SEC OKs rules on Asean ‘green’ bond offers

The Securities and Exchange Commission (SEC) has approved the framework for the local retail offering of Association of Southeast Asian Nations (Asean) “green” bonds, instruments that raise funds for projects with clear environmental benefits.

In a press statement, the SEC said these guidelines sought to “improve awareness and appetite for green financing in the local market.”

“While there is already a global impetus to move toward sustainable growth and green financing, there is a significant lack of interest from local companies to issue green bonds,” it said.

Compliance with the Asean green bond standards (Asean GBS) is also seen to enable local issuers to tap into the burgeoning global green bond market.

Green bonds are similar to traditional bonds in terms of deal structure, but they have different requirements for reporting, auditing and proceeds allocations.

Asean green bonds refer to bonds and sukuk (Islamic bonds) which comply with the Asean GBS, proceeds from which will be exclusively used for green projects. These include renewable energy, energy efficiency, pollution prevention and control, environmentally sustainable management of living natural resources and land use, clean transportation, climate change adaptation and green buildings.

All designated green projects must provide clear environmental benefits, which will be assessed and, where feasible, quantified by the issuer, based on the guidelines. Fossil fuel power generation projects, for instance, are excluded from the Asean GBS.

Issuers must be incorporated in any of the Asean member countries. A non-Asean issuer may also issue these bonds, provided the eligible green projects are located in the region.

At the discretion of the SEC, outstanding bonds issued by a Philippine-based issuer and/or in instances where the proceeds were used in the Philippines, will be considered for eligibility under the GBS provided that the issuance is compliant with the requirements and already carries an internationally-recognized green label.

Last year, the green bond market recorded a 78-percent growth globally. Total green bond issuance stood at $155.5 billion at end-2017.