Opening Lines – Guatemala Launches the First Social Finance Taxonomy in Latin America

Source: caribbeannewsglobal.com, News Editor, First Published July 25th, 2025

IDB Invest, the sustainable finance advisory council of Guatemala, and CentraRSE have launched a pioneering tool called the Social Finance Taxonomy to help the financial sector identify and promote investments with a positive social impact. This marks a milestone for Guatemala in Latin America and the Caribbean.

This tool will facilitate identifying projects that strengthen the competitiveness and productivity of micro, small, and medium-sized enterprises (MSMEs). It will also help channel resources to improve vulnerable populations’ access to financing. Additionally, it will attract impact capital to the country through financial instruments such as thematic bonds.

Taxonomies play an essential role in boosting the capital market and financial and business activity, where MSMEs are key. The launch of this taxonomy is part of the renewal of the Sustainable Finance Protocol, led by IDB Invest and CentraRSE, signed within the framework of the XVIII Ibero-American Sustainability Forum in Guatemala.

The social finance taxonomy represents a classification system that enables the identification of economic or investment activities that contribute to achieving Guatemala’s social objectives. Its purpose is to provide a clear signal to financial institutions, corporate enterprises, investors, and other stakeholders, facilitating investment decisions that generate social impact and investment returns.

The taxonomy functions as a voluntary classification tool that helps identify projects and investments with social impact, aligned with clear and measurable criteria. Its application facilitates the segmentation of target populations, the design of financial instruments such as social bonds, and the generation of standardized impact reports.

Banks, financial institutions, anchor companies, and corporations can use this voluntary tool to strengthen their segmentation processes, value chain management, and productive development while improving transparency in measuring social impacts. This approach, designed with the participation of the country’s financial and productive sectors, enables the private sector to contribute concretely to closing social gaps.