Special Report Developed for the project “Building a foundation fora sustainable and scalable low-carbon future in Mexico – from Green
Bonds to a Greener Ecosystem” under UK PACT Mexico

Financing low-carbon
transport in Mexico
February 2021
Mexico is a key player in reducing emissions in Latin America. The
aim of this briefing is to provide a guide to the opportunities in the
country to leverage green and sustainable bonds to finance lowcarbon transport. Globally, energy, buildings, and transportation
projects attracted the largest proportion of funding from green
bonds in 2020.1 Investment in adaptation and resilience of transport
infrastructure presents further opportunities for Mexico.
Introduction to the transport sector
The awareness related to climate change andenvironmental protection has been growing
in the last decades. The pressure is being
increasingly placed on governments, theprivate sector, and organizations worldwide
to prioritize decisions that reduce GHG
emissions and impacts on natural ecosystems.
The Paris Agreement is a landmark for the
globe to take ambitious efforts to keep the
global temperature rise below 1.5 degrees
Celsius. To achieve this goal, it is imperativethat there are globally- accepted definitionsof what is considered green or sustainable. In
the financial market, one beneficial outcomeof the growth of the green bond market isthat it has started this global conversation
around definitions and has helped investors
to identify projects aligned with mitigation
and resilience principles.
The imperative:
Almost 48% of the energy
consumed in Mexico
is used to move goods
and people, and the
combustion of gasoline
in transport makes this
sector the second source of greenhousegas emissions (GHG) in the country.2 It
is therefore urgent to reduce emissions
generated by transportation activities. Doingso can substantially improve air quality,
especially in urban centers, reduce pulmonary
diseases and deaths related to atmosphericpollution, and lower Mexico’s contribution to
global climate change.3 Action points in thisdirection must consider diversifying urban
mobility options, improving transportation

systems through the use of new technologies
for heavy and light-duty vehicles, and public
transportation fleets.
Mexico sees the transport sector as a
critical sector for a transition to a low carbon
economy, and, therefore, it has proposed
reducing black carbon emissions by 51%
by 2030, the only country to set a black
carbon commitment.4 In Mexico, 38% of
black carbon emissions, are derived from thetransport sector.5
The opportunity: To meet the imperative,
substantial investment will
be needed in low-carbon
transportation (LCT)
options. Green bonds
can help to increase thevisibility of LCT assets incapital markets and meetinvestors’ growing demand for transparency
in operations, subnational infrastructuredevelopment, and vehicular technologies
for carbon emissions reduction. A key
characteristic of the transport sector is thatthe investment costs for emission mitigation
can be compensated if the co-benefits of an
integrated transport system are considered.
Due to the percentage of greenhouse gases
emissions coming from transportation,action taken in the sector can have a big
impact on reducing overall emissions.
Moreover, a better transport system can help
to achieve climate goals since it takes moretime to switch people to drive somethingcleaner than establishing a well-functioning
transportation system which encourages
people to drive less. Mitigation actions suchas promoting efficient public transport, could

Financing low-carbon transport in Mexico Climate Bonds Initiative

be among those that contribute the most to
meeting climate goals.
Reducing emissions directly improves air
quality and respiratory health problems.
Studies have found a relationship between
poor air quality, chronic health problems andeven premature deaths.6
Mexico City is one of the most affected cities
in the country and the world, with sustained
high levels of pollution. Even at times of
low traffic during the COVID-19 pandemic,
the concentration of fine particles PM2.5
and PM10 remains high. This has put a highpercentage of the population at risk, and toa greater extent, informal workers with highexposure to polluted air or long travel times.7
Improvements to the transport sector offers
the potential to improve quality of life, reducethe burden on the health sector as well as
promote urban economies.8 Low carbon
transport systems also reduce household’s
dependency on private transport, saving themtime and income.9 Investments in the sector
provide an opportunity to stimulate job growth,
become safer and more socially inclusive.
Within cargo transit, there is a particular
opportunity to migrate towards more
efficient and cleaner units in the next coupleof decades given that there are over 980
thousand cargo vehicles in Mexico each withan average life span of 18 years, which need
to be renewed.10 Furthermore, the vehicle
fleet is expected to be expanded.
Size of the building green
bond market: Investments
in LCT have followed astable upward trend forthe last few years. In
the green bond market,
issuers have allocatedproceeds to fund the sector by employing
various green bond structures and initiating
a green securitization market. According to
CBI data, USD191bn has been allocated to
low-carbon transport projects and assets
globally as of December 2020.

1Sector overview
A competitive transport
and infrastructure
system is crucial for the
economic developmentof the country. However,transport is the largest
and the fastest-growing sector in Mexico
when it comes to energy consumption
and GHG emissions with around 90% ofemissions generated by road transportation.
The country’s vehicle fleet nearly tripled in
10 years between 1996 and 2006 increasingfrom 8 to 21 million vehicles. The numbers
have been boosted by a huge increase in
the importation of used cars from the US, afactor that has increased the average age ofthe vehicle fleet, which raised, in turn, hasraised concerns about low gas mileage andincreased GHG emissions.
In Mexico, 55.5% of products transported
are shipped in freight trucks, with which
the transport sector represents 3.34% of
GDP in Mexico, according to data reportedby the National Institute of Statistic andGeography (INEGI).11 The economic relevanceof the transport sector in the production anddistribution of merchandise is shown by its
monetary value. Promoting more efficientmeans of transportation such as railways,
highways, airports, and ports will substantiallydecrease both costs and emissions.
According to the National Institute of
Ecology and Climate Change (INECC)
in Mexico, emissions from the transport
sector directly account for 25.1% of thetotal national emissions, the largest of any
sector.12 The private sector will also play
an important role in reducing emissions,particularly those relating to the transport ofgoods and merchandise, of which 157Mt areemissions from the freight transport sector.13
There are solutions to reduce emissions
in the sector. In the short term, efficiency
improvements and regulations can help todrive immediate emissions reductions but
longer-term, efficiency improvements will not
be enough and a shift to a low carbon economy,
investment in new technology vehicles andpublic transport systems will be required.
In 2016, Mexico registered a 13% reduction
in fuel consumption from cars and lighttrucks in respect to 2011, thanks to adopting
filter-based, best-in-class transport
standards at the national level, according
to the International Council on Clean
Transportation.
The standardization of the environmental
norms and regulations for existing and new
vehicles was one of the government’s goals
for the transport sector established on the

The EURO standard
The Euro Standard regulates the acceptable limits for internal combustion gas emissions
for most petrol and diesel vehicle types sold in the European Union. There are sevennorms in total, where EURO VII will be the stringiest and will be followed by a phase-out
of fossil fuel vehicles.
Euro I
1992

Euro II
1996

Euro III
2000

Euro IV
2005

Euro V2009

Euro VI
2014

Euro VII
2025

This standard is continually evolving, as it aims at zero emissions to improve air quality,
prompting manufacturers to implement and adjust to new technologies that increasingly
clean vehicles’ exhaust gases.
NDCs. Other goals centered on promoting
multi-modal freight and passenger transportand modernizing the vehicle pool, while
reducing imports of used automobiles.
Increasing access to clean fuel, natural gas
vehicles, and ultra-low sulphur gasoline anddiesel options was another set of goals thathas been established.14
To meet these goals and to address carbon
emissions, the Ministry of the Environment
and Natural Resources (SEMARNAT) has
recently updated the norms for all new
on-road vehicles and engines to featureadvanced technologies for pollution control,
under U.S. and European standards. These
regulations mainly include restrictions forheavy-duty trucks and buses’ machinery to
be soot-free, which is essential for achieving
Mexico’s NDC pledge to reduce black carbon
emissions by 51% by 2030.15
Progress towards carbon emissions
reduction has also been made at amunicipality level, for example in Mexico
City, which established the Euro VI standard
for all new buses in the publicly-owned fleet,signaling to the market what technology it
wants to operate with.16 These are not thebest current practices worldwide but theregulation update in Mexico represents asignificant step forward in the sector’s public
policies, where the country has a lot of
potential for improvement.
However, improving the energy efficiency oftransport technologies and moving towards
cleaner fuels will not be enough and it isclear that Mexico must show much greater
ambition to achieve climate goals. For thisreason, the international classifications,
including the Climate Bonds Standard (seepage 5) do not regard gas as green fuel, andthere is a move around the world towards fullelectrification of transport systems. Thereis also still a lot of debate around biofuel’ssustainability, which is excluded, except formaritime transport, under the Climate Bonds
Standard (CBS), but can be considered forthe aviation industry.

Financing low-carbon transport in Mexico Climate Bonds Initiative

The SLOCAT (Partnership on Sustainable,
Low Carbon Transport) framework explores
the concepts of: (i) avoid, and (ii) shift, at thesame time as (iii) improve, which can allow
developing more comprehensive investment
plans for low carbon transportation.17
Utilizing land use planning efficiently can
avoid unnecessary travel and reduce travel
lengths. This is being achieved by cities andmunicipalities working on urban planning
projects. On the other hand, shifting towards
public transport, or sustainable transportmodes can complement the development
towards LCT, which is being achieved
through increasing lanes for urban public
transport. As a third consideration, improving
the quality of fuels, especially transitioning
towards non-fossil fuels will be necessary,such as is being demanded for Mexico City’s
buses’ technology. These three concepts are
already being considered under the Climate
Bonds Criteria and can be financed throughgreen bonds.
It is also essential to understand the impactof the automotive industry on the Mexican
economy. The automotive industry in Mexico
generates around 3.6% of the national GDP.
The assembly and manufacturing companies
have invested in Mexico due to its privileged
geographical location and its affordable andqualified labor force, which is characterized
by its competitive levels and quality.
However, local labor will require a newskillset given that electric vehicles will be thepriority for Mexico’s main trade partners.18
Worldwide, sales of hybrid and electric cars
have increased steadily. According to the
Mexican Association of the Automotive
Industry (AMIA), between January and July
2020, 12,408 new vehicles with environmental
technology were sold, representing 1.66% of
the total sales of light vehicles made duringthat period in Mexico, a percentage that,
although still low, continues to increase.19
The transition toward a circular economy will
also be an important environmental objective
to meet. Manufacturing largely accounts for2the total environmental impact generated
by vehicles, but an automobile is one of themost recycled consumer products. Everythingfrom aluminum and steel to tires and oil
can be recycled. Due to the need to makecurrent cars more efficient and renew thecirculating units, there is the scrap process
underway. Remanufacturing entails rebuilding
products to meet the original finished productspecifications using repaired, reused, and newfeatures. The shift to a circular economy entailsa challenge and represents a tremendous
opportunity to ensure efficiency through waste
reduction and to maintain the materials in theloop, making them greener.
Stimulus packages supporting the vehicle
fleet’s decarbonization as well as the European
Green Deal to support green economic
recovery are generating additional pressure
on the industry. Volkswagen, Ford, and BMW
Group are some of the manufacturers that are
beginning to work with automobiles’ assemblywith electrical technology in Mexico. But noneof the current production plans are ambitious
enough to be fully aligned with the goals of theParis Agreement.20

Low-carbon transport bonds
in Mexico
Large amounts ofinvestment for green andresilient transportation
infrastructure can befinanced by green or
sustainable bonds. We
have identified the following examples from
Climate Bonds public data sources.21
Mexico City’s local government has issued
two green bonds. The 2018 bond allocatedpart of its MXN1.1bn issuance to sustainablepublic transport projects. Their 2016 green
bond allocated 58% of its MXN1bn to its
transport sector projects, specifically to the
public transport system’s construction, theMetrobus line 5, the repair and maintenanceof the metro- Metrobus network, and therefinancing of the acquisition of light rail
units.22
Additionally, BANOBRAS, a developmentbank in Mexico offering financial solutions forinfrastructure development and public service
projects issued five sustainability bonds
until December 2020. Some of the proceeds
collected from these bonds have beenchanneled to affordable basic infrastructure,utility infrastructure, disaster recovery, andsustainable transportation.23
Green funds could finance new efficient lowcarbon transport systems. Although the green
and sustainable bond market in Mexico was
at USD3.07bn of issuance as of the end of
December 2020, it is growing. In September

Only 1.27% of green bondproceeds raised by Mexican
issuers go to low-carbon
transport.
Unallocated 0.41%
Waste
8.47%
Land Use
11.13%
Energy45.73%

Water
19.63%

Buildings
13.36%
Transport 1.27%
31 January 2021

2020, Mexico issued the first Sovereign
Sustainability Bond linked to the Sustainable
Development Goals (SDG) promoted by
the United Nations for EUR750m. The
country will use the proceeds for the publicfinancing of the budget aligned with the 2030
Agenda and the SDGs, according to the SDG
Sovereign Bond Framework.24

Low-carbon transport
opportunities in Mexico
Green and sustainablebonds can financeunderlying projects,
assets, or receivables
related to low-carbon
emissions, circular
economy or resilient
infrastructure.
The opportunities to invest in low-carbon
transport in Mexico are numerous, as thecountry possesses a huge potential in termsof skills base and technological ability tomake improvements in energy efficiency
and climate-smart measures. The following
section briefly describes some of the most
iconic projects being developed.
The “New bus corridor for electric buseson Eje 8 Sur in Mexico City” project aims
to be the first Mexico City’s Zero Emissions
Corridor. The construction will be divided
into two phases, where a cost of USD115m
is estimated for Phase 1 and USD90m for
Phase 2. More than 50 electric buses will bedelivered to operate along the 22km corridor,
where 185,000 daily trips are expected,
thus reducing cumulative GHG emissions by
875,809t.25

Financing low-carbon transport in Mexico Climate Bonds Initiative

Mexico City has already delivered the firstten fully electric buses for Line 3 of theMetrobus, with nine additional buses
to be provided in the following months.
Each unit’s cost is about USD750,000,
reducing the operating costs by 30%
compared to diesel-fueled buses.26 The plan
is to enlarge the zero-emissions fleet in thenext years upon evaluating the acquired
electric buses’ performance.27
Another project is The Jalisco Line 3of the Guadalajara Light Rail, an electric
system that cost MXN32bn (approximately
USD1.5bn) and expanded the networktransport system by 86% to cover 233,000
trips daily. The federal government financed
it fully, and it has been the most significant
investment ever in Jalisco for low-carbon
transportation.28
The Mexico-Toluca Train is anotherfederal government initiative project underconstruction that has been identified
as LCT.29 With the capacity of 230,000
trips per day, the project will integrate
into other public transportation systems,
including Mexico City’s Subway Network.
It will also connect to Toluca’s Airport. The
Mexico-Toluca Train will provide seven newstations, across six different municipalities,
and reduce 90 minutes of commute time
between Zinacantepec and Observatorio.
The system will be supplied with electricand automatic trains, aerodynamic design,
and regenerative brakes that minimize
energy consumption. The total investment isapproximately MXN90bn (USD4bn). Morethan 27,000 tons of pollutants are expected
to be avoided, considering that 13,000
vehicles won’t be used on a daily basis.30
The Mexican multinational company Bimbo
currently has 400 electric vehicles. It will
invest around USD146m dollars through its
subsidiary company Moldex to manufacture
a total of 4,000 units in the next four years
to expand its electrified delivery fleet. Partof this production may be sold to othercompanies that have similar requirements.
The energy that feeds them is generated by
Piedra Larga’s Group wind farm in Oaxaca,
backed by rows of solar panels and windturbines, which provides the necessarystorage for hours in the absence of sun
and wind. The company is also working
towards energy efficiency and clean energy
consumption to meet their goal, set for
2025, of becoming 100% renewable. Whenit comes to electric trucks, Bimbo is not
the only company taking the initiative to
become builders and buyers of their vehicles.
Companies such as UPS and Amazon in the
U.S., Deutsche Post in Germany are also
gradually introducing these vehicles into
their companies’ fleet.31
3

The first conversation about the transport sector in Mexico
In September 2020, the Instituto
Tecnológico Autónomo de México (ITAM)
and the Climate Bonds Initiative, with thesupport of the UK PACT programme of the
British Government, hosted a RoundTable
discussion on green and sustainabletransport in Mexico.32
Experts highlighted the need for thetransport sector’s standards to achieve
the country’s goals to decrease GHG
emissions, pollution in the main cities andattract higher and cheaper capital flows.
The sector’s sustainability was also
primarily discussed; for instance,
new public transportation projects shouldbe electric and carbon-free. However,high acquisition prices are always themain argument against this solution.
Having an operation cost efficiency andother cost-benefit analysis could changethese views.

Endnotes
1. Climate Bonds Initiative figures
2. Movilidad urbana sustentable and ITDP, Hacia una estrategia
nacional integral de movilidad urbana
3. Project Hub (Proyectos México 2020), Banobras. Retrieved from:https://www.proyectosmexico.gob.mx/en/projects-hub/
4. INECC 2017. Retrieved from: https://www.gob.mx/inecc/
acciones-y-programas/inventario-nacional-de-emisiones-degases-y-compuestos-de-efecto-invernadero
5. Mexico Gobierno de la República, Compromisos de Mitigación yAdaptación ante el Cambio Climático para el periodo 2020-2030.
Retrieved at https://www.gob.mx/cms/uploads/attachment/
file/162974/2015_indc_esp.pdf
6. CHAY, Kenneth Y.; GREENSTONE, Michael. The impact of air
pollution on infant mortality: evidence from geographic variationin pollution shocks induced by a recession. The quarterly journal of
economics, 2003, vol. 118, no 3, p. 1121-1167.
7. López-Feldman, Alejandro, et al. COVID-19: impactos en el medio
ambiente y en el cumplimiento de los ODS en América Latina.
Revista Desarrollo y Sociedad, 2020, no 86, p. 104-132. Retrieved
from https://doi.org/10.13043/DYS.86.4
8. WRI, Low-carbon Urban Transport Boosts Social and Economic
Development. Retrieved from: https://www.wri.org/blog/2014/12/
low-carbon-urban-transport-boosts-social-and-economicdevelopment
9. LEDS Global Partnership (Low Emissions Development Strategy),
Save money and time, May 2016. Retrieved from: https://ledsgp.
org/wp-content/uploads/2016/05/LEDS-GP-Save-Time_final.pdf
10. Agenda Económica del Autotransporte de Carga, CANACAR
2019
11. CANACAR, Boletín económico del autotransporte de carga,
2020, https://canacar.com.mx/app/uploads/2020/03/BoletinEconomico-00.pdf
12. INECC 2017. Retrieved from: https://www.gob.mx/inecc/
acciones-y-programas/inventario-nacional-de-emisiones-degases-y-compuestos-de-efecto-invernadero

As one of the solutions, the experts
explained that Mexico needs to evaluate theefficiency of transporting certain goods andsimultaneously switch to electromobility.
This perception comes from experts who
affirm that Mexico could allocate investment
towards electric vehicles in accordancewith global trends instead of adapting more
efficient engines in a fleet of old units.
It was also brought up that improving aspects
such as energy efficiency, operations, andmaintenance (also referred to as telematics)
are as important as new technologies.
Finance for greener transport should focus onbuilding capacities for vehicles’ correct use,
reducing emissions, especially for small andmedium companies, instead of inefficient andunnecessary freight trips.

Defining green public transport is vitalfor the sustainable mobility of all people.
This is particularly important whenplanning green smart cities as transport
is an important component of the urban
system. All experts agreed that it isnecessary to create financial incentives
and match the capital flows with theinvestment needs, ideally, during the earlystage of the projects.

There must be improvements in engines
and renovations in clean technology, but
energy efficiency changes are also essential.

13. CESPEDES and WWF, 8%+ Sector privado y crecimiento bajo
en carbono en México, http://awsassets.panda.org/downloads/
informe_8pc_wwf_cespedes_final.pdf
14. Mexico’s Intended Nationally Determined Contributions,
https://www.gob.mx/cms/uploads/attachment/file/162973/2015_
indc_ing.pdf
15. The International Council on Clean Transportation, 2018.
Retrieved from: https://theicct.org/publications/mexico-heavyduty-vehicle-emission-standards
16. Revista Transportes y Turismo, Llegan los primeros buses Euro
6 a la flota RTP, 2019, https://www.tyt.com.mx/nota/llegan-losprimeros-buses-euro-6-a-la-flota-de-rtp
17. SLOCAT Partnership, http:/www.slocat.net
18. Agenda Económica del Autotransporte de Carga, CANACAR
2019 https://canacar.com.mx/app/uploads/2019/08/Agenda_
Economica_2019.pdf
19. Deloitte, Autos eléctricos meten el acelerador, https://www2.
deloitte.com/mx/es/pages/dnoticias/articles/crecimiento-deautos-electricos-en-mexico.html
20. T21, PREOCUPA A INDUSTRIA AUTOMOTRIZ EN MÉXICO LA
IMPORTACIÓN DE VEHÍCULOS ELÉCTRICOS, http://t21.com.mx/
automotriz/2020/09/07/preocupa-industria-automotriz-mexicoimportacion-vehiculos-electricos
21. Climate Bonds Initiative Bond Library https://www.
climatebonds.net/bond-library
22. Mexico City’s Government, Climate Change Financing,
http://www.data.sedema.cdmx.gob.mx/cambioclimaticocdmx/
climatechange/bonos-verdes.html
23. El Economista, Banobras regresa al mercado de deuda, https://www.eleconomista.com.mx/mercados/Banobras-regresa-almercado-de-deuda-20201122-0042.html
24. SDG Sovereign Bond Framework, https://www.finanzaspublicas.
hacienda.gob.mx/work/models/Finanzas_Publicas/docs/ori/
Espanol/SDG/UNDPs_Opinion_on_Mexicos_SDG_Sovereign_
Bond-February_2020.pdf

Financing low-carbon transport in Mexico Climate Bonds Initiative

25. C40, 2017. Retrieved from: https://www.c40cff.org/mexicocity-eje-8
26. Mexico News Daily 2020. Retrieved from: https://
mexiconewsdaily.com/news/mexico-city-takes-delivery-of-first-of10-fully-electric-buses/
27. Forbes, 2020. Retrieved from: https://www.forbes.com.mx/admovilidad-tecnologia-primer-metrobus-electrico-cdmx/
28. Government of Mexico, 2020. Retrieved from: https://www.
gob.mx/sct/articulos/linea-3-del-tren-ligero-de-guadalajara-entraen-operacion?idiom=es
29. El Economista, 2020. https://www.eleconomista.com.mx/
estados/CDMX-retomara-construccion-del-Tren-InterurbanoMexico-Toluca-20200810-0118.html
30. Government of Mexico, 2020. Retrieved from: https://www.
gob.mx/sct/prensa/el-tren-interurbano-mexico-toluca-proyectode-vanguardia-subsecretario-de-transportes-carlos-moranmoguel?idiom=es
31. Forbes Mexico, Bimbo invierte 2,800 mdp para crecer su flota
de vehículos eléctricos, https://www.forbes.com.mx/bimboinvierte-2800-mdp-para-crecer-su-flota-de-vehiculos-electricos/
32. UK PACT (Partnering for Accelerated Climate Transitions)- Mexico. Retrieved from: https://www.ukpact.co.uk/countryprogramme/mexico.

4

Low-carbon
transport
certifications
accepted by the
Climate Bonds
Standard

Within the Climate Bonds Standard andassociated Sector Criteria, low-carbon
transport definitions are divided bysubsectors for eligible projects and assetsaligned with the Paris Agreement 2-degree
limit. Please see below the diagram andtransport criteria eligible for certification
under the Climate Bonds Standard.
CBI has more information about theTransport Criteria and the various
subcategories available for certification on
the Climate Bonds website.

Transport core eligibility
TRANSPORT MODESYes

INFRASTRUCTURE

Is the mode of transport electric, hydrogen orother zero-direct emissions?

Is the project supporting infrastructure forzero-direct emissions transport modes (orprojects that would meet the criteria?

No
Yes

If it is not zero-direct emissions, do the operationalemissions fall below the following thresholds?
No
We are looking to see if the operational emissions
associated with the transport mode broadly
complies with either of these thresholds:

No

For example, manufacture of electric vehicle
components are considered green if they are
exclusively destined for zero-direct emissions
vehicles. All infrastructure upgrades, fueling andrefueling, rolling stock and vehicles soley for suchtransport are included as green.

(a) <50g passenger-km (for passenger transport)(b)<25g tonne-km (for freight transport)

If the project is for public walking or cycling
infrastructure, this is automatically green.

If the mode of transport is freight rail AND/OR new interurbanrail, continue the flow. Any other mode is certified.

If freight rail, is less than 25% of the total freight
being transported comprising fossil fuels?

If the project is just a retrofit for public
transport infrastructure, this is considered
automatically green.

No

Yes

CertifiedIf new interurban rail, will the project result in atleast a 25% reduction in emissions in the travel
corridor?

No

An independent project appraisal must
demonstrate this reduction.
Yes
Certified

If the project is dedicated to the recharging
and refuelling of zero emissions vehicles, thisis considered automatically green.

Not Certified

Financing low-carbon transport in Mexico Climate Bonds Initiative

Certain infrastructure types are eligible on acase-by-case basis, including smart freight logistics,
intermodal freight facilities and ICT that improves
system efficiency
Automatically excluded projects include: Biofuels,
Fossil fuel transport by road, Road freight that is
not zero-direct emissions, Parking, New roads.

5How to issue a green bond/loan
Who can issue green bonds?
Any entity which has suitable green assets can issue green bonds and/or obtain green
loans. Suitable green assets include renewable energy, low carbon transport, low carbon
buildings, sustainable water, agriculture, shipping, waste management, sustainable land
use as well as climate change adaptation measures such as flood defences.

1 Develop a green bond framework• Define eligibility criteria for projects/assets• Create selection process• Set up tracking & reporting

Available guidelines & standards:
International: EU Taxonomy, Green Bond Principles(GBP), Green Loan Principles, Climate Bonds Taxonomy
and Climate Bonds Standard
Country-specific: Brazil, Chile, Mexico, Dominican Republic, Panama,
Colombia, Ecuador, Paraguay (SDG), Argentina, Peru, and Costa Rica

Best practice:

2 Arrange an external
review

Assurance report: an external party
confirmation of compliance with GBP/GLP
Second Party Opinion: an external assessment of
the issuer’s green bond framework, confirming GBP
compliance and analysing the eligible asset categories
Green rating: an evaluation of the green bond andframework against a third-party rating methodology,
which considers the environmental aspects of theinvestments. In LAC, these mainly include products
developed by international rating agencies such as
S&P and Moody’s.
Verification report for Certified Climate Bond:
third party verification, pre- and post-issuance,
which confirms that the use of proceeds adheresto the Climate Bonds Standard and Sector Criteria
and the Paris agreement to keep global warming to
2˚C and achieve full decarbonisation by 2050

3 Check for support mechanisms:$

In some LAC countries, it is mainly stock exchanges thatprovide some support services for green bond issuers.
Although financial support is rare (only Costa Rica’s BNV
seems to offer reduced fees for green bonds issuers, as well as helping themin organising roadshows), it is worth checking this locally, especially sincegreen finance policy is changing rapidly. Other local organisations, such as
Brazil’s CEBDS and Mexico’s CCFV also be able to provide support.

4 Issue the bond / loan
5 Post-issuance reporting
Report annually to confirm that the funds are allocated togreen projects / assets
Best practice: Disclose environmental impacts of financed projects inabsolute terms and relative to an appropriate benchmark

Climate Bonds Initiative © February 2021
www.climatebonds.net
Design: Godfrey Design

CBI prepared the report with the support of
the UK PACT.
A special thank you to the World Resources
Institute (WRI Mexico), and to the Consejo
Consultivo de Finanzas Verdes (CCFV)

Disclaimer: The information contained in this communication does not constitute investment advice in any form and the Climate Bonds Initiative is not an investment adviser. Any reference to a financialorganisation or debt instrument or investment product is for information purposes only. Links to external websites are for information purposes only. The Climate Bonds Initiative accepts no responsibility forcontent on external websites. The Climate Bonds Initiative is not endorsing, recommending or advising on the financial merits or otherwise of any debt instrument or investment product and no information within
this communication should be taken as such, nor should any information in this communication be relied upon in making any investment decision. Certification under the Climate Bond Standard only reflects
the climate attributes of the use of proceeds of a designated debt instrument. It does not reflect the credit worthiness of the designated debt instrument, nor its compliance with national or international laws.
A decision to invest in anything is solely yours. The Climate Bonds Initiative accepts no liability of any kind, for any investment an individual or organisation makes, nor for any investment made by third parties
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Financing low-carbon transport in Mexico Climate Bonds Initiative

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