BDO raises $150M from ‘green’ bond

The country’s biggest lender BDO Unibank has raised $150 million from a pioneering “green” bond issuance, boosting private sector funding for climate change-mitigating initiatives.

This funding deal marks the first green bond issued by a commercial bank in the Philippines.

International Finance Corp. (IFC), the private sector investment arm of the 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.

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

The pioneering green bond is seen to provide an alternative source of long-term green finance in the country and contribute to the Philippines’ target of reducing carbon emissions by 70 percent by 2030 relative to its “Business As Usual” (BAU) scenario.

“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,” BDO president Nestor Tan said on Friday. “This bond demonstrates our corporate commitment to come up with business solutions to address the challenges of sustainability.”

“This also aligns with our goal of growing BDO’s climate business and, ultimately, fostering the nascent climate finance market in the country. We are glad to partner with IFC, a global expert in green finance,” Tan added.

Vivek Pathak, IFC director for East Asia and the Pacific, said the issuance was 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,” Pathak said.

The financing deal is expected to help save 93,000 tons carbion dioxide emissions a year by 2022.

The issuance is an offshoot 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 has expanded its climate-smart portfolio from zero to more than $500 million, making it a leader in local climate financing.