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Sharing Knowledge, Key to Transition to a Sustainable Economy: Our Experience in Mexico

The growing interest of companies and investors in thematic bonds goes hand in hand with the need to provide them with the tools and knowledge to guide them on this path. The results, so far, speak for themselves. And the future looks promising.

Dos personas ante una pantalla en una oficina

 

Green, social, sustainable, and sustainability-linked thematic bonds are debt instruments that offer investors the opportunity to direct their investments towards projects with social and environmental impact, or both. These instruments redirect and mobilize resources to accelerate the transition to a green, sustainable, and just economy.

According to the Mexican Council for Sustainable Finance, "2023 marked a milestone, registering the highest number of thematic issuances and the highest amount issued to date. In percentage terms, it experienced a 27% growth in the number of issuances and a 6% growth in the amount placed."

An important part of our work is fostering these types of financial instruments to accelerate sustainable financing in Latin America and the Caribbean. As of February 2024, IDB Invest, leader in thematic bonds in the region, has supported 38 thematic issuances, equivalent to US$3.325 billion in eleven countries.


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Throughout this process, it has been crucial to support efforts that provide the needed tools and knowledge to entrepreneurs, financiers, and other stakeholders so they can structure, issue, and/or invest in thematic bonds and to generate an attractive offering of sustainable projects to finance.

One of IDB Invest's goals is to share knowledge with market representatives.

In the case of Mexico, IDB  Invest has taken part and contributed to the four editions of the Chief Sustainability Officer Program (CSO), a training developed and delivered by the Bolsa Institucional de Valores or BIVA (A Mexican Stock Exchange).

This program teaches the private and the public sectors about the design and implementation of sustainable practices starting with the development of corporate sustainability or sustainable finance strategies, all the way to the execution of the strategic pillars and the different alternatives to raise capital to fulfill the stated objectives.

Throughout these four editions of the CSO program, different IDB Invest teams have shared their knowledge and experience on thematic financing instruments and best environmental, social, and governance (ESG) practices with leaders from private and public entities from multiple economic sectors that have the potential to generate impact.

Thanks to the financial resources provided by the European Union for the fourth edition of the CSO BIVA training program, it was possible to share this knowledge with more public and private organizations in Mexico.

Learning and support

In the fourth edition of the CSO program, our advisory division specialists participated in four workshops, each of them focused on one specific economic sector, where they shared practical guides for identifying eligible uses of proceeds and building innovative thematic debt frameworks aligned with international standards and practices, as well as local taxonomies and regulations.

Additionally, in the last sessions of the training, IDB Invest investment officers served as judges for the business cases on potential issuances presented by the participants. This allowed organizations to receive feedback, and to strengthen their knowledge on thematic bonds from the perspective of potential investors.

A total of 187 people from one hundred organizations attended the fourth edition of the CSO program, with over half - 59% - coming from the real sector, including infrastructure, manufacturing, food, metals, and energy, among others. 29% were from the financial sector, and 12% were government organizations and development banks.

This training program was part of the first phase of a broader project, funded by the European Union and executed by the IDB Group.

Graphic thematic bonds

 

In the second stage of this project, IDB Invest will support a group of Mexican companies with the potential and interest in issuing green, sustainable, or sustainability-linked bonds, in the preparation process for these issuances. This includes the development and strengthening of taxonomies and thematic debt frameworks, as well as the issuance of Second Party Opinions (SPO), creating capabilities to keep promoting sustainability in the private sector.

The alliance between the European Union, the IDB, and IDB Invest contributed to a 54% increase in the number of organizations that participated in the CSO 4.0, compared to the attendance obtained in the third edition. This meant an increase from 65 to 100 organizations attending the program.

Continued investment in the generation and sharing of knowledge, and in the development of financial instruments that facilitate a just transition in Mexico and the region, is necessary so that more companies and financial institutions become familiar with sustainability topics, understand their importance, and know the steps to integrate them into their businesses.  This way, we will continue to contribute to increasing the number of issuers and financiers of initiatives that seek to build a green, sustainable, and inclusive economy.


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Authors

Rafael González

Rafael joined IDB Invest in January 2023 and is currently a consultant in the Sustainable Business and MSMEs team within the Advisory division. Before

Víctor Fort

Víctor is Investment Officer in Debt Capital Markets in IDB Invest in Mexico’s office. He enjoys working together with customers and internal teams to

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