseeing human rights and labor standards. Between 82% and 85% also operate formal sustainability committees. Nevertheless, researchers identified a persistent disconnect between internal governance structures and public perceptions of environmental performance and transparency.

Emissions Reporting Remains a Key Weakness

A separate study released in September 2025 by UN Global Compact Network Mexico and GlobeScan  found that 55% of Mexican consumers remain skeptical of corporate ESG reporting. The report highlighted significant gaps in emissions measurement. Only half of Mexican companies track Scope 1 and Scope 2 greenhouse gas emissions, while approximately 75% do not measure Scope 3 emissions, which cover indirect emissions across supply chains and product use.

The analysis also found limited monitoring of sustainability-related innovation. Only 17% of companies track the share of revenue invested in research and development (R&D) for low-carbon products and services, while 62% do not measure this indicator at all.

To address these shortcomings, the report recommends that Mexican companies support stronger public policies, integrate sustainability into core business strategies and expand collaboration with stakeholders. Researchers argue that improving measurement, transparency and accountability will be essential for closing the gap between corporate sustainability commitments and public expectations.