Pioneering sustainable finance in the Philippines: BDO’s Blue Bond Issuance Qorus Reinvention Awards - APAC - Winner

BDO Unibank is the largest bank in the Philippines and a pioneer in introducing sustainable finance initiatives since 2010. In 2022, BDO issued the country’s first Blue Bond amounting to US$100 million through an investment from the International Finance Corporation (IFC). BDO’s Blue Bond proceeds were used to finance three (3) key businesses in the Bank’s portfolio on water and wastewater management, including wastewater treatment, bulk water and operations management, and bulk water distribution facility. The projects are located in the provinces of Bulacan, Tarlac, and Rizal which are large and densely populated areas near coastal areas in the Luzon region of the Philippine archipelago. 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. BDO’s Blue Bond issuance comes at a critical time for the Philippines. As an archipelagic country composed of 7,641 islands, water supply is unevenly distributed across the country depending on the rainfall variability, size, and features of each island. The currently available supply cannot keep up with fast rising demand due to the region’s rapidly growing population, migration, and economic expansion. At present, severe and extreme water scarcity exist in parts of Luzon island, especially in the Greater Metro Manila Region and nearby provinces. Water availability in the Philippines is only 1,446 cubic meters (m3) per capita per year nationwide, indicating that the country is experiencing water stress --- a situation where water supply is from 1,000 to 1,7000 m3 per capita per year. With financing support from the Blue Bond, water management has improved as a result of increased technologies for reducing non-revenue water (NRW), sustainable water supply infrastructure, rain water harvesting, and surface water utilization. All these efforts increase clean water supply, while avoiding groundwater extraction. On the other hand, ocean pollution is a critically important issue in the Philippines as is it widely recognized as the “center of the center” of marine biodiversity in the world. The country is part of the Coral Triangle in Asia due the very large number of corals in the area, and other marine sources that thrive in the presence of the coral reefs eco-system: seagrass beds, mangrove and beach forest, fisheries, invertebrates, seaweeds, marine mammals, and many others (4th National Report to the Convention on Biological Diversity 2009, p. 45). Solid waste and waste water disposal, and chemical pollution are among destructive human activities that are primary threats for habitat loss in oceans and seas surrounding the Philippines. Through the financing from the Blue Bond proceeds, a client established a new wastewater treatment plant in Tarlac, a large and densely populated province near the Bangut and Tarlac Rivers. This allowed for the expansion of their wastewater management services to additional 121 businesses and 23 hospitals in the province. The wastewater treatment process's by-products are also re-used in other plant processes: steam is reused in the physico-chemical treatment plant, and ash is used to make pavers, bricks, and fence posts. The client also invested in thermal oxidation/incineration technology which results to energy and heat recovery from the thermal oxidation of wastewater solids. The heat recovered from this is used as an additional source of energy to power the plant’s lamp posts and light fixtures. Uniqueness of the Project: BDO’s Blue Bond issuance is the first private sector issuance by a commercial bank in Southeast Asia and the first financial institution in the world to follow IFC’s then recently released Guidelines for Blue Finance. BDO is the Philippines' first bank to finance projects that protect water and the ocean as critical natural resources, pioneering a new financial instrument to protect the environment.