Author: IKI Alliance
Moving towards low-carbon and resilient economies requires building partnerships to mobilise green finance, achieve the goals set out in the Paris Agreement and limit the increase in global average temperature to below 1.5°C above pre-industrial levels.
Since 2019, the Mexican-German Climate Change Alliance, implemented by the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH and part of the International Climate Protection Initiative (IKI), has been working hand in hand with the Government of Mexico and actors from the private, financial and social sectors to mobilise resources for concrete actions in the territory and identify the challenges and opportunities of climate finance. This long-term vision aims to allow Mexico to meet its national and international climate commitments.
In the framework of the third edition of the Green and Inclusive Finance Festival, the Mexican-German Climate Change Alliance presented the fruitful technical cooperation with the Government of Mexico to green the financial system and mobilise climate finance towards actions to address the climate crisis in the territory. The five axes of climate action were shared, in which they collaborate with various institutions from the public, financial, private and social sectors to promote green finance.
We invite you to learn more about the results of the Mexican-German Climate Change Alliance on green finance:
Promoting green finance mobilisation is key to meeting the Sustainable Development Goals (SDGs) of the 2030 Agenda and the Paris Agreement. In this context, the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH and the Tecnológico de Monterrey organised the third edition of the Green and Inclusive Finance Festival 2022 with the aim of creating a space for multi-stakeholder dialogue to share best practices at the national, regional and international level about the allocation, access, governance, management and mobilisation of green finance.
On 13, 14 and 15 June, 24 sessions were held in a hybrid manner, with the participation of around 100 panellists and more than 2,000 online attendees from Mexico, Latin America, the Caribbean, Spain and Germany. The festival was attended by representatives of GIZ Mexico, the IKI projects in Mexico, the Tecnológico de Monterrey, the Ministry of Finance and Public Credit (SHCP), the Ministry of Environment and Natural Resources (SEMARNAT), the Bank of Mexico (Banxico), Nacional Financiera (NAFIN), the National Banking and Securities Commission (CNBV), the National Bank of Public Works and Services (BANOBRAS), the Economic Commission for Latin America and the Caribbean (ECLAC), the National Institute of Social Economy (INAES), CIBanco, among others.
The inauguration was chaired by Gabriel Yorio González, Undersecretary of Finance and Public Credit; Simone Franke, Political Counsellor of the German Embassy in Mexico; Philipp Schukat, Climate Team Coordinator of GIZ Mexico; Cynthia María Villarreal, Director of Sustainable Development and Linkages at the Tecnológico de Monterrey and Ambassador Miguel Ruíz Cabañas Izquierdo, Director of the Sustainable Development Goals (SDG) Initiative at the Tecnológico de Monterrey. To open the Festival, the speakers addressed the efforts and achievements of the bilateral Mexico-Germany cooperation for sustainable financing, the importance of multi-stakeholder cooperation in the mobilisation of financial resources and the role of universities in the greening of the financial system.
The first day of the Financing Festival addressed the social economy and impact investments, the history of change generated by the Global FELICITY Programme, decentralised financing and the efforts of GIZ Mexico, financial mechanisms for climate change and sustainable development from the public sector, the 2030 Solutions for local development, the financial inclusion of people with disabilities and the post-COVID recovery strategy of the Development Bank.
The second day’s sessions dealt with instruments to boost financing with women entrepreneurs, feminist financial policy, solar thermal energy financing, Payment by Results mechanisms, socio-economic assessments of resilient and low-carbon infrastructure projects, crowdfunding for green investment in Mexico, digital tools for project preparation and the green supply of commercial banks.
On the final day, sessions focused on the economic and financial impacts of climate change, the development of green and sustainable taxonomies in Latin America, youth in action for green finance, challenges and opportunities for energy efficiency finance, climate finance engagement at the COP, green and sustainable finance mechanisms at the subnational level, and partnerships to drive ambition in climate action.
Recognising the role of youth in climate action, the Festival also featured innovative projects selected from the open call promoted by GIZ Mexico, “Youth in Action for Green Finance“. The young people who presented their projects were Daisy Álvarez for the project Construyendo espacios verdes y sustentables para todes, Graciela Rivera with the project EnerYou, Daniela Carreón with the project ETF Verde and Iván Mendoza for the project in Mazahua communities SMAR JÑatjo’o.
To conclude the Festival, participants discussed alliances to increase climate action ambition, including the results of the cooperation between GIZ Mexico and the Government of Mexico to green the financial system. In addition, the Mexican-German Climate Change Alliance presented on the progress of the cooperation and its work with key actors to promote green and inclusive finance in the country, from the territory to the creation of sustainable taxonomies. Moreover, the SHCP and Banxico highlighted the need to move towards low-carbon and resilient economies, as well as the key role of the technical cooperation provided by GIZ Mexico in addressing climate change.
In the closing session, Philipp Schukat, Coordinator of the GIZ Mexico Climate Team, presented two key conclusions on green finance. First, that “in the face of the climate crisis we already have the technological innovation, now we have to create the financial mechanisms to implement it and reduce social gaps”. Second, he stressed the importance of multi-stakeholder cooperation between governments, civil society and businesses to achieve global goals.
