The International Finance Corp., a member of the World Bank, agreed to invest $250 million or about P14 billion in a green bond issuance by Bank of the Philippine Islands.
BPI said in a disclosure to the stock exchange Wednesday the investment—the biggest deal IFC has done with a local financial institution—was part of an effort to grow climate finance in the country.
“Proceeds will be used to finance eligible green assets in the Philippines, including renewable energy, energy efficiency, green buildings, electric vehicles, and climate-smart agriculture projects, among others,” the bank said.
It said while most proceeds would be used for local projects, a part could also be used to invest in bonds with underlying green assets overseas.
IFC also agreed to help BPI build its capacity to assess the eligibility and impact of its climate projects. IFC is the sole subscriber of the bond, which will be aligned with the International Capital Market Association’s Green Bond Principles.
Data from the World Bank’s Country Climate Development Report showed that up to three quarters of the Philippine population is vulnerable to the impacts of natural hazards. The report estimates that the economic damage caused by climate change in the country could reach up to 7.6 percent of GDP by 2030.
“As a bank known for its commitment to sustainable finance and climate change mitigation, we are delighted that IFC has entrusted us with this significant investment,” BPI president and chief executive Jose Teodoro Limcaoco said.
“This is our third green bond issuance, and we will draw on our successful track record to fund projects that will make a lasting difference in the communities in which we operate,” Limcaoco said.
BPI first issued a green bond in 2018, which was more than four-times oversubscribed.
Jean-Marc Arbogast, IFC country manager for the Philippines, said IFC was pleased to continue its impactful partnership with BPI, a long-time client and partner in promoting climate finance in the Philippines.
“Thematic bonds are a key pillar of our longstanding commitment to not only tackle climate change, but also to help deepen sustainable capital markets in the country,” Arbogast said.
Latest data from the Securities and Exchange Commission showed there were 28 sustainability bond issuances collectively valued at more than $10 billion since the first green bond was issued in 2016.
The green bond issuance is aligned with IFC’s 30 by 30 Zero Program, which aims to help financial institutions mobilize private financing for more climate-related projects in the Philippines.
It aims to help them grow their climate-related lending to 30 percent of their total portfolios with near zero coal exposure by 2030. As part of the program, IFC will also work with regulators and conduct training and workshops with potential issuers to support more thematic bond issuances in the country.
IFC is the largest global development institution focused on the private sector in emerging markets. It has a presence in more than 100 countries, using its capital, expertise, and influence to create markets and opportunities in developing countries.
IFC committed a record $32.8 billion to private companies and financial institutions in developing countries in fiscal year 2022.