ABSTRACT
Latin America stands at a pivotal “regulatory crossroads” in sustainable finance, shaped by its unique combination of low greenhouse gas emissions, extreme climate vulnerability, rich biodiversity, and deep social inequality. Across the region, governments, pension regulators, and financial institutions are advancing taxonomies, ESG disclosure frameworks, and sustainable finance roadmaps that blend elements of U.S. flexibility with EU-style rigor—while adapting them to local realities.
The papers in this section showcase a region in active transition. Countries such as Mexico, Chile, Colombia, Brazil, and Peru are developing taxonomies, strengthening pension fund regulation, adopting IFRS S1/S2, issuing thematic bonds, and integrating ESG into investment and risk-management processes. Pension funds—managing more than USD 800 billion across FIAP member countries—have emerged as central actors, mobilizing long-term capital toward infrastructure, energy transition, nearshoring, and social impact.
Despite global headwinds—U.S. political pushback, European regulatory fatigue, declining corporate ESG mentions—Latin America continues to advance pragmatically. Mexico, in particular, is leveraging pension reform, a robust Sustainable Taxonomy, and long-term institutional investors (Afores) to position itself as a regional leader and potential global safe haven for sustainable finance.
The contributions from Eva M. Gutierrez, Guillermo Zamarripa, Sergio Aratangy, and David Razú collectively highlight the region’s challenge: moving from rule-making to meaningful implementation, improving data quality, coordinating regulators, and balancing ambition with market realities. They also emphasize its opportunity: harmonizing standards, scaling impact investing, strengthening fiduciary stewardship, and channeling domestic savings into economic transformation.
Taken together, the LATAM experience illustrates how emerging markets can transform sustainability from an external expectation into a strategic, competitive, and long-term development model—anchored in resilience, institutional strength, and pragmatic regulation.
Keywords: PLatin America, sustainable finance, ESG integration, pension funds, taxonomies, climate risk, biodiversity, IFRS S1/S2, sustainable investing, Mexico Sustainable Taxonomy, Afores, regulatory convergence, double materiality, social inequality, impact investing, green bonds, thematic bonds, energy transition,
infrastructure finance, nearshoring, fiduciary duty, financial regulation, disclosure frameworks, sustainable development, climate adaptation, public–private collaboration, emerging markets.
Key Findings
- Latin America is highly vulnerable to climate change but contributes little to global emissions.Despite accounting for less than 7% of global GHG emissions, 74% of countries in the region are highly exposed to extreme weather events. This asymmetry reinforces the urgency of adaptation, biodiversity protection, and
socially inclusive sustainable finance strategies. - The region is building hybrid regulatory models that blend EU ambition with local pragmatism. Countries like Mexico, Chile, Colombia, and Brazil are integrating ESG into financial regulation and developing sustainable taxonomies inspired by the EU—but adapted to regional needs (e.g., exclusion of gas/nuclear, inclusion of agriculture, voluntary frameworks).
- Pension funds are becoming the cornerstone of sustainable finance in the region. With over $800B in AUM across FIAP member countries, pension funds are embedding ESG into investment mandates, issuing engagement guidelines, and channeling capital toward infrastructure, energy transition, social inclusion, and climate resilience.
- Regulatory progress is tangible—but implementation gaps remain. ESG disclosure requirements (e.g., IFRS S1/S2) and taxonomy-linked metrics (like green asset ratios) are coming into force, but lack of data, limited impact investment pipelines, and asymmetry with banking regulation create bottlenecks.
- Mexico is emerging as a regional leader. Through its Sustainable Taxonomy, ESG pension reform, and increased allocations to green and social bonds, Mexico is positioning itself as a stable ESG investment hub amid global volatility—particularly leveraging nearshoring and long-term capital from Afores.
- Volatility in global ESG consensus creates both risks and opportunities. Political resistance in the U.S. and regulatory fatigue in the EU weaken investor confidence— but also create space for LATAM to differentiate through clarity, stability, and credible ESG frameworks.
- Public–private coordination is critical to scale sustainable finance. From thematic bonds to biodiversity taxonomies and infrastructure investments, collaboration between regulators, institutional investors, and development banks is needed to move from compliance to real impact.
- The region’s approach is evolving from policy to performance. There is a shift from rule-writing to active stewardship, impact metrics, and fiduciary ESG integration. Latin American countries are no longer just adopters of global standards—they are adapting and innovating within their own frameworks.
