SEC Philippines Encourages Use of Blue Bonds to Raise Capital

​The Securities and Exchange Commission (SEC) introduced its framework for the issuance of blue bonds in front of the business community and the investing public on Tuesday, seeking to encourage more companies to make use of the new investment product in achieving their sustainability goals.

The Commission officially launched on December 5 the SEC Guidelines on the Issuance of Blue Bonds in the Philippines, in line with efforts to promote sustainability while boosting participation in the capital market. The guidelines were launched alongside a conference entitled, “Advancing the Role of Capital Markets in Financing the Philippines’ Blue Economy,” co-organized with the Asian Development Bank, and in partnership with the Government of the United Kingdom.

The conference sought to analyze the status and potential of blue bonds in the local market, explore innovative financial instruments and capital market solutions to support the blue economy, and provide a platform for stakeholders to discuss opportunities to finance investments into the blue economy.

“As we unveil the guidelines on blue bond issuances, we take a giant leap towards fostering a sustainable blue economy and building a robust capital market in our country,” SEC Chairperson Emilio B. Aquino said during the launch of the guidelines at The SEC Headquