The Securities and Exchange Commission (SEC) said initiatives that aim to nurture a sustainable marine ecosystem may now be funded by “blue bonds.”
The securities market regulator said these projects are those that fall under ecosystem management and natural resources restoration of water-based ecosystems; sustainable fisheries management; sustainable aquaculture; and sustainable tourism in the vicinity of marine conservation areas.
They also include programs that involve solid waste management within 50 kilometers of the coast or river that drains to the ocean; projects that prevent and reduce waste from entering the coastal and marine environments; initiatives to reduce marine debris or associated impacts to marine life; wastewater management; ports and shipping projects to increase environmental performance and sustainability of maritime infrastructure and transport; marine and offshore renewable energy that do not harm marine ecosystems; and protection and restoration of aquifers.
A subset of the similarly-ecologically responsive green bonds, blue bonds are debt instruments issued to raise capital to finance marine and ocean-based projects that have positive environmental, economic and climate benefits, termed “blue projects.”
Blue projects may include ecosystem management and natural resources restoration of coastal, marine, river, lake, and other marine- or water-based ecosystems; sustainable fisheries management; and sustainable aquaculture, among others, as long as they directly aim to address sustainable water management and ocean protection.
Issuance under the blue bonds, widens and diversifies a company’s investor pool for its borrowing, tapping into investors looking for sustainability-aligned initiatives to invest into.
Under the SEC’s memorandum circular No. 15, Series of 2023 (MC15),
A blue bond must “substantially contribute to objective numbers 6 and/or 14 of the United Nations Sustainable Development Goals, which seeks to ensure availability and sustainable management of water and sanitation for all, and conserve and sustainably use the oceans, seas and marine resources for sustainable development, respectively.”
Such contribution shall be assessed and quantified, if possible, by the issuer, and can be measured based on greenhouse gas emissions reduced or avoided, ocean-based renewable power generation or energy savings, water savings, plastic waste reduced or avoided, and wastewater treated or avoided, among others.
The SEC said the blue bonds guideline is based on the Blue Finance Guidance Framework developed by the International Finance Corp. (IFC) and the Green and Blue Bond Framework of the Asian Development Bank.
“The Commission has consistently promoted the growth of sustainable bonds and projects in the Philippines over the past five years,” it said.
Prior to the release of the blue bonds guidelines, lender BDO Unibank Inc. issued the first blue bonds in Southeast Asia in May last year, where it raised a $100 million with a tenor of seven years, through an investment from the IFC.
The bank said the issuance will expand financing for projects that help prevent marine pollution and preserve clean water resources, while supporting the country’s climate goals.
