Mexico's Sustainable Taxonomy (the "Taxonomy"), a classification tool created through a broad, participatory, and coordinated three-year process to identify and define activities with positive effects on the environment and society, following technical criteria and international standards was presented on March 16, 2023 by Gabriel Yorio, assistant secretary of the Ministry of Finance and Public Credit “Secretaría de Hacienda y Crédito Público” (“SHCP”) within the framework of the 2023 Banking Convention.

The promotion of investment in economic activities that contribute to closing socio-economic gaps and protect the environment is the purpose of the Taxonomy. The SHCP worked on it with the assistance of over 200 technical experts from public, private, financial, academic, and civil society institutions, as well as international organizations, ensuring the technical soundness and relevance of this tool to address sustainable development challenges in Mexico.

The Taxonomy is a globally unique tool, as it incorporates environmental and social dimensions in its core design, allowing a comprehensive approach to sustainability as it promotes the integral well-being of individuals and the environment, with 124 activities (to mitigate and adapt to climate change) distributed in six economic sectors: (a) agriculture, livestock breeding, forestry, and logging; (b) generation, transmission, distribution, and commercialization of electric power and supply of water to the final consumer; (c) construction; (d) manufacturing industries; (e) transportation; and (f) waste management and remediation services.

To align such economic activities, the following aspects must be met: a) eligible activities must be included in the Taxonomy, b) such activities must be classified under various metrics and thresholds, c) Non-Significant Harm (“NSH”) criteria must be met, and d) maintain minimum safeguards.

The Taxonomy also establishes cross-guidelines to identify activities to ensure compliance with gender equality.

The Taxonomy is the beginning to disseminate and implement activities to contribute the development of a sustainable financial market, resulting in: (a) promoting actions to train authorities and entities in the financial sector, (b) developing corresponding regulation, and (c) preventing the attribution of environmental or social benefits lacking foundations, better known as 'greenwashing'.

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