Content
Eva M. Gutierrez
Latin America and the Caribbean (LAC) is developing an approach to sustainable finance that combines elements of the EU and US approach that reflect the challenges in the region including climate adaptation, biodiversity loss, and social inequality. In contrast to the US or the EU, LAC is not a big GHG emitter (only 7% of total emissions). Only Brazil, Mexico (and to lower extent Argentina) are significant emitters. However, LAC countries are greatly exposed to climate change; 74 percent of its countries are highly exposed to extreme weather events, the second-most disaster-prone region in world after Asia. LAC is also home to important carbon sinks, such as the Amazonia. Furthermore, LAC is the second most biodiverse region in the world, and such biodiversity is key to many economic activities (agriculture, industry, tourism) that are particularly important to economic vulnerable populations. Loss of biodiversity in Latin America, due to climate change, pollution and urbanization can reduce carbon storage, decrease food security and affect livelihoods. Biodiversity loss was estimated to cost 4.5 percent of GDP in Mexico in 2019. Beyond climate considerations, social challenges are prevalent in a region with high income inequality (one of the highest levels together with southern Africa). Climate proofing the economies in LAC and attain the UN Sustainable Development Goals requires comprehensive policy action to plan and fund the needed investments to address these challenges.
Several countries in LAC are advancing on firming their sustainable finance frameworks/roadmaps and strategies. A key component, more so in the case of LAC countries are ESG integration into investment decisions under the double materiality approach, to minimize financial risks to investments and to ensure sustainable outcomes.Many LAC countries have issued ESG guidelines for issuers to report IFRS S1 but mostly those requirements begin in 2025 and 2026 (eg. Mexico, Brazil, costa Rica, Chile and Bolivia). Colombia was a pioneer issuing ESG disclosure requirement for financial entities in 2021. Unfortunately, IFRSS1/S2 do not incorporate double materiality considerations. However, the largest domestic banks in Brazil, Colombia, Uruguay and Mexico adopted the Ecuador principles, inspired in IFC performance standards, as they are the large Spaniard banks with substantial operations in the region. The sustainable taxonomies developed in the region also include «do not harm» considerations albeit so far they are mostly voluntary reporting guidelines.
To support mobilization of sustainable investments several countries have published sustainable taxonomies in region including Colombia, Mexico, Chile, Panama ,Costa Rica, Dominican Republic, Panama and Paraguay. All the taxonomies have climate objectives, mitigation and adaptation albeit inspired by the EU taxonomies, the focus is in mitigation. Mexico ‘s taxonomy also has explicit social objectives (gender equality). Many countries in LAC are working with the BIOFIN initiative to develop a biodiversity taxonomy. In contrast to the EU, taxonomies in LAC cover the agricultural sector and exclude nuclear and natural gas from green list. In contrast to the EU approach, the taxonomies in LAC are so far voluntary tools, and only CONSAR in Mexico asked pension companies to report according to a well stablished taxonomy.
Beyond taxonomies, several countries in LAC have also issued guidelines for the issuance of green and thematic bonds (Colombia was a pioneer too) and sovereigns have been active in issuing sustainability linked bonds and sustainable bonds. Also, with the support of the IADB and the World Bank, guidelines were issued for the issuance of Amazonia bonds to support projects focused on environmental conservation, social well-being and economic growth in the region. Social bond issuance is raising, particularly in Mexico and Chile. In 2025 LAC’s share of total Green, social, sustainability and sustainability linked bonds reached 35% (up from about 9 percent in 2020). Withing the sovereign segment of these bonds, LAC accounted for 50 percent of total issuance.
Finally, state owned financial institutions, are the largest providers of green finance in the world according to CPI statistics. In LAC there are efforts to green their state-owned development and commercial banks, important in several countries such as Costa Rica, Uruguay, Brazil and Mexico) as part of their sustainable finance roadmaps.
Guillermo Zamarripa
The objective of my section of the panel discussion is to give an overview of where we are in Latin America (Latam) in terms of regulations and industry practices related to ESG and sustainable finance, some of the challenges and where are we headed in terms of the crossroads.
I.- The current situation in Latam
The pension fund industry in the region is a relevant player in terms of financial intermediation. We understand that in sustainable finance we are at a crossroads. Also, we acknowledge that pension funds can influence the definition of which path we will take, both in terms of capital mobilization and engagement with other players of the sustainability ecosystem.
