4 min read July 2023 — In an interview with Invest:, Calixto Mateos-Hanel, the managing director of North American Development Bank, talked about green banking and its financial stability, how they are addressing water-related challenges in the border region, and their engagement with students to address labor challenges.
What have been some major highlights and achievements over the last year?
First, I would like to mention our significant involvement in a particular loan to the state of Baja California. We provided them with a loan of $150 million, but what made it innovative was the loan structure itself. It was designed as a sustainable loan, where the funds were allocated to specific water utilities in the state. These utilities used the funds to carry out water-related projects, addressing the water problems in Baja. As they progress with these projects and meet key performance indicators related to efficiency, fee collection and meeting targets, they have the opportunity to receive reimbursement of the loan payments they made. This structure allows them to reinvest the funds into improving their utilities and providing better services aligned with their mission. Significantly, this loan structure showcases our commitment to sustainable development and can be replicated in other regions.
Another significant achievement is our commitment to being a green financial institution. We have updated our policies to include specific environmental, social and governance (ESG) policies, as well as gender and inclusion policies. While we have always operated with these principles, having them formally outlined in a single policy enhances our mission and strengthens our collaboration with the communities along the U.S.-Mexico border.
Furthermore, we take pride in our Community Assistance Program, which provides grants funded from our retained earnings. This program has been successful in supporting communities, and as a result, our board has decided to increase the maximum grant amount from $500,000 to $750,000. This allows us to continue making a positive impact on the lives of people in these communities and contribute to their overall well-being.
How do you expect the North American Development Bank to navigate the current challenging economic time period?
The current economic conditions can be described as a bit rough, with some volatility in the market. However, as a financial institution, we understand the importance of persistence and continuous effort and, despite the challenges, we have been able to provide funding for various projects. It’s worth noting that interest rates have risen, which typically poses a challenge for attracting business. However, as a development bank, we still see a demand for our services.
While we may experience some fluctuations, we anticipate a leveling off in the near future, which could create more incentives for businesses to engage with us. It’s crucial for us to adapt and find ways to navigate these changing waters as we have observed the effects of inflation, resulting in increased project costs. To address this, we have provided additional funds for certain projects and adjusted our projections to account for inflationary factors.
Furthermore, it’s important to mention that we closely monitor interest rate developments in both our country and Mexico. The decisions made by institutions like the Federal Reserve and the Bank of Mexico play a significant role in our strategies. We believe that the current upward trajectory of interest rates may reach its peak soon, and there could be a possibility of rates stabilizing or even decreasing in the future. This would provide a favorable environment for more business opportunities and contribute to economic growth without causing excessive inflation.
What impact do you hope to make through the NADBank University Ambassador program, not just for the company, but the industry at large?
The Ambassador program is a multipurpose initiative that I personally find very impactful. Its primary objective is to engage students and make a difference through their involvement. We have extended this program to students across the region, both in Mexico and the US. Our aim is to connect with students at this level, educate them about our work, and encourage them to help us spread awareness among their peers. We value their feedback on community needs and their perspectives on our initiatives.
By reaching out to students, we tap into a new generation that is genuinely interested in what we do. This expands our outreach and allows us to connect with individuals who align with our environmental and social goals. Moreover, this engagement with students is a talent scouting opportunity for potential future employees. By fostering a connection with them, we hope to identify individuals who share our values and would be a good fit for our institution.
Lastly, through this approach, we not only enhance the bank’s visibility but also cultivate a pool of prospective employees who are passionate about our mission. In a labor environment where skilled resources may be scarce, we believe that attracting individuals who are inspired by our commitment to the border region’s environment and social well-being is vital. By embracing this strategy, we anticipate a sustainable source of talent and a stronger workforce for the future.
What are the most pressing needs at the border right now in terms of environment and infrastructure?
The border region is predominantly a dry area, making water scarcity a significant concern. To address this, we must prioritize proper utilization and treatment of water. By changing our approach and implementing effective water management practices, we can maximize its usage and promote sustainable development. Additionally, exploring new water sources becomes crucial in regions where aquifers may be saline. Desalination plants, such as those in San Antonio, El Paso, California, and Baja, play a vital role in sourcing water from the sea.
Presently, we are facing challenges related to the Colorado River, which impacts both the western and eastern parts of the border. To mitigate these challenges, we must focus on water reuse, along with seeking alternative water sources. After all, a thriving economy requires a fertile environment and water is a fundamental component for growth.
Another area of concern is air quality. The region experiences a high volume of vehicle traffic, which necessitates a transition to electric vehicles and the development of charging infrastructure. Furthermore, by leveraging the abundance of sunlight and wind, there is ample potential for renewable energy generation as well. However, to ensure a consistent energy supply, investments in battery technology and energy storage systems are crucial. This enables stable transmission and distribution of renewable energy across the region. While our bank’s mission primarily revolves around environmental initiatives, the financing of certain projects, such as combined cycle plants, may be beyond our scope. Nevertheless, there are opportunities for other financial institutions and industries to invest in these plants, which contribute to grid stability in the presence of increasing renewable energy capacity. Especially as a balanced energy mix will be essential for meeting the region’s energy demands effectively.
What is your outlook for the next two to three years, and how does that inform your priorities?
We are currently in the initial stages of developing our strategic plan. One of our key priorities is water as we understand the significance of addressing water-related issues. Considering our location in the border region, we are a crucial player for both governments. However, alongside water, there are other important aspects we need to focus on such as supporting the development of sustainable industrial parks and promoting green building initiatives are areas where we aim to make a positive impact. The relocation of industries to the border region necessitates the establishment of sustainable practices and infrastructure. We strive for economic development that prioritizes environmental considerations, including efficient resource utilization such as energy and water.
Another area of interest for us is agricultural financing, specifically in enhancing irrigation channels. By addressing issues such as leakage and permeation, we can significantly reduce water losses and improve overall efficiency. Exploring options for distributed generation, such as renewable energy sources for farmers’ pumping needs, can further optimize energy consumption without relying solely on the grid.
Investing in agricultural efficiency is crucial since it is the sector that consumes the most water. By maximizing efficiency, we can allocate more water resources for human and urban consumption, thus ensuring sustainable water management in the region. Our goal is to strike a balance between agricultural productivity and responsible water usage.
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