Mexico starts dialogue with Central Bank about greening the finance sector

Participants at the webinar
Participants at the webinar

In the framework of Mexico’s finance solution “Greening the finance sector”, Banxico (Mexico’s Central Bank) presented a webinar called “The role of the central bank for a sustainable development” with the Deputy Governor, Irene Espinosa as keynote speaker.

The finance solution “Greening the finance sector” has the objective of promoting the transition towards a more sustainable economy that maximizes opportunities of economic and social development.

Prior to the participation of the Deputy Governor, the Resident Representative of UNDP Mexico, Lorenzo Jiménez talked about the Agenda 2030 and the development challenges that Mexico faces, as well as how they relate to the finance sector. The Resident Representative emphasized the role of the UNDP in the publication of the Report on the Sustainable Development of the Banking Sector, in cooperation with the Mexican Banks Association. Finally, he expressed the interest of the UNDP to develop a road map with the finance sector, to transversally contribute to the SDG’s and to foster the role of the bank towards a more sustainable economy.

The Deputy Governor, Irene Espinosa Cantellano, presented an overview of the actions that the Central Bank already implements to transit towards a more sustainable, inclusive, and competitive economy. She started acknowledging the dependency of the financial system on the natural capital, and the financial risks that the loss of biodiversity entails, for example the high vulnerability of the supply chains.

Furthermore, she also highlighted the role of the Bank in international initiatives such as its participation as founding member of the Network for Greening the Financial System. In the NGFS, the Bank also leads market dynamics where it can strengthen conditions and key factors of the bank and capital market for the development and innovation of green finance.

Additionally, the Deputy Governor presented the last national and international advances about improving the availability of data through sustainable investment guides, indicators, recommendations and processes for the analysis and the management of climate and environmental risks. In Mexico, these actions can be reflected in the conformation of the Sustainable Finance Committee, created by representatives of seven financial authorities, a representative of the federal government in the Agenda 2030 and six observers from the finance industry.

She also outlined the role of the Committee to structure the dialogue around: mainstreaming the climate and environmental risks in financial strategies; establishing clear rules for companies and intermediaries; defining a national taxonomy on sustainable investments; and establishing an agenda to capitalize the opportunities to transit towards a sustainable economy.

Irene Espinosa also explained how Banxico included environmental, social and governance investment criteria, and excludes from its asset portfolio those that are not aligned with the strategies, criteria and priorities of sustainable development.

In the context of the alignment with the Agenda 2030, the Deputy Governor highlighted that the finance of sustainable development faces a significative finance gap, that added to a limited resources scenario, it is imperative to increase the finance flows from all the sources in investments that maximize the social and environmental impact. She also claimed that it is feasible to bet for this type of investments, and mentioned examples such as the Green Bond or the Gender Social Bond, financial instruments issued by FIRA (a finance institution that supports the development of primary activities such as agriculture, fisheries and forestry) with clear investment objectives in projects with high social and environmental profitability.

Finally, both the Deputy Governor and the Resident Representative of UNDP mentioned the need to continue these dialogues and increase the collaboration between the finance sector and the organizations of social and environmental sectors. To achieve it, BIOFIN will undoubtedly play a role as an interinstitutional and intersectoral platform.