The NAMA SME project began the launch of the initiative that supports the strengthening of the energy efficiency market in SMEs in Yucatan through technical and financial solutions.
The NAMA SME project is implemented by the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH, together with the Yucatan Institute for Entrepreneurs (IYEM) and the Energy Sub-Secretariat of the Ministry of Economic Development and Labour (SEFOET) of the Government of the State of Yucatan. On May 11, it launched an initiative to strengthen small and medium-sized enterprises (SMEs) in the state of Yucatan through energy efficiency (EE). Through an open call, companies in the state were invited to register to receive an energy diagnosis (DE) at no cost and be able to implement EE measures.
With the aim of providing technical and financial support to incorporate EE measures in companies, capacity building sessions were held for SMEs on 19 and 26 May and 2 June 2022. More than 60 people participated and learned what EE is, the importance of DE in their companies and how to manage a loan and pay it back through energy savings. In addition, companies learned about the MicroYuc Verde financing initiative promoted by IYEM, as well as the requirements to participate in the call for proposals.
The success of these events was reflected in the 36 SMEs that registered for the initiative, with participation from the industrial, service and trade sectors. Those selected were those with the greatest potential to implement EE projects and that were priority sectors for the economy of the state of Yucatan.
Of the SMEs that registered, 16 were selected and will be able to identify and implement improvements in their energy consumption, generating economic savings, increasing their competitiveness, and reducing greenhouse gas (GHG) emissions. Importantly, seven are led by women, contributing to GIZ Mexico’s commitment to promote access to finance for women entrepreneurs in the state.
In September, each SME will begin to implement the projects they selected based on their needs, as well as their technical and economic viability. These projects will be regularly monitored to document the energy saving measures and the economic, environmental and social benefits to each company.
International cooperation is key to achieving the climate goals of the Paris Agreement and the 2030 Agenda. With the aim of strengthening dialogue and the exchange of good experiences between projects of the International Climate Initiative in Mexico (IKI), the sixth IKI project exchange workshop in Mexico was held on May 19, 2022. Eighty six people participated in the event, from public and social sectors.
The high-level event had the outstanding presence of the Ministry of Environment and Natural Resources (SEMARNAT), the Ministry of Agrarian, Territorial and Urban Development (SEDATU), the Ministry of Agriculture and Rural Development (AGRICULTURA), the Ministry of Treasury and Public Credit (SHCP), the Secretary of the Environment and Territorial Planning of Guanajuato (SMAOT), as well as representatives from the Ministry for the Environment, Nature Conservation, Nuclear Safety and Consumer Protection (BMUV), the German Federal Ministry for Economic Affairs and Climate Action (BMWK) and the German Embassy.
https://twitter.com/GIZMexico/status/1527324256996327424?s=20&t=9AEXAM4NMnXuAi8HCV4S8A
During the opening remarks, SEMARNAT and the German Embassy reiterated their common interest in cooperating within the IKI framework for the protection of the environment, the fight against climate change and the protection of biological diversity. On behalf of the BMWK and BMUV of the German Government, they reaffirmed the priority that climate change represents for the government and the importance of IKI cooperation in Mexico since 2008, in addition to mentioning the priorities of the biodiversity agenda within the Global Biodiversity Framework.
Mexican climate policy
Subsequently, representatives of the Mexican government presented the strategies and priorities of Mexico’s climate and biodiversity policy. On behalf of SEMARNAT, the General Directorate of Policies for Climate Change announced the climatic risks that are already being experienced in Mexico. In addition, he shared various actions that the Mexican government is carrying out to adapt to climate change. He agreed with the German government in putting climate justice at the forefront.
Additionally, various priorities of the climate change agenda were shared by SEDATU and AGRICULTURA, including the cross-cutting link between climate change, territorial planning and the agricultural sector.
Implementation of climate action in the transport sector
The first part of the event concluded with a panel on sustainable transport, the actions that are being developed, the challenges and opportunities to build cities and a prosperous, green and inclusive transport sector.
The panel was integrated by Francisco Ramírez, General Coordinator of Strategic Projects and Alternatives against Climate Change of the National Institute of Ecology and Climate Change (INECC); David Camacho, Director of the Railway Transport Regulatory Agency (ARTF); Roxana Montealegre, Director of Mobility of SEDATU; María Isabel Ortiz Mantilla, head of the SMAOT and President of the General Assembly of the National Association of State Environmental Authorities (ANAAE); and Verena Ommer from the International Climate Initiative Division of the BMWK.
In general, the panel agreed on focusing on sustainable transport, prioritising public transport, electromobility, urban efficiency and thinking about sustainable cities. The importance of working on decarbonisation routes in the transport sector and linking it to planning, public policy and land use planning instruments was emphasised. Additionally, the potential of the railway sector to achieve these purposes was commented, based on the fact that we have a network of more than 23 thousand kilometres that unite the cities of the country.
