IFC backs BDO Unibank’s $150m green bond

BDO Unibank, the Philippines’ largest bank, has raised $150 million from issuing its first green bond – with the International Finance Corporation as the sole investor.

“The funds will be used exclusively to finance climate-smart projects including renewable energy, green buildings and energy-efficient equipment,” said the IFC in a statement.

It is expected to provide an alternative source of long-term green finance in the country and help the Philippines achieve its target of reducing carbon emissions by 70 percent by 2030. The financing will help cut 93,000 tonnes of CO₂ emissions per year by 2022, the IFC noted.

The transaction marks the first green bond issued by a commercial bank in the Philippines, as well as the first green bond investment by the IFC in a financial institution in East Asia and the Pacific, according to a joint statement.

“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,” said Nestor Tan, president and chief executive of BDO.

BDO has worked with the IFC since 2010 as an advisor on sustainable energy finance. It has developed its “climate-smart portfolio” to more than $500 million, making it one of the key players in climate financing in the Philippines.

“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,” said Vivek Pathak, IFC’s director for East Asia and the Pacific.

IFC has been one of the world’s largest financiers of green projects in developing countries. It has invested $18.3 billion in long-term financing from its own account in “climate-smart projects” since 2005 and mobilised another $11 billion with co-investors. In addition to its own issuance of green bonds, the multilateral seeks to develop the green bond asset class in emerging markets.