Mexico strengthens its sustainable finance framework

The updated Reference Framework expands the Federal Government's ability to access international markets through green, social, blue, SDG-linked bonds and other thematic instruments, aligned with international principles such as those issued by ICMA and LMA. Unlike the previous framework, this update not only broadens the range of available instruments, but also deepens the technical criteria for the selection and reporting of financed projects.

A key element of the update is the explicit alignment of Eligible Sustainable Expenditures with the Mexican Sustainable Taxonomy, strengthening traceability, transparency, and comparability of public spending against global standards. This is particularly relevant for institutional investors, financial institutions, and issuers seeking to mitigate greenwashing and socialwashing risks, as well as for companies that participate directly or indirectly in projects financed with public resources.

The Framework also expands eligible expenditure categories to include, among others, projects related to inequality reduction, circular and blue economy, biodiversity, energy transition, and climate adaptation. At the same time, oversight mechanisms are reinforced: Moody's assigned the highest rating (SQS1) in its Second Party Opinion, while the United Nations Development Programme will continue acting as an independent observer and Mexico's Supreme Audit Institution will review the alignment of annual reports.

Overall, this update positions Mexico as a regional benchmark in sustainable finance, with implications that extend beyond the public sector and increasingly influence the financial and productive sectors.

Authored by Mauricio Llamas and Sofia de Llano.

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