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Mexico’s SDG Bond Framework: a two-fold eligibility and unique governance

- 3-minute read -


The Federal Government of Mexico released on February 21 its “SDG Sovereign Bond Framework”. It has mandated BNP Paribas, Credit Agricole CIB and Natixis (who acted as Sole SDG Sovereign Structuring Advisor) to arrange an investor roadshow in Europe[1].
This Framework displays unique features: the use of the SDGs as entry point, a two-fold eligibility that includes geospatial criterion and an enhanced governance that involves an international organization (the UNDP) at various phases.


Genesis of this Framework: Mexico’s federal budget mapping against the SDGs 

In 2015, all the countries in the world agreed on the “2030 Agenda for Sustainable Development”. Starting from then, Mexico kicked-off efforts to develop SDG budget tagging tools, mapping the federal budget against the SDGs in a granular fashion, a task that was implemented in the 2019 federal budget. Mexico also developed an SDG National Platform[2], an open source tool fed with data monitored by the National Institute of Statistics and Geography to enable an accountable monitoring & effective delivery of the SDGs.

In 2019, the Mexican government appointed Natixis to assist with the design of its SDG Sovereign Bond Framework. It is the first time that SDGs are used as entry point for eligibility criteria in a Framework and not as an afterthought exercise (ex post mapping). 


Two-fold Eligibility: localized finance to leave no one behind

This Framework combines program eligibility[3] and geospatial eligibility for social related expenditures. Geospatial or territorial eligibility enable the prioritization of vulnerable populations living in landlocked and disadvantaged areas. It does not apply to Green &/or Environmental expenditures as they are designed to benefit society at large.

The 2030 Agenda is global, but its gaps are spatial and local. Public policies and incidentally Social or Sustainability Bonds Frameworks are often designed on national averages. By contrast, this Framework specifically targets the bottom range of territories and populations in Mexico, particularly those living in the South of the country. The geospatial eligibility is based on very granular open data collected through the Census of Population and Housing and analyzed by the National Council for Evaluation of Social Development. To factor regional disparities, a list of 1,345 municipalities (totaling roughly 22m of inhabitants out of national population of circa 120m) has been defined. The Proceeds raised through future Mexico’s SDG Bonds issuances will finance projects located in these 1,345 cities selected because of their illiteracy and school attendance rates, level of health services deprivation, lack of toilets, drainage or piped water in houses, absence of electricity access or basic equipment such as fridges. Such “SDG localized Finance” guarantees that only budgetary programs targeting the most disadvantaged areas and vulnerable populations are eligible (indigenous, elderly and children).


A unique governance with the involvement of a UN entity

Vigeo Eiris provided a Second Party Opinion on the Framework and granted its highest level of assurance.  It considered the Framework is aligned with the four core components of the Green Bond Principles 2018, the Social Bond Principles 2018 and Sustainability Bond Guidelines. The main governance innovation lies in the involvement of the United Nations Development Programme (“UNDP”) who previously accompanied the Mexican government in its SDG budget mapping analysis. UNDP’s role in this SDG Framework is multi-faceted. It provided an opinion on the Framework’s eligibility criteria and envisioned reporting indicators[4]. UNDP states in its Opinion that: “The issuance of Mexico’s SDG Sovereign Bond represents an important step towards creating a market for SDG investments. This first of its kind, this bond has the potential to open the way for other Governments to tap into the private capital market to finance public SDG-related programs. It also establishes a benchmark to guide the development of private sector bonds”. Furthermore, UNDP says it has the potential “to advance Mexico’s commitment towards the SDGs” by “strengthening budget transparency and increasing the amount of resources earmarked towards sustainable social development policies”. Meanwhile, the UNDP will also act as an observer to the budgetary selection process to establish the eligible expenditures. Lastly, it will provide technical assistance to Mexico in the preparation of the impact report and a non-binding public opinion and recommendations on it.


Natixis’ role and SDG Methodology

This Framework is inspired by the in-house methodology developed by Natixis Green & Sustainable Hub on the UN 2030 Agenda and the SDGs. This methodology is presented in a Report published in 2018 “Solving the Sustainable Development Goals Rubik’s Cube – an impact-based toolkit for issuers and investors”. This methodology lies in 5 principles: i) geographic contextualization (because SDG finance cannot be rootless but only localized to take into account national and sub-national SDG achievement gaps), ii) prioritization between the SDGs (on the basis of needs acuteness & materiality), iii) segmentation of the stakeholders & beneficiaries (priority given to vulnerable populations), iv) attention to positive and negative interlinkages between the SDGs ; v) impact attribution (to evidence contribution to SDG progress). This in-house methodology has already been applied by Natixis but not as entirely and comprehensively as with Mexico. It was used for instance when co-structuring the “Sustainability Framework” of the Caisse des dépôts et consignations[5] (with a geospatial criterion for the deployment of optical fibre and the reduction of medical deserts[6]). Proceeds from CDC’s inaugural issuance in June 2019 (Size €500m, Maturity: 5 years) are earmarked to projects contributing to the achievement of the SDGs in France. Apart from fixed-income products, this SDG Methodology also fed the development of the Equity Index “Water & Ocean” developed in partnership with Euronext, which is composed of selection companies that decisively contribute to the SDG 6 “clean water and sanitation” and the SDG 14 “life below water”.

Mexico’s approach can be duplicated but it requires a strong bedrock in terms of institutional capacities, budget mapping against the SDGs and granular data at sub-national level. Natixis Green & Sustainable Hub is currently developing structuring guidance on new SDG Bond formats, especially for national governments, regions or municipalities, including SDG-linked Bonds.

Geospatial eligibility criterion: Mexico's Social Gap Index


[1] Investor roadshow from February 24th to Monday March 2nd

[2] Site available here: It provides disaggregated and georeferenced data at the national, state and municipal levels, as well as data visualization tools

[3] For instance, eligible expenditures include training to small farmers, educational scholarships, hospitals and medical equipment, Prevention and care of Sexual Transmitted Infections public programs, Technical training to young unemployed people, Rehabilitation of public water treatment plants

[4] UNDP concluded that “The United Nations Development Programme is of the view that this framework is aligned with the principles and objectives of the Sustainable Development Goals”.

[5] Caisse des Dépôts et consignations. Framework (May 2019) “Green, Social and Sustainability Bonds”. Available here:

[6] Construction/renovation/extension of multi-disciplinary health centers in territories where the population is more than 20min away from at least one local health service (according to INSEE’s data).