This chapter examines the role of green bonds in Mexico’s subnational bond markets, assessing their impact on financial sustainability, governance structures, and climate commitments. Despite the rise of environmental, social, and governance (ESG) funds, standardized evaluation mechanisms remain lacking. Mexico has made strides in integrating sustainability into its financial framework, yet subnational governments face persistent challenges in financing climate initiatives. By analyzing Mexico’s regulatory environment and municipal debt market, this research explores the successes and limitations of green bonds, as well as the role of international financial institutions, fiscal policies, and regulatory oversight in shaping sustainable investments. The study also considers Mexico’s financial reforms, including the 2016 Fiscal Discipline Law, and alternative financing mechanisms such as special-purpose vehicles and development bank loans. With the upcoming USMCA renegotiation and shifting energy policies under President Claudia Sheinbaum, Mexico stands at a pivotal moment in its green finance trajectory. This research highlights governance gaps and regulatory shortcomings, offering policy recommendations to enhance transparency, financial stability, and investment efficiency in Mexico’s transition to a low-carbon economy.