Is Mexico Ensuring the Intended Use of ESG Investments?
Financial Services Partner Guillero Uribe was featured in The Dialogue's Latin America Advisor discussing the use of sovereign sustainable bonds, also known as ESG bonds, in Mexico. The goal of these bonds is to advance environmental, social and/or corporate governance (ESG) purposes, but some have questioned whether Mexico has sufficient controls to guarantee that these investments go toward such initiatives. One particular concern is "greenwashing," in which vague goals of improving the planet are used to raise money more cheaply. Mr. Uribe addressed some of these concerns, saying that because Mexico lacks specific regulations for the issuance of ESG bonds, investors and market authorities must closely scrutinize issuers and be careful with what they support.
"Mexico lacks specific regulations for the issuance of ESG bonds...The absence of widely recognized criteria for issuing ESG bonds has made it very difficult to distinguish between true sustainable investments and 'greenwashing,'" he explained. "It is obvious that some issuers are taking advantage of the bonds to achieve better results in the rate, in the offering or to create a better reputation in the market and obtain short-term benefits. The investors and market associations should identify and provide support only to issuers who are willing to make a real difference. Market authorities must scrutinize the way issuers disclose the ESG information in connection with the use of proceeds and analyze the necessity of establishing a legal framework for it."