Government dangles maiden $500 million green bond offer to US investors

MANILA, Philippines — The Department of Finance (DOF) has urged American investors to extend sustainable financing to the Philippines by participating in its first-ever offering of green bonds.

In a virtual forum, Finance Secretary Carlos Dominguez III said the country aims to raise $500 million from the maiden auction of green bonds.

He said the proceeds of the fund-raising activity would support the government’s efforts to mitigate the impact of climate change in the Philippines through sustainable infrastructure.

“Soon, we will be issuing our first-ever sovereign green bonds with a benchmark size of at least $500 million. We look forward to US investors’ strong support of this landmark offer,” Dominguez said.

The finance chief said the landmark sale follows through the government’s issuance of its sustainable finance framework. Under the blueprint, the government outlined ways on how it can raise funds to complete public infrastructure that emits less carbon to the benefit of the environment.

“We launched the Philippine sustainable finance roadmap and a sustainable finance framework for green bonds to support our climate action commitments,” Dominguez said.

The framework requires the government to pour proceeds from green bond auctions on projects that promote environmental protection and social intervention.

For instance, funds raised through green bond offerings can go to initiatives mainstreaming the use of renewable energy like biomass, geothermal, hydropower, solar and wind.

The framework bars the government from using proceeds to fund the extraction of mineral resources, production of fossil fuel, among others. It disallows the use of sustainable finance as well on projects associated with child and forced labor.

Dominguez lamented that the Philippines has entered the debt market for sustainable bonds in the absence of the financing pledged by developed nations like the US for developing countries. He added the country can no longer wait for Western economies to extend the funds needed to alleviate the damage taken from the climate crisis.

Last year, the government announced the national goal of cutting greenhouse gas emissions by at least 75 percent by 2030.

According to the DOF, economic losses due to climate hazards reached P506.1 billion between 2010 and 2020, equivalent to an average of P48.9 billion or around 0.33 percent of economic output.