The Philippines’ largest lender BDO Unibank is issuing the country’s first blue bond to help tackle marine pollution and preserve clean water resources, while supporting the Philippines’ climate goals.

The issuance, announced on April 29, will see the International Finance Corporation (IFC) subscribing up to US$100 million to the blue bond, which is aimed at increasing access to financing for blue projects.

In making the investment, IFC says solid waste management and marine plastics are key issues for the Philippines, threatening several elements of the blue economy as well as urban public health. The country is the third largest contributor to marine plastic pollution, with an estimated 0.75 million metric tonnes of mismanaged plastic entering the ocean every year, according to the Market Study for the Philippines: Plastics Circularity Opportunities and Barriers by the World Bank Group in 2021.

The Philippines is also tackling water stress with rapid urbanization. According to Water.org, more than three million people in the country rely on unsafe and unsustainable water sources and seven million lack access to improved sanitation.

Commenting on the blue bond issuance and IFC’s support to its inaugural offering, BDO chairperson Teresita Sy-Coson says the issuance reinforces the bank’s commitment to sustainable finance, allowing BDO to provide more support to critical areas such as water conservation, wastewater treatment, plastic recycling, sustainable tourism, fisheries and sustainable seafood processing.

“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,” she adds.

BDO’s blue bond will be the first such issuance in the Philippines and the first for IFC in the East Asia Pacific region. The blue bond will adhere to the International Capital Market Association (ICMA) Green Bond Principles and to the recently-launched Blue Finance Guidelines by IFC.

IFC will also help BDO identify projects that can be funded by the blue bond while building its capacity in terms of monitoring the impact of these projects. IFC’s role is likely to further inspire confidence among other investors, promoting market competition.

“Given that the coastal blue economy is critical to the Philippines, a blue bond instrument will be key to the nation’s growth trajectory,” says IFC country manager for the Philippines Jean Marc Arbogast. “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.”

This project, part of IFC’s blue finance pilot across four other countries – Indonesia, Thailand, India and China – will be among the first blue bond issuances by commercial banks in Asia using the IFC’s Blue Finance Guidelines, a blue-specific framework and metrics to monitor the use of proceeds and to report on relevant impact.