BDO’s first Blue Bond helps address Philippines’ water crisis

Summary

BDO Unibank Inc. (BDO)’s $100 million Blue Bond issuance helped mitigate climate change by financing activities that addressed water scarcity, preserved clean water resources, and prevented marine pollution in the Luzon area of the Philippines. The BDO Blue Bond issued in 2022 was made possible by an investment from the International Finance Corporation (IFC) as the sole investor. It is the first private sector issuance by a commercial bank in Southeast Asia and the first to follow IFC’s Guidelines for Blue Finance. BDO is the first Philippine bank to directly fund projects that protect water and the ocean as critical natural resources, pioneering a new financial instrument to protect the environment. Beneficiaries included the Bulacan Bulk Water Supply Project, a Public Private Partnership (PPP) project of the national government providing water services to an entire province. Through the blue bond proceeds, 203,372 households were provided with clean water. A second beneficiary was Cleanway Environmental Management Solutions, Inc. (CEMSI), which provides integrated technology solutions for waste and wastewater treatment. CEMSI established a new plant in Tarlac City to expand services to industrial and hospital facilities. Through the blue bond proceeds, the new facility provided wastewater management services to 121 new businesses and 23 new hospitals. The Bank also provided blue financing to Wawa Bulk Water Supply Project, a flagship government infrastructure project designed to help tackle the water crisis in Metro Manila and the province of Rizal. It also aims to address flooding in downstream communities, as well as protect the eastern part of Metro Manila and lower areas in Rizal, Marikina and Pasig. Ultimately, 211,851 households benefited from clean water as a result of financing for the Wawa project. Financing these three projects resulted in savings of 60,062,121 m3 of ground water extraction, 323,939 m3 of water loss was avoided and an additional 4,517 m3 of wastewater was treated annually. These water savings are equivalent to 19,240 tonnes of CO2e emissions avoided.

Key Takeaways:

Systemic approach: By starting at the source, moving through use, and ending with the bodies of water, the Blue Bond-financed projects provide solutions to a systemic issue that ensure the availability of water resources and prevent ocean pollution for future generations.

Creating precedent: Deploying innovative mechanisms such as blue bonds in new markets helps create track record, build issuer and investor confidence, and strengthen domestic capital markets.

Leveraging investor frameworks: Aligning instruments like blue bonds with accepted principles and guidance builds credibility and supports growth in the market for innovative mechanisms.

BDO’s first Blue Bond helps address Philippines’ water crisis

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