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Philippines cited for ASEAN green-finance leadership

The Philippines was cited as a regional leader in sustainable finance thanks to the combined efforts of the government, banks, and businesses, according to a report issued by the international non-profit Climate Bonds Initiative (CBI).

“The Philippines is a leader in green finance in ASEAN. (It) has been increasingly exploring the use of green debt as well as equity instruments and has been expanding credit enhancement mechanisms and risk sharing options,” according to the Green Infrastructure Investment Opportunities (GIIO) Report 2020.

It cited Philippine initiatives in green bonds, green loans, and funds for green infrastructure and renewable energy, among others.

The report said the Philippine government helped develop “national and regional policies for facilitating further growth in green finance.”

“In 2019, the Philippines became members to the new Coalition of Finance Ministers for Climate Action and its Helsinki Principles, which promote national climate action through fiscal policy and the use of public finance. Prior to this commitment, the government and regulators had long been moving in this direction,” according to the GIIO Report.

The Department of Finance (DoF) said it is working on leading an inter-agency group called the Green Force to help coordinate green policy and regulations, Finance Assistant Secretary Paola A. Alvarez said during the GIIO report’s virtual launch Thursday.

“What we wanted to do is to harmonize definitions so that when investors come in, and they talk about green projects or sustainable projects, whatever government department they talk to- the Department of Energy, Public Works, the Securities and Exchange Commission, the Central bank or other banks….All of us would be talking about the same thing,” Ms. Alvarez, the Head of the Green Force, said.

According to the CBI, the Philippines had the third-most investments in the region in the green bond market, at around $2.6 billion as of August. Singapore invetment totaled $6.20 billion, and Indonesia $2.88 billion.

“To date, four domestic banks, the Bank of the Philippine Islands (BPI), Rizal Commercial Banking Corp. (RCBC), China Bank and BDO Unibank, have issued green bonds in three currencies: dollar, peso and Swiss Franc, with issuance in each currency amounting to $600 million, P15 billion, and CHF100 million ($108.6 million) worth of green bonds,” it wrote.

Meanwhile, eight firms- including Ayala Corp., Manila Water and Aboitiz Equity Ventures- have also issued green bonds to finance their various projects, according to the CBI Green Bond Database.

“The largest issuer of green bonds in the Philippines is (Ayala unit) AC Energy, with four green bonds outstanding, ranging in size from $ 75 million to $ 400 million,” according to the GIIO.

During the report’s launch, State Street Asia-Pacific Head of Fixed Income Kheng Siang Ng pointed out that the “supply of green bonds in the market is currently less than the demand.”

Securities and Exchange Commission (SEC) Commissioner Ephyro Luis B. Amatong said green bond issuers need to do more to assure invstors that they “adhere to international best practices.”

“There is no doubt that the investor appetite is there, and the funds are there, but… there is a requirement, there is some assurance that the issuers adhere to international best practice, (such as) having bonds certified by Climate Bonds Initiative. Another way is for the bonds to carry the ASEAN Green Social Sustainability Label (which) shows adherence to the ASEAN standards based on the green bond principles,” Mr. Amatong said.

Launched on Thursday, the CBI report was prepared with the support of the Securities and Exchange Commission (SEC), the Asian Development Bank (ADB), and the ASEAN Catalytic Green Finance Facility. — Angelica Y. Yang

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