Thematic bonds benefit the construction, equipment, and supply of industrial spaces because they allow companies to yield low-risk environmental and economic returns.
This is possible because these bonds are fixed-income financial instruments designed for companies looking for sustainable industrial development.
What advantages do thematic bonds provide to industrial spaces?
Green, social, and thematic bonds are credits extended to companies with projects related to sustainability, social welfare, and a focus on current issues. The primary benefits include:
- Streamlining new technology adoption to produce clean and renewable energy.
- Increasing green job opportunities.
- Helping companies face non-financial risks such as climate change, job shortage, and population aging.
- Increasing demand for industrial spaces and warehouses encourages investor diversification.
- Providing more access to tax incentives (susceptible to each country’s applicable regulations).
- Aiding mitigation of the water shortage crisis in Mexico.
- Cost cutting and securing capital to support sustainable projects.
- Enhancing the companies’ reputation in the community and market.
Mexico’s sustainable economy overview
In Latin America, the market for thematic bonds has experienced substantial growth since the first instruments of this kind were launched in 2007. And post-pandemic, investors redirected their interests toward developing economies.
However, stock markets across the world promote the use of thematic bonds, whose estimated value reach US$700 billion1, as stated by BID Invest.
Accordingly, more than 35% of the Mexican Stock Exchange’s financing comes from instruments in this category.
Likewise, that same entity reported that green, sustainable, and social bond issuance in Mexico was up to eight times higher between 2015 and 2022.
Types of thematic bonds for industrial and community development
Thematic bonds can be classified according to the problems they address, seen as follows:
Thematic bonds can be classified according to the problems they address.
1. Green bonds
With an investment of US$11 billion, Green bonds rank third in The Climate Bonds Initiative2.
These bonds are for sustainable infrastructure projects (including the construction of industrial buildings, parks, and warehouses) that focus on energy efficiency, decarbonization, and waste reduction to properly to run operations and production.
2. Blue bonds
Blue bonds emerged to help identify solutions related to fresh water or saline bodies conservation. Although they are relatively new, forecasts show a high demand for them, especially for those related to water treatment and reuse in industrial spaces.
3. Bonds with a gender perspective
Bonds with a gender perspective were created to face gender inequality in work environments during COVID-19.
In Mexico, the first social bonds issued were issued in October 2020 with The Secretariat of the Treasury and Public Credit as trustor and Banco de México as trustee.
After the fourth quarter of 2021, the fall in productivity and its negative effect on GDP was linked to an under-representation of women in paid work and entrepreneurship. At this time, only 45% of women over the age of 15 were employed, compared to 79% of men3.
4. Demographic dividend
Demographic dividend bonds are aimed at facing population aging and the resulting loss of productivity.
Mexico has an Economically Active Population (EAP) of 59%4, ranging from 15 to 59 years old. Of this, 16% work in manufacturing activities, while in the United States, only 7% are employed in this sector. This makes these bonds a competitive advantage for Mexican companies.
The country has positioned itself as one of the most attractive places to invest due to the skilled labor force combined with its strategic location to carry out operations with a nearshoring approach and a compatible infrastructure with 4.0 technology.
At Advance Real Estate, we support companies’ commitment to Mexico’s sustainable economy. That is why we work under ESG criteria and offer industrial spaces suitable for energy efficiency projects and clean energy production.
INFORMATION SOURCES
- realestatemarket.com.mx/noticias/…/38234-bonos-tematicos-factor-clave-para-el-desarrollo-industrial
- www.climatebonds.net
- mexicoindustry.com/noticia/el-auge-de-los-bonos-tematicos-clave-para-el-desarrollo-industrial-mexicano
- www.lacapital.com.mx/noticia/91187-El_boom_de_los_bonos_tematicos_como_factor_clave_para_el_desarrollo_industrial_mexicano
- greenfinancelac.org/es/…/bonos-verdes-sociales-y-tematicos
- www.idbinvest.org/es
- realestatemarket.com.mx/noticias/…/35236-bonos-tematicos-representan-mas-del-35-de-todo-lo-financiando-en-la-bmv
