Mexico Deploys $7B in SDG Bonds with Enhanced Sustainable Taxonomy Alignment

Mexico’s Finance Ministry (SHCP) has published its 2025 Allocation and Impact Report detailing the deployment of US$7.09 billion in Sustainable Development Goals (SDG) Sovereign Bonds. The report expands eligible spending categories and for the first time includes an assessment aligned with Mexico’s new Sustainable Taxonomy. SHCP highlights its focus on financing projects that reduce social and environmental gaps while enhancing investor confidence through transparent impact reporting. The report covers 42 expenditure categories across social and green initiatives supported by past issuances totaling US$7 billion. These projects span clean energy, water management, sustainable urban development, education, gender equality, and social inclusion. SHCP strengthened its position in global sustainable debt markets in 2024 via major international issuances in yen and euros, alongside growing the local-currency sustainable yield curve. Currency allocation of SDG bonds stands at 55% local currency, 30% euros, and 15% yen. In 2024, SHCP allocated US$5.4 billion to states and municipalities with high social marginalization, supporting 29 social and 13 green expenditures. Investment in education reached US$2.134 billion, funding scholarships, school infrastructure, and Indigenous student programs. Water projects received US$1.248 billion to improve access and infrastructure for over 35 million people. Health initiatives were supported with US$1.174 billion targeting family planning, antiretroviral therapy, and preventive care programs. Energy efficiency projects were funded with US$15 million, contributing to 6.519 GWh of avoided power generation, with renewables maintaining a 20.44% share of national consumption. Transportation and environmental conservation also saw significant investments. Agricultural producers, forestry subsidies, and nutrition programs for Indigenous children received targeted support. SHCP renewed a US$24 billion Flexible Credit Line with the IMF as a precautionary measure to reinforce financial stability amid constrained economic activity influenced by fiscal consolidation, tight monetary policy, and global trade tensions. For the first time, the report aligns expenditures with the Mexican Sustainable Taxonomy, revealing that 67.6% of spending is not aligned, 8.1% eligible, 22.5% partially aligned, and 1.8% fully aligned. This transparency initiative follows international disclosure standards including the ICMA principles, with the UN Development Programme providing nonbinding credibility review. These developments indicate Mexico’s advancement in sustainable finance transparency, aligning fiscal policy with global sustainability frameworks and enhancing confidence in its sovereign green and social bonds market.