Philippines' BDO Unibank first blue bond gets US$100 million investment from IFC

The Philippines' largest bank becomes the first local lender to issue a blue bond to tackle ocean litter and preserve clean water in a country considered the world's third biggest marine polluter.

beach clean-up_Freedom Island, in Manila Bay
Environmental groups carry out a waste clean-up activity at Freedom Island, in Manila Bay, just off the coast of Parañaque in Metro Manila, Philippines in 2017. Image: Daniel Müller/ Greenpeace

The International Finance Corporation (IFC), the private investment arm of the World Bank Group, is pouring US$100 million into BDO Unibank Inc’s blue bond, which aims to finance projects that will help tackle marine pollution in the Philippines.

The country is considered the third largest global contributor of ocean plastic, with an estimated 0.75 million metric tonnes of mismanaged waste entering the ocean every year, according to a World Bank study published in 2021.

The coastal blue economy is critical to the Philippines but is threatened by pollution, unsustainable fishing, rapid urbanisation, and the impact of climate change such as typhoons that drag tonnes of rubbish into seaside areas. 

BDO Unibank Inc’s blue bond, the first of its kind in the country and a first for IFC in the East Asia Pacific region, is slated to raise money for projects such as water conservation, wastewater treatment, plastic recycling, sustainable tourism, fisheries, and sustainable seafood processing, the global development institution said in a statement on Friday. 

“A blue bond instrument will be key to the nation’s growth trajectory. By supporting the first blue bond issuance in the country, IFC continues its tradition of supporting the development of capital markets through issuances of thematic bonds and mainstreaming climate finance in the banking sector”, said Jean-Marc Arbogast, IFC country manager for the Philippines. 

“Moving forward, a robust blue economy will help create jobs and alleviate poverty while strengthening the marine ecosystem in the Philippines.”

IFC will also help BDO identify projects that can combat water stress with rapid urbanisation, as more than 3 million people in the Philippines rely on unsafe and unsustainable water sources and 7 million lack access to improved sanitation.

…A blue bond instrument will be key to the nation’s growth trajectory…a robust blue economy will help create jobs and alleviate poverty…

Jean-Marc Arbogast, country manager for the Philippines, International Finance Corporation

The bond will be issued under the International Capital Market Association (ICM’s) Green Bond Principle and IFC’s recently launched Blue Finance Guidelines, a blue-specific framework and metrics that monitor the use of proceeds and report on relevant impact.

“Marking our two-decade partnership, IFC’s investment will be key to helping BDO develop a Blue Finance Framework that will allow us to fund projects that support the country’s blue economy while establishing a new asset class in the Philippine debt market,” said Teresita Sy-Coson, chairperson of BDO Unibank, Inc.

Blue financing is emerging in Asia, with the IFC piloting the mechanism in China, India, Indonesia, and Thailand. Last year, multi-lateral lender Asian Development Bank issued its first ever dual-tranche blue bonds denominated in Australian and New Zealand dollars that will finance ocean-related projects in Asia and the Pacific.

The “blue economy”, which includes livelihoods and other economic benefits derived from oceans, is expected to reach US$3 trillion and employ 40 million people by 2030, giving it critical role in pivoting the global economic system towards regenerating ocean health, said the World Bank. 

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