The Mexican financial sector, in partnership with the Mexican-German Climate Change Alliance, is working on the development of a monitoring system to identify the financial flows for climate change mitigation and adaptation actions in Mexico.

Banking institutions of the Association of Banks of Mexico (ABM), in collaboration with the Mexican-German Climate Change Alliance implemented by GIZ, are going to work on the development of a measurement, reporting and verification (MRV) system of climate finance flows, which will position the Mexican financial sector at the forefront of climate finance issues.

The MRV system requires to identify and define elements to develop the system in a first step. It will track financial allocations to climate change actions in the banking sector. The final product is supposed to be a reference framework which will be used by the 50 banks currently operating in Mexico.

The system will offer several opportunities for the Mexican banking sector. For instance, it will simplify the reporting of financial flows allocated for mitigation and adaptation actions. Among other aspects, the system will report the characteristics of the contributors to mitigation and adaptation actions. It will also track the progress towards achieving the Sustainable Development Goals (SDG).

The development and implementation of this system also implies several challenges. In this regard, it is necessary to guarantee its operability and implement incentives for the banking sector given the level of green investments. At the same time, it should contribute to the fulfillment of Mexico’s climate policy objectives, while being adapted to the practices of the Mexican banking sector as wells as to international standards.

The development of the preliminary phase of this Project is significant for Mexico. The country has played an active role in the climate finance working group of the G-20. Given the constant movement of global markets, its national financial sector has several business opportunities in the development of innovative instruments such as green portfolio investments and capital markets.

The launching of the preliminary phase of the project took place on 25^th April during a meeting between representatives of the Mexican-German Climate Change Alliance and finance institutions such as the Mexican National Bank of Foreign Trade (Bancomext), Trust Funds for Rural Development (Fira), Citygroup, HSBC, y Banorte. This initiative is part of the activities that the Mexican German Alliance of Climate Change develops in partnership with banking institutions to build capacities for development, involving the financial sector in the implementation of innovations for climate protection.