BDO Unibank Inc. sells $150 M green bonds

First bank in Philippines

MANILA, Philippines — BDO Unibank Inc. raised $150 million from the issuance of green bonds, part of its efforts to help boost financing for climate change projects.

It is the first commercial bank in the Philippines to issue green bonds.

Nestor Tan, president and CEO of BDO, said the bond issue demonstrates the bank’s corporate commitment to come up with business solutions to address the challenges of sustainability.

“Climate change is a very real concern in the Philippines. It is one of the most vulnerable countries globally to the impacts of such change. This also aligns with our goal of growing BDO’s climate business, and ultimately, fostering the nascent climate finance market in the country,” he said.

International Finance Corp. (IFC), the investment arm of World Bank, is the sole investor in the bond. This is also IFC’s first green bond investment in a financial institution in East Asia and the Pacific.

“We are glad to partner with IFC, a global expert in green finance,” Tan said.

The pioneering green bond provides an alternative source of long-term green finance in the country and contributes to the Philippines’ target of reducing carbon emissions by 70 percent by 2030 relative to its Business As Usual (BAU) scenario and conditioned on international support.

The funds would be used exclusively to finance climate-smart projects including renewable energy, green buildings and energy-efficient equipment.

IFC director for East Asia and the Pacific Vivek Pathak said the issuance is an example of BDO’s leadership in developing climate finance in the country.

“By building on our long-term partnership with BDO, we aim to create a vibrant green bond market in the country and stimulate private sector investment in renewable energy and energy efficiency,” he said.

By setting the standard and the benchmark for green bonds issued in accordance with the green bond principles which IFC helped develop, he added the IFC hopes to pave the way for other issuers and investors to access financing through this product, at a time when demand for green infrastructure and other sustainable investments are high.

The financing is expected to help save 93,000 tons C02 emissions per year by 2022.

The issuance is a culmination of an advisory engagement on sustainable energy finance between IFC and BDO that started in 2010. It helped establish sustainable energy finance as a core part of the bank’s sustainability strategy.

BDO, the country’s largest bank owned by retail and banking magnate Henry Sy, expanded its climate-smart portfolio from zero to over $500 million, making the country the market leader in climate financing.

IFC is one of the world’s largest financiers of climate-smart projects for developing countries. It has invested $18.3 billion in long-term financing from its own account, and mobilized another $11 billion through partnerships with investors for climate-related projects since 2005.

It has issued $7.25 billion in green bonds in 12 currencies. These issuances are part of a global strategy to develop the green bond asset class in emerging markets.