In Mexico the pension fund industry is the second financial intermediary in terms of size. As of September 2025, the industry has over 400 billion USD of AUM. The assets will more than double over the next six years.
FIAP member countries have around 800 billion USD of AUM and manage accounts for more than 130 million workers in the region.
The evolution of the ESG regulatory agenda in Mexico is consistent with the efforts of all members of FIAP. We also see an evolution in terms of industry practices. I present two examples of such practices.
One is the adoption of the Principles for Responsible Investment (PRI). Now includes 19 pension funds from seven countries in the region (Chile, Colombia, Costa Rica, Mexico, Peru, the Dominican Republic, and Uruguay) which are more than half of the industry participants. It shows a commitment because adoption is voluntary not mandatory.
As of December 2023, more than 50% of the pension fund portfolios in Latin American countries have some analysis using ESG criteria. While there is no unique approach to ESG analysis, Latam pension funds recognized the relevance of incorporating these factors in investment and risk management processes.
II.- Where are the challenges in Latam?
In terms of adoption of best practices and regulations our point of reference is the European Union. However, we believe that full replication is not the adequate strategy for Latam countries.
Harmonization efforts should be done where applicable. It is important to understand that we have differences. Also, we are listening to some voices in Europe arguing that is convenient to review their regulation and their taxonomy.
Countries such as Chile, Mexico, Colombia, and Peru are leading the integration of ESG factors into their processes. The change is driven by regulatory requirements that establishes their incorporation in different risk management and investment evaluation processes.
In the case of Mexico there are additional requirements. One is transparency and disclosure of what each Afore does in ESG. Another one is to have at least one certified member of the investment and the risk management teams.
In 1Q 2026 the Mexican pension funds will be calculating some metrics according to one taxonomy. One is the green asset ratio and other is the internal sustainability capex. Also, a new requirement to report aligned with an international standard like IFRS S1 and S2, PRI or TCFD.
Complementary to pension fund regulation, several countries published sustainable taxonomies including Colombia, Mexico, Chile, Panama Costa Rica, Dominican Republic, and Paraguay. Still is work in progress but there are frameworks in Latam.
Pension Fund regulators have done their part, so does the pension fund industry. There are two caveats in terms of progress. First, we are concentrated on internal aspects of policies and procedures and less on impact investment. Second, we need actions beyond the pension fund industry.
Countries need to move from rule writing to meaningful compliance. There will be a reality check in terms of ESG regulation in Mexico in 2026. In the first calculations of the green asset ratio and other metrics there will be a lot of 0´s because the lack of information. Also, the region needs to ask the following question: Will we move slowly from compliance with policies and procedures, disclosure and doing several calculations to asset allocation in terms of thresholds and restrictions?
Better adoption of ESG standards and sustainable finance in the different countries of the region require regulation and other actions from other financial industries, mainly the securities and banking regulators. All need to move in a coordinated way.
One example of potential distortions if there is no coordination is what can happen in the credit market segment of big corporations. If banks do not have requirements for credit granting that include ESG criteria and pensions funds do, then a big regulatory asymmetry will emerge creating a bias toward banking finance.
We also need to define which approach is better. I think the top-down is the correct one. This implies starting with large companies and leaving SME´s to a later stage. Imposing requirements to small companies can get us to a point where we have regulation with no enforcement.
One example in Mexico is the local version IFRS S1 and S2 reporting standards issued by CINIF. The local standard is consistent with the global one. The scope of application is for all companies that prepare financial statements using CINIF standards which include small and medium size companies. This will be excessive since most of SME´s barely have reliable accounting numbers.
III.- Latam and the crossroads: Europe and the U.S.
Europe is the global leader in sustainable finance and ESG. Has more assets under management with ESG criteria than the US and other parts of the world. This is driven by strict regulations such as the SFDR (Articles 8 and 9) and the EU Taxonomy which classifies sustainable activities and fosters transparency.
In addition, 60% of publicly traded companies in Europe have targets validated by the Science Based Targets initiative (SBTi), reflecting a strong commitment to decarbonization.
IFRS S1 and S2 is basically a European effort that will help with the disclosure of companies in Europe. This will be key towards the goal of better comparing assets and mitigating climate risks.
