Mexico Updates Sovereign Sustainable Finance Reference Framework

Mexico has updated its Sovereign Sustainable Finance Reference Framework, strengthening the rules that govern how the federal government will access international capital markets through environmental, social, and sustainability-linked instruments. Published on Jan. 8 by the Ministry of Finance and Public Credit (SHCP), the framework also tightens standards on transparency, taxonomy alignment, and impact reporting.

The updated framework replaces the original version published in 2020 and aligns Mexico’s sustainable financing strategy with the National Development Plan (PND) 2025–2030. As with the previous framework, it establishes the rules under which Mexico may issue green, social, sustainability, and sustainability-linked bonds, while also outlining what qualifies as sustainable spending. For the first time, it fully integrates the criteria of the Mexican Sustainable Taxonomy, aiming to prevent greenwashing and improve comparability with international sustainable finance standards.

Eligible expenditures are grouped into four main categories: environmental, social, sustainability-linked, and transition-related spending. Now aligned with the sustainable taxonomy, these categories now include a broader range of activities than in 2020.

Environmental categories include climate change mitigation and adaptation, renewable energy, energy efficiency, clean transportation, sustainable water, and wastewater management, pollution prevention, biodiversity conservation, and ecosystem restoration. The framework explicitly references marine and coastal ecosystems, including mangroves and wetlands, as priority areas.

Social categories cover access to essential services such as health, education, housing, food security, drinking water, and sanitation, as well as programs targeting poverty reduction, gender equality, Indigenous and Afro-Mexican populations, and regional development in marginalized areas.

New to the framework are explicit categories for the blue economy and circular economy, covering sustainable fisheries, waste reduction, recycling, resource efficiency, and sustainable production models. Transition expenditures, including investments that support decarbonization pathways in hard-to-abate sectors, are also incorporated, provided they meet taxonomy thresholds.

The framework outlines a multi-stage governance process for project selection and fund allocation. SHCP leads the process, working in coordination with relevant line ministries and public entities responsible for project execution. Projects and programs must demonstrate alignment with the PND 2025–2030, the Agenda 2030 Sustainable Development Goals (SDGs), and Mexico’s updated Nationally Determined Contribution (NDC 3.0), presented this year at COP30. Eligible expenditures may include both new investments and refinancing of existing projects, subject to defined look-back periods. The framework specifies that funds raised through sustainable instruments will be tracked using internal budgetary systems to ensure traceability and prevent double counting.

The updated framework strengthens reporting obligations by committing Mexico to publish annual allocation and impact reports for each sustainable finance instrument. Allocation reports will detail the distribution of proceeds by category, program, and geographic region, while impact reports will disclose quantitative indicators where data is available.

Indicative environmental metrics include greenhouse gas emissions avoided or reduced, renewable energy capacity installed, energy savings achieved, hectares of ecosystems restored, and volumes of waste diverted or recycled. Social indicators may include the number of beneficiaries reached through health, education, or social protection programs, affordable housing units supported and access to basic services in underserved regions. Where direct measurement is not feasible, the framework allows the use of proxy indicators and qualitative assessments, provided methodologies are disclosed transparently.

The framework has received the highest possible score, SQS1, in a Second Party Opinion from Moody’s, confirming alignment with international standards such as the Green Bond Principles, Social Bond Principles, and Sustainability Bond Guidelines of the International Capital Market Association. It also aligns with the Green Loan and Social Loan Principles issued by the Loan Market Association, the Loan Syndications and Trading Association, and the Asia Pacific Loan Market Association.

The UN Development Program will continue to act as an independent observer, issuing nonbinding opinions on the framework and annual reports. Domestically, the Supreme Audit Institution (ASF) will review alignment between reported expenditures and the framework’s eligibility criteria, adding an additional layer of public accountability.