IFC Invests $250 Million in Green Bond to Drive Climate Finance in the Philippines

Strategic Insights -

In a move to spur climate finance in the Philippines, the International Finance Corporation has agreed to invest $250 million in a green bond issued by Bank of the Philippine Islands (BPI), the second largest private bank in the country. The investment is the largest deal IFC has done with a financial institution in the Philippines and aims to finance eligible green assets, including renewable energy and climate-smart agriculture projects. The bond will be used to support local and international projects, with the potential to invest in bonds with underlying green assets overseas.

Key Takeaways:

  • The International Finance Corporation will invest $250 million in a green bond issued by Bank of the Philippine Islands to drive climate finance in the Philippines.
  • The bond will be used to finance eligible green assets, including renewable energy, energy efficiency, green buildings, electric vehicles, and climate-smart agriculture projects.
  • Proceeds may also be used to invest in bonds with underlying green assets overseas.
  • The deal is the largest investment IFC has done with a financial institution in the Philippines.
  • The investment aligns with the International Capital Market Association's Green Bond Principles.
  • IFC will help BPI build its capacity to assess the eligibility and impact of its climate projects.
  • As much as three quarters of the Philippines' population is vulnerable to the impacts of natural hazards.
  • The World Bank's Country Climate Development Report estimates that the economic damage caused by climate change in the country could reach up to 7.6 percent of GDP by 2030.
  • BPI has issued two other green bonds, with the first one being more than four times oversubscribed in 2018.
  • IFC is working with regulators and conducting training and workshops to support more thematic bond issuances in the country as part of its 30 by 30 Zero Program.
  • There have been 28 sustainability bond issuances in the Philippines since the first green bond was issued in 2016, collectively valued at over $10 billion.

Statistics:

  • $250 million: IFC's investment in the green bond.
  • 28: Number of sustainability bond issuances in the Philippines since 2016.
  • $10 billion: Collective value of sustainability bond issuances in the Philippines since 2016.
  • 7.6 percent: Estimated economic damage caused by climate change in the Philippines by 2030 (based on the World Bank's Country Climate Development Report).
  • 2030: Year by which IFC aims to have financial institutions mobilize private financing for more climate-related projects in the Philippines as part of its 30 by 30 Zero Program.

Sources:

  • Global Data Point
  • Bank of the Philippine Islands
  • International Finance Corporation
  • World Bank
  • Philippines' Securities and Exchange Commission
  • International Capital Market Association