In all these issues Latam is behind. Regulations are not as strict; taxonomies are work in progress like in Mexico; less companies in the region with SBTi (the ones influenced because they do business in Europe), and only a few will apply IFRS S1 and S2.
In Latin America less than 20% of companies in our markets have SBTi-approved targets. Here the challenges include lack of reliable ESG data and nonstandard methodologies. The problems are bigger for companies in the small- and mid-cap segments of the markets.
Latin America is more closely aligned with European approach in terms of regulation when compared to the United States. However, the US has greater investment scale, although with a less uniform approach due to more flexible regulations (such as those of the SEC). Views about ESG and sustainable finance today are influenced by the political status quo in the country.
Influence means change not disappearing. It is more about beliefs, values and commitment of each corporation and market participant than a general trend.
In Mexico we are very close to the US market and are aware of this. Industry players are trying to understand how to deal with the new reality.
In Latam we acknowledge that this is also a public interest dilemma. Latam countries account for less than 7 percent of greenhouse gas emissions, but it is greatly exposed to climate change (74 percent of its countries are highly exposed to extreme weather events).
We are working in sustainable finance and ESG in the pension fund industry in Latam because we are “good global citizens”. The path that we are taking in the crossroads is more aligned with European practices and standards but with a pragmatic approach.
Sergio Aratangy
Chile has recently approved a new law introducing substantial changes to the pension system, including major reforms to the investment structure. These changes are expected to have implications for Sustainability and Climate Change analysis.
There are two key reforms designed to foster a long-term perspective for Chilean pension funds:
- Shifting from target risk funds to target date funds.
While the main objective of this shift is to align the entire investment philosophy with the system’s ultimate goal—paying pensions—it should also encourage a longer-term mindset. At the statutory retirement age, the expected duration of a pension is approximately 15 years.
- Establishing a new collective fund to finance the higher life expectancy of women.
This fund is mandated to remain solvent for the next 75 years and will offer defined benefits. It therefore represents the first public Chilean DB fund since 1980. Consequently, the investment approach must reflect a long-term commitment consistent with these obligations.
Having said that, long-term trends such as climate change will have a tremendous impact on investment decisions. We must be prepared: not only do we need good and reliable information—but we also need to know how to act on it.
Regulators play a pivotal role in preparing the ground for information disclosure—but that alone is not enough. Science must develop robust models to understand real environmental changes that will affect demographics, resources, costs, and consumption. Investors then need to apply these models to adjust valuations and factor in climate-related risks.
In Chile, we are embracing recognized best practices, such as adopting the IFRS Sustainability Disclosure Standards—IFRS S1 (General Requirements for Disclosure of Sustainability-related Financial Information) and IFRS S2 (Climate-related Disclosures). These standards are being incorporated into the strategies of Pension Fund Managers—not just in their investment decisions, but also in their market analysis and corporate strategies.
As a society, we are still learning how to tackle this challenge. It’s not enough for a few countries to move in the right direction—widespread, coordinated action is required, amid geopolitical distractions that can easily derail progress.
In the same vein, and with the aim of defining criteria for classifying economic activities as sustainable, there has been an international push to establish classification systems (“taxonomies”), providing a common language that facilitates comparability across different industries and helps prevent practices such as greenwashing.
In this context, in May 2025, the Chilean Ministry of Finance published the Taxonomy of Environmentally Sustainable Economic Activities of Chile (T-MAS). Its objective is to identify and categorize economic activities considered environmentally sustainable, thereby providing a common language to facilitate decision-making on sustainable investments.
I think we could emphasize the fact that, in Chile, we have been enforcing as much as regulating. And, through our preventive oversight process, we are also fostering the adoption of good practices in risk management, including he treatment of Climate Change risks and opportunities.
David Razú Aznar
Key Findings
- ESG agendas face increasing political and market pressures at the international level, weakening consensus but opening new strategic opportunities for countries like Mexico to position themselves as stable and sustainable investment hubs.
- Despite international setbacks, ESG remains a competitive advantage and fiduciary tool, particularly for institutional investors committed to long-term sustainable value creation.
- Protectionist measures and U.S. trade policy shifts increase volatility but also highlight nearshoring opportunities that Mexico can capture with the right regulatory and financial frameworks.
- LATAM’s regulatory crossroads reveal both convergence and divergence with U.S. and EU frameworks. Mexico’s Sustainable Taxonomy and CONSAR regulation on ESG investments demonstrate leadership in aligning local markets with global standards.
- Mexico’s pension system (Afores) has become a cornerstone of domestic financial markets, channeling long-term savings into infrastructure, energy transition, and sustainable finance.
- The 2020 Pension Reform and subsequent regulatory updates have significantly expanded the ability of Afores to invest in structured instruments, real estate (FIBRAs), and ESG-linked bonds, positioning them as pivotal actors in financing Mexico’s economic transformation.
Abstract
While international consensus on ESG is weakening in the United States and facing political headwinds in Europe, Mexico is uniquely positioned to step forward as a regional and global leader in sustainable finance. This opportunity stems from both structural reforms and institutional maturity. On the regulatory side, the Mexican government has introduced a forward-looking framework that strengthens fiduciary responsibility, expands investment limits for pension funds (Afores), and aligns local market practices with global standards such as the Paris Agreement and the UN SDGs. The adoption of Mexico’s Sustainable Taxonomy, alongside CONSAR’s ESG investment regulation, and the expansion of the limit for certain investments has provided the legal certainty and incentives needed for institutional investors to channel long-term savings into strategic sectors.
Pension fund administrators have become the cornerstone of this transformation. Afores not only stabilize domestic financial markets but also mobilize vast resources into the market that has increased investment on infrastructure, renewable energy, and digital transformation. By leveraging these reforms, they have financed large-scale sustainable projects, promoted gender equality and social impact initiatives, and positioned themselves as credible actors in global green markets. This dynamic illustrates how Mexico is turning external volatility into an engine of resilience, growth, and innovation. In doing so, the country offers a model for other emerging economies: combining regulatory pragmatism, institutional strength, and long-term fiduciary vision to transform sustainability from a trend into a competitive advantage and a source of inclusive development.
Contents
Pragmatism in Sustainability Agenda
The current political context in the United States, resistance to the European Union’s Corporate Sustainability Reporting Directive (CSRD), and the U.S. withdrawal from the Paris Agreement have weakened the international consensus on climate and sustainability. These events generated a perception of fragility around ESG standards, discouraging some investors while emboldening skeptics who see sustainability as a passing trend.
Yet, this vacuum creates an extraordinary opportunity for countries that can offer regulatory stability, credible frameworks, and long-term institutions. Mexico is uniquely positioned to seize this moment. Unlike economies where ESG has become a political battleground, Mexico has advanced steadily and pragmatically, designing regulations that strengthen fiduciary duty, embedding sustainability in pension fund mandates, and fostering tools such as the Sustainable Taxonomy. This approach allows Mexico to become a reference point for Latin America and beyond: not through rhetoric, but through measurable reforms, financial discipline, and the mobilization of pension assets.
The Congress highlighted that pragmatism means aligning ambition with execution. For Mexico, this means leveraging pension funds as catalysts of sustainable transformation, aligning regulation with global standards, and demonstrating that sustainability is not only compatible with competitiveness—it is the foundation for long-term growth and stability.
ESG Agendas in a Complex Global Environment
Globally, ESG is at a crossroads. In the United States, corporate ESG mentions peaked in 2023 and are now in decline. The SEC has retreated from efforts to mandate climate disclosures, and political discourse has increasingly framed ESG as controversial. Even in the EU, which pioneered double materiality and comprehensive reporting, political resistance is emerging, delaying the effective implementation of the CSRD. The U.S. withdrawal from the Paris Agreement exacerbates this fragmentation, weakening international solidarity and redirecting attention toward fossil fuels.
This erosion of consensus has several consequences. First, it undermines investor confidence in the permanence of ESG standards, raising doubts about whether commitments are structural or temporary. Second, it reduces appetite for capital flows into emerging markets, especially those that rely on ESG differentiation to attract investors. Third, it weakens public-private coordination at the global level, delaying the development of green markets.
For Mexico, however, this environment presents a paradoxical opportunity. By offering stability where others retreat, the country can differentiate itself as a credible ESG destination. Mexico’s adherence to the TCFD disclosure framework, the creation of the Sustainable Taxonomy, and the incorporation of ESG into pension fund regulation since 2022 provide precisely what international investors now demand: clarity, transparency, and long-term commitment.
In this sense, the weakening of ESG abroad does not diminish its relevance. Rather, it sharpens the distinction between opportunistic actors and those with genuine long-term vision. Mexico can use this moment to consolidate its reputation as a serious and consistent player, attracting capital from Europe, Asia, and Canada, where ESG remains a core principle of institutional investment.
The Investor Side
According to CONSAR reports, one of the first impacts of the ESG regulation was reflected in the increase in investments by Afores. In May 2024, Afores invested USD 12.4 billion in ESG bonds, compared to just USD 10.2 billion in 2023.
Afore XXI Banorte, the largest pension fund administrator in Mexico and Latin America, has been a pioneer in the implementation of ESG criteria even before the new regulation came into effect, and it may be considered the industry leader in this area of investment. Its objective has been to promote the adoption of ESG practices in the operating processes of the promoted firms and projects in its portfolio. As a result, 45 major issuers from various sectors have signed engagement letters to incorporate ESG factors into their businesses, enabling them to access long-term funding from XXI Banorte.
Thanks to the implementation of these criteria, various social impact strategies have been promoted—educational projects, donations, workshops, development programs, and other initiatives—that have benefited millions of people. A notable example is the investment in sustainable electricity production, which has helped generate more than 2.9 million mw/h.
Moreover, Afore XXI Banorte has actively promoted gender equality and equal opportunities, both within its own organization and in the companies it finances. Through its investments in Structured Equity Securities (CKDs), it has enabled the granting of credit to 241,000 women to start their own businesses, among other examples of the impact of its ESG investment strategy.
Regarding the inclusion of women, it has been established that by 2030, 30% of the portfolio on corporate instruments must be invested in companies with at least 30% female participation on their boards of directors.
Currently, 30% of Afore XXI Banorte’s investments are directed toward sustainable projects, including renewable energy, agribusiness, healthcare, education, and women’s empowerment. Additionally, it has allocated MXN 89 billion to active strategies and MXN 2 billion to passive strategies, as well as MXN 55 billion in thematic bonds—of which 41% are sustainable, 26% sustainability-linked, 15% green, 13% social, 4% development-focused, and 2% blue bonds.
Mexico’s Pension Reform and the Expanding Role of Afores
One of Mexico’s most significant contributions to sustainable finance lies in its pension reform trajectory. The 2020 reform increased contribution rates, reduced the required weeks for retirement, and capped Afore fees. More importantly, it expanded the potential for pension funds to act as long-term institutional investors.
The impact is already visible. According to Banco de México, the reform will elevate pension assets from 35% of GDP under a no-reform scenario to 56% by 2040. As of August 2025, Afores manage USD 415.6 billion, representing 22.2% of GDP. This scale positions them as the second most important financial actors in the system, only behind banks.
Subsequent regulatory changes in 2024 and 2025 expanded the investment limits for structured instruments, infrastructure, and alternative assets. Afores can now allocate up to 30% of their assets to domestic projects such as energy and infrastructure. This has translated into USD 52.3 billion invested in infrastructure and USD 17.7 billion in energy projects, making them the largest contributors to national development in these sectors.
The reforms also enabled greater participation in FIBRAs, CKDs, and CERPIs, allowing Afores to capture opportunities from nearshoring. By August 2025, Afores had invested USD 5.6 billion in highways and USD 34.0 billion in development capital certificates, strengthening Mexico’s industrial corridors and logistics networks.
These figures reveal a structural shift: pension funds are no longer passive savings managers, but nation-builders whose portfolios align with the country’s long-term strategic priorities.
Investment in Key Sectors: Energy, Infrastructure, and Nearshoring
The transformation of Mexico’s financial system is particularly evident in its sectoral allocations. Energy transition stands at the forefront. Through structured instruments, Afores have mobilized USD 17.5 billion into energy, representing over 90% of outstanding instruments in the sector. These investments support renewable generation, sustainable fuels, and grid modernization, aligning with Mexico’s commitments under the Paris Agreement.
Infrastructure has become another pillar. With nearly USD 40 billion invested, Afores are the single most important source of financing for roads, airports, and logistics platforms. Their long-term horizon and risk tolerance allow them to fund projects that require decades to mature, something few other investors in Mexico can achieve.
Nearshoring amplifies the relevance of these investments. As global supply chains relocate, demand for industrial real estate and logistics hubs in Mexico is rising. The regulatory changes that allow Afores to invest up to 12.5% of assets in FIBRAs enable them to directly capture this trend. By financing warehouses, manufacturing clusters, and e-commerce distribution centers, pension funds not only generate stable long-term returns but also anchor Mexico’s role as a sustainable manufacturing hub for North America.
The opportunity is enormous, but it requires policy stability, adequate infrastructure planning, and international partnerships to secure technology and capital. If Mexico succeeds, nearshoring could become the engine that consolidates its leadership in sustainable economic development.
ESG as a Fiduciary Duty and Competitive Advantage
ESG is not philanthropy — it is a fiduciary obligation. Mexican Afores exemplify this principle. Afore XXI Banorte, for instance, has directed 30% of its portfolio to sustainable projects, including renewable energy, healthcare, education, and agribusiness.
Beyond allocations, Afores are shaping corporate behavior. Engagement letters signed with 45 issuers have ensured the integration of ESG criteria into corporate strategies. Social initiatives funded through their portfolios have benefited millions of Mexicans, from renewable electricity generation to credit access for women entrepreneurs.
These practices reinforce a broader point: ESG is not a short-term trend but a source of resilience, differentiation, and competitiveness. For pension funds, it reduces exposure to reputational, market, and regulatory risks. For affiliates, it guarantees that their savings are invested responsibly. For the Mexican economy, it mobilizes capital into sectors that generate long-term growth, social equity, and climate resilience.
Proposals and Conclusions
- Strengthen regulatory ecosystems: Mexico’s Sustainable Taxonomy should become mandatory, interoperable with EU standards, and supported by monitoring mechanisms to guarantee compliance.
- Promote regional convergence: Latin America should harmonize taxonomies and reporting standards, reducing fragmentation and improving access to cross-border financing.
- Enhance investor confidence: Mandatory ESG disclosures, standardized metrics, and third-party verification can elevate the quality of information available to global investors.
- Leverage pension funds for transformation: By channeling capital toward infrastructure, renewable energy, and digital projects, Afores can accelerate regional development.
- Foster public-private partnerships: Nearshoring, electromobility, and renewable energy require collaboration between governments, businesses, and institutional investors.
- Position LATAM as a safe haven: By emphasizing regulatory stability, long-term returns, and credible ESG frameworks, the region can attract capital reallocated from less stable jurisdictions.
Mexico’s experience demonstrates that it is possible to reconcile financial growth with environmental stewardship and social inclusion. By scaling these lessons regionally, Latin America can turn sustainability from a niche ambition into a pragmatic driver of competitiveness and prosperity.
Mexico stands at a regulatory crossroads, with the potential to lead sustainable finance in LATAM. Despite global ESG setbacks, its proactive reforms and institutional leadership offer a model for resilience and innovation. To capitalize on this momentum, Mexico should operationalize its Sustainable Taxonomy, enhance regional cooperation, and continue expanding ESG investment frameworks. Pension funds must deepen their engagement strategies and promote transparency, while regulators should transition from voluntary to mandatory ESG standards.
Links to recommended readings or specific bibliography on the content of the panel.
Sustainable Taxonomy of Mexico – Ministry of Finance (2023)
Sustainable Taxonomy Overview – SHCP
Banco de México Pension Reform Impact Study (2021)
Impact Study on Pension Reform – Banxico
World Finance – Best Pension Fund Awards
World Finance Pension Fund Awards 2025
World Finance Pension Fund Awards 2024
Mexican Securities Market Law Reform (2024)
Ley del Mercado de Valores – Reformas 2024 (CNBV)
Informe Anual CNBV 2024
CONSAR – Quarterly Reports to Congress
LCONSAR: Informe Trimestral
Author
- Eva M. Gutierrez, Financial expert.
- Guillermo Zamarripa, President, International Federation of Pension Fund Administrators (FIAP).
- Sergio Aratangy, Head of the Financial Division, Superintendence of Pensions of Chile (Online).
- David Razú, General Director, AFORE XXI BANORTE (Online).
- Moderator: Caroline Berthod, Director of ESG Development, GovenArt.
Furthermore, this document is signed in a personal capacity and does not represent the official position of the institutions or entities to which the author may belong.
Oxford/25 Congress Final Report
Reaching Pragmatism in Sustainability
#Impact #Engagement #Megatrends #Data powered by AI
This comprehensive report defends that sustainability can no longer rest on labels or narratives alone. It must be anchored in credible transition plans, robust data, coherent regulation and real-world outcomes.. Dive into the findings and help shape a sustainable future.
