Philippines poised for more green bond issuance

MANILA, Philippines — The Philippines is seen growing its green bond issuance over the next few years as most countries in the Asia Pacific region will integrate this into their recovery in a post-pandemic world.

In a joint report, the International Finance Corp. (IFC), the private sector arm of the World Bank Group, and leading European asset manager Amundi said emerging markets (EMs) such as the Philippines would incorporate green objectives into their recovery.

This is aimed at not just mitigating climate risks and environmental challenges, but also increasing resilience to future shocks.

Based on the report, EMs issued a total of $40 billion in green bonds last year, the bulk of which came from China with $18.1 billion.

Among the EMs, the Philippines ranked 11th with $919 million. In the ASEAN region, the country came third after Indonesia’s $1.86 billion and Thailand’s $955 million.

Renewable energy companies based in Indonesia, Malaysia, the Philippines and Thailand made up most of the rest of the region’s issuance.

“ASEAN continues to provide regional coordination on the development and implementation of sustainable finance strategies, which include scaling up green and sustainability bond markets,” the report said.

“In the Philippines, the central bank issued the country’s first sustainable finance framework, under which banks have three years to integrate transition plans integrating sustainability principles into corporate governance and risk management frameworks,” it said.

Among those that issued green bonds last year include AC Energy and Infrastructure Corp., Arthaland Corp., AgriNurture Inc., Bank of the Philippine Islands, Rizal Commercial Banking Corp., China Bank and BDO Unibank.

Green bond issuers typically designate use of proceeds for specific projects that would contribute to environmental objectives.

Cumulatively, the largest share of the use of proceeds has been designated for renewable energy, while transport projects were increasingly prevalent last year.

Other categories for use-of-proceeds bonds include water, green buildings, waste, land, adaptation and resilience measures, information and communications technology, and industry.

“Robust investor appetite and increasingly supportive policy environments will continue to support the growth of green bond markets in EMs,” IFC Global Macro and Market Research director Jean Lacombe said.