Green economy blooms with sustainability bonds

One of the issues tackled during last week’s Asia-Pacific Ministerial Conference on Disaster Risk Reduction (DRR) hosted by the Department of Environment and Natural Resources and the United Nations Office for DRR was the need for more funds to mitigate the impact of calamities.

One way of financing DRR is through sustainability bonds. Such debt securities are issued to raise capital specifically for financing projects that provide both environmental and social benefits, such as renewable energy (RE), energy efficiency, waste management, pollution reduction, sustainable agriculture, conservation, affordable housing, education, healthcare, poverty reduction and programs that enhance social equality.

BDO Unibank Inc., a member of the SM Group, is committed to helping businesses preserve and protect the environment by raising funds through sustainability bonds.

As a member of The Asian Transition Finance Study Group since 2021, BDO Unibank creates financing mechanisms and global standards and categories for selecting projects that truly lead to less if not zero carbon emissions. The bank also has its Sustainable Finance Framework that supports the goals of the Association of Southeast Asian Nations (ASEAN) in ensuring sustainable growth of industries in the region and protecting vulnerable communities from the worst effects of climate change.

The framework covers RE, energy and water efficient buildings, less polluting transportation, recycling, sustainable and smart agriculture, and livelihood for micro, small and medium entrepreneurs.

BDO already issued three tranches of peso-denominated ASEAN Sustainability Bonds (ASBs) to increase funds for environment-friendly projects. The latest ASB was issued in July with BDO raising P55.7 billion. It also raised P63.3 billion from an ASBs issued in January 2024.

The second batch marked BDO’s biggest single bond issuance early this year as the bond proceeds emerged 12 times higher than the initial offer of P5 billion.

One notable project reportedly funded by BDO out of ASB proceeds was the 197-megawatt solar power plant of Citicore Renewable Energy Corporation in Tuy, Batangas.

The Bangko Sentral ng Pilipinas said BDO and other universal banks have approved sustainability loans worth over P830 billion since the middle of 2022.

The Center for Energy, Ecology and Development Philippines said the global shift to cleaner energy among firms and consumers is partly being driven by declines in RE prices: 85 percent both for solar energy and lithium-ion batteries and 55 percent for wind energy.