ESG bond issuances grew 11% in 2022: HR Rating

Next year the Ministry of Finance and Public Credit will launch a taxonomy of what is sustainable and not, aligned with the principles of sustainable development of the UN; A guide to generate greater transparency in the market.

The amount of thematic bond issues or under the environmental, social and governance (ESG) approach registers an increase of 11% in these first 10 months of 2022, compared to everything registered in 2021, said the director of HR Sustainable Impact at HR Rating, Luisa Adame.

However, the number of placements is still below what was reported all last year, as 32 offers are reached against the 41 observed in the indicated period.

During this year, 56% of all the amount raised with the placement of labeled bonds in Mexico has been by corporations; followed by development banking (21.1%), government (17.9%), multilateral banking (4%) and commercial banking (1.3%).

“We are seeing significant growth in the issuance of labeled bonds from 2021. The placement of labeled bonds in 2019 was five, in 2020 they increased to 13 and in 2021 they increased to 41,” said Luisa Adame.

Giving the conference “In an ESG world, Where is Mexico and the Mexican market?”, within the framework of the 15th anniversary of the rating agency HR Rating, Luisa Adame stressed that given the growth that this market, also called sustainable finance, has had, it is to achieve greater transparency while standardizing the concepts and methodologies to make emissions.

He mentioned that the Ministry of Finance and Public Credit (SHCP) will launch next year a taxonomy (or definition of what is sustainable and not), aligned with the principles of sustainable development of the United Nations (UN), a guide to generate greater transparency in the market.

Luisa Adame recalled that this thematic bond market began in 2015 in Mexico, so in that year and in 2016 only green bonds were issued, whose resources were channeled 100% to finance projects with environmental benefits.

Subsequently, social and sustainable bonds began to be issued. From 2021, bonds linked to sustainability began to be issued (with which companies commit to meet certain goals related to ESG actions).

“Bonds linked to sustainability represent a great opportunity for companies and entities that do not have a project that has a specific environmental or social impact, since they can use the resources raised to improve their operation and commit to a sustainable goal,” he said.

However, Luisa Adame stressed that real estate investment trusts (fibras) are the ones that have made the most progress in implementing clear ESG strategies. In 2019, 36% of fibers transparently communicated their actions, this percentage increased to 70% in 2020.

Source: The Economist