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The 3,600 houses that the real estate developer Vinte built in 2023 saved the water equivalent to about 62 Olympic swimming pools, the energy that an electric car would consume over 27,500 kilometers, and avoided emitting the carbon that 114,400 trees can absorb.
Since 2012, Vinte has managed the EDGE certification, which endorses constructions that generate savings in energy, water and materials.
With it, the company began to introduce innovations in its homes to care for the environment and thus access international financial credits.
With this background, in 2018 Vinte made its first issuance of thematic bonds - those in which investors have the guarantee that their resources are destined to finance projects that solve or mitigate a social problem -, multiplying its available resources to add more technology. sustainable and make the savings from their homes perceptible to their clients.
With that first bond, Vinte raised 800 million pesos (almost 48 million dollars).
“We began to add greater added value and sustainability so that the client saw that sustainable technologies represented savings and decided to buy.
More values for the same price,” explains Sergio Leal, president of the developer's board of directors.
What began 14 years ago for Vinte as an innovation is today a requirement for companies that wish to finance themselves through the issuance of thematic bonds in the stock market.
The bonds were created when the UN General Assembly adopted the 2030 Agenda, and with it an action plan for sustainable development based on 17 goals (SDGs) on economic, social and environmental issues for member countries.
Between 2018 and 2023, Vinte issued five sustainable bonds.
This is also an advantage over its competition, since of the 800 developers in Mexico, only five are listed on the stock market, a condition to be able to issue shares or debt of any type (bonds).
Thematic or labeled bonds, like any bond, are a stock market instrument issued by companies to obtain loans from investors, in exchange for returning the borrowed amount with interest.
The difference with traditional bonds is that in thematic bonds the company undertakes to use the resources of the issue to finance projects that benefit the environment (green bonds), to mitigate a social problem (social bonds) or to finance both topics at the same time. time (sustainable bonds).
When the market uncovered
Although they were created in 2015, the greatest growth in thematic bonds in Mexico has been during the last two years.
“Mexico's sustainable bond market has experienced year-on-year growth of 11% between 2021 and 2022,” says the
Climate Bonds Initiative
report prepared with the support of the Inter-American Development Bank (IDB).
In 2023, growth continued.
“Mexico is already a leader in the issuance of thematic bonds in Latin America.
This shows the appetite of not only national but also international investors,” says María Ariza, general director of the Institutional Stock Exchange (BIVA).
According to information from BIVA, last year 52 placements were made in Mexico by 26 issuers from both BIVA and the Mexican Stock Exchange (BMV).
The greatest growth in the number of stations occurred in 2021 when the eight stations increased to 23.
The issuances of these bonds through BIVA increased 36% in 2023 compared to a year before.
The placement through the BMV set a “historical record” and exceeded what was placed in 2022 by 48%, according to information from the institution.
But for this growth to be uncovered, some important events had to happen.
In May 2017, investors in Mexico, such as pension funds, insurance companies and multilateral organizations, signed a commitment that expressed their support for investing in projects that contribute to solving climate change.
The Green Bond Declaration, as it was called, was signed by 57 organizations at the time.
A year later, the National Commission of the Retirement Savings System (Consar), the authority that regulates savings funds for workers' pensions in Mexico (Afores), published a circular requiring them to consider in their strategies of investment the incorporation of environmental, social and corporate governance principles, no later than 2022. “Once the Afores receive the mandate from Consar to invest in this type of bonds, an important change is generated in the issuance in Mexico,” says Ariza.
In Latin America, the largest issuers of green, social, and sustainable bonds in the region are Brazil, Chile and Mexico.
There, the participation of international development banks has also contributed to the formation of this market.
The IDB, through IDB Invest—its branch for the private sector—has structured around 40 thematic bonds in 11 countries in Latin America and the Caribbean.
“Our job is to identify clients that can enter the capital market and identify if they have underlying assets to be financed, green, sustainable or social and new assets that can be originated;
“We support the client in the issuance, subscription and anchoring the issue with the IDB seal,” says Fabio Fagundes, head of the Financial Products and Services Division at IDB Invest.
In addition, the issuing company must report annually, during the life of the bond, how it uses the resources obtained from investors, the projects financed, the environmental or social results or benefits, or both.
Bet on transparency
There are certain international requirements and regulations that companies or governments must comply with to issue thematic bonds with the idea of protecting the interests of investors and guaranteeing that the projects to be financed meet their environmental, social or sustainable objectives.
In addition to the requirements that any issuer must meet when participating in the securities market, such as audited information and credit rating, a second opinion and sustainability reports are required for the issuance of thematic bonds.
The second opinion consists of an external, independent and credentialed person verifying that the bond has the objectives, strategies and processes that ensure the proper use of resources.
In addition, the issuing company must report annually, during the life of the bond, how it uses the resources obtained from investors, the projects financed, the environmental or social results or benefits, or both.
For example, Vinte began creating reports for its clients since 2012, before issuing thematic bonds.
“We told them what the (EDGE) certification gave them in terms of water, gas or electricity savings,” says Leal.
Even if the requirements are met, there is a risk that stations may fall into
greenwashing
.
“That they say they are going to do something and use the resources on other things, or spend more than what they are generating.
It is an issue that we must avoid,” says Ariza, from BIVA.
However, he also comments that investors are increasingly careful in reviewing and monitoring the projects in which they invest.
To continue improving transparency, there are challenges for companies, such as investing in systematizing their portfolio of projects to be financed to ensure that they meet the requirements to be green or social.
“There is really a need for investment in these internal systems to be transparent,” says Fabio Fagundes, of IDB Invest.
For Leal, from Vinte, the biggest challenge with thematic bonds is for companies to qualify to enter the stock market.
“It is to encourage companies to get into the Mexican stock market and then issue green bonds,” she says.
In the case of developers in Mexico, he adds, it is more feasible for banks to become consolidators and issue green bonds and then lend to companies.