Mexico Updates Sovereign Sustainable Finance Framework

The Ministry of Finance and Public Credit (SHCP) updated its Sovereign Sustainable Financing Framework, aimed at reducing social inequalities and addressing the effects of climate change. The document represents an update to the original framework published in 2020. It is also aligned with the priorities of the 2025–2030 National Development Plan (PND) and, for the first time, incorporates the criteria of Mexico’s Sustainable Taxonomy.

The agency highlighted that sustainable finance has become a key lever to advance Mexico’s National Development Plan and its commitment to the 2030 Agenda. In this regard, progress such as the integration of the Federal Budget linked to the Sustainable Development Goals (SDGs) and the issuance of SDG sovereign bonds has laid the groundwork for the Sustainable Finance Mobilization Strategy (EMFS).

The specific objectives of the EMFS include mobilizing financing toward sustainable projects while facilitating access to low-cost funding; ensuring the disclosure and transparency of sustainable finance information through public policy and financial regulation; and enabling financing mechanisms through innovative financial instruments to diversify sources of sustainable financing and reduce investment risks.

To achieve these objectives, SHCP estimates that MX$13.6 trillion (US$756.4 billion) will need to be mobilized between 2023 and 2030, equivalent to approximately MX$1.7 trillion annually. In this context, the importance of updating the framework stands out, as it will allow the federal government to access financing in international markets under ESG criteria, such as green bonds, social bonds, and bonds linked to the United Nations Sustainable Development Goals (SDGs), among others.

The framework also establishes criteria for selecting projects and programs that contribute to reducing social inequalities and combating the effects of climate change. In addition, it expands its scope by incorporating new categories of Eligible Sustainable Expenditures related to inequality reduction, the blue and circular economy, biodiversity, and climate transition and adaptation.

Prior to its publication, the framework was reviewed by external entities and received the highest rating from Moody’s, ensuring alignment with the most rigorous international standards, including the Green and Social Bond Principles, the Sustainability Bond Guidelines of the International Capital Market Association (ICMA), the Green and Social Loan Principles of the Loan Market Association (LMA), the Loan Syndications and Trading Association (LSTA), and the Asia Pacific Loan Market Association (APLMA).

The United Nations Development Programme (UNDP) will continue to serve as an independent observer, issuing non-binding opinions on both the framework and the annual reports, ensuring alignment with market best practices. Additionally, Mexico’s Supreme Audit Institution (ASF) will continue reviewing the alignment of sustainable financial instrument reports with the criteria established in the framework.

State of Green Investments in the Region

According to Climate Finance, the Latin American green investment market is projected to grow from US$200 billion in 2024 to US$980 billion in 2033, driven by increasing demand for sustainable bonds, renewable energy investments, and ESG initiatives. Brazil and Mexico lead the region, accounting for 80% of sustainable bond issuances in local currency.

The report, State of the Sustainable Debt Market in Mexico 2023, published by Climate Bonds Initiative, details that in 2023, the issuance of green, social, sustainability, and sustainability-linked bonds in Mexico reached US$14.7 billion, aligned with the Climate Bonds methodology. This figure represents 21% of the region’s total cumulative volume by the end of that year.

During the period analyzed, public sector contributions accounted for 75% of total volume. In this regard, the Mexican government issued 14 sustainability bonds totaling US$13.3 billion, while the local development bank Banobras issued 17 transactions amounting to US$4.5 billion.

However, despite the progress achieved, the Sustainable Finance Index 2025 (IFS2025), developed by the Climate Finance Group for Latin America and the Caribbean (GFLAC), revealed that countries in the region are not directing sufficient resources to address the climate crisis.

Based on fiscal data from 2024, the report concluded that Latin American governments allocated five times more of their budgets to carbon-intensive sectors such as oil extraction and mining than to sustainable programs linked to climate action and biodiversity protection.

On average, the countries analyzed generated approximately US$199 billion from extractive and polluting activities, compared to just US$18 billion from sustainable income sources. Public spending followed a similar pattern, with US$71 billion directed toward carbon-intensive sectors and only US$13 billion allocated to sustainable initiatives.

GFLAC emphasized that fiscal transparency, the reduction of fossil fuel subsidies, and an increase in debt-free international financing are key to closing the structural gaps that limit climate action in the region. “The challenge is not only technical but also political: public budgets must reflect the climate emergency,” the report concluded.