Exchange between IKI projects
There are 32 IKI projects operating in Mexico, with 21 implementing organisations and 31 implementing counterparts; bilateral projects have a budget of more than 29 million euros. In addition, new IKI projects starting in 2022 were presented, such as the Latin American Climate Asset Disclosure Initiative (LACADI); Transformative Urban Coalitions, Territorial Planning and Financial Innovation to increase Mexico’s resilience to climate change (SAbERES); CitiesAdapt – strengthening adaptation to climate change in cities; and the expansion of climate finance through the financial sector – “30 by 30 Zero”.
The participants carried out an exchange in thematic groups with the aim of identifying future synergies and the need for successful knowledge management within the IKI. They were divided into five thematic groups: cities, biodiversity, energy efficiency, climate commitments and green financing.
As a result of the working groups, there were several convergences in each area. Regarding best practices, the projects highlighted the integration of climate change and biodiversity criteria in cost-benefit analysis and projects from various sectors, as well as intersectoral cooperation and cooperation with various government orders. Regarding the potential, they pointed out the strengthening of monitoring, reporting and verification (MRV) systems to have updated and systematised information. Regarding the challenges, they alluded to the articulation, coherence and continuity of the measures implemented by the projects over time and the strengthening of financing models. In terms of knowledge management, they pointed to the documentation and dissemination of lessons learned from implemented projects and the creation of a Community of Practice for the exchange of experiences at the local, national, regional and global levels, transversally.
The International Climate Initiative (IKI) is an important part of the German Government’s international commitments to support the implementation of international climate agreements and the protection of biodiversity. The Federal Ministry for Economic Affairs and Climate Action (BMWK) has been the lead agency of the IKI since 2022. The IKI collaborates with its founding department, the BMUV, and the German Federal Foreign Office.
Check out the sessions’ videos:
6th IKI Workshop: Cooperation within the IKI framework- YouTube
6th IKI Workshop: Mexican Climate Agenda – SEMARNAT – YouTube
Past IKI Workshops in Mexico:
On March 30, 2022, Gabriela Niño, technical advisor of the Mexican-German Climate Change Alliance, implemented by the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH, accompanied by the National Commission of Compliance (CONACOM), carried out the forum “International Cooperation on Climate Financing Between Mexico and Germany“.
In his opening speech, Ernesto Infante, coordinator of the Public Compliance & ESG Committee, pointed out the economic and commercial importance between Mexico and Germany, as well as the parallel interests between these two countries regarding issues such as transparency, corruption, accountability and intersectoral communication in government.
Later, Gabriela Niño mentioned that the main objective of GIZ Mexico is to provide technical assistance within the framework of alliances, agreements and international governance in accordance with international agendas–specifically, the Sustainable Development Goals (SDGs) of the 2030 Agenda and the Paris Agreement, as well as the development of digital tools, and the development of capacities and transmission of knowledge.
In this sense, Gabriela explained that help would be provided in the adoption of a National Climate Change Policy through Mexico’s climate change adaptation and mitigation commitments; intersectoral communication of the government’s different levels; the acceleration in the use of sustainable energies; creating resilient infrastructure; the integration of the private sector, and the development of a post-COVID-19 recovery plan.
Finally, it was mentioned that the climate financing agenda has been taking place in Mexico since 2015, as a result of the international rapprochement between financial and environmental sectors. Thus, GIZ Mexico, in coordination with the Association of Mexican Banks (ABM) and other associations that bring together various financial sectors, have worked on several green finance issues, including the analysis of the sensitivity of bank portfolios and the green bonds market; how far the Mexican government is prepared to engage in climate financing; workshops on climate risks and green taxonomies for the banking sector in Mexico; the socialization of climate change risk information , and the benefits of an adequate financial policy.
A few years ago, removing a retaining wall that blocked waves, and instead restoring the dune’s native vegetation as a measure to prevent coastal erosion, might have sounded unlikely. However, the Moon Palace Group in Quintana Roo has understood that nature itself is the best ally for reducing climate change vulnerability.
This ecosystem-based adaptation measure (EbA) began in 2019 with the technical support of the project Adaptation to Climate Change in the Tourism Sector (ADAPTUR) of the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ), The Nature Conservancy (TNC) and the United Nations Development Programme (UNDP Resilience).
To date, the commitment of the hotel group through the Environmental Management Department remains strong; despite the health and economic crisis caused by the COVID-19 pandemic, they have made progress in:
- The removal of 280 linear metres of retaining wall that separated the hotel area from the beach.
- The transformation of 5,000 square meters of exotic grass gardens to their natural state: sagassum was removed and a sandy coastal dune was recovered, with native species of plants that provide stability to the coastline.
- The reforestation of 1.8 kilometres of coastal dune with varied and stratified species.
- Constant monitoring of the effectiveness of actions and technical exchange with experts.
The plants used are not only adapted to the climate and soil, but also keep the beach stable, where they are not present, erosion continues and reduces the areas for recreational use.
In March 2022, ADAPTUR coordinated a technical visit to Moon Palace facilities and an experience exchange session with another important hotel group, who have also initiated coastal dune restoration efforts in the Mexican Caribbean.
This case study is an inspiring example and demonstrates that the private sector can improve its operation in the market and at the same time achieve the climate resilience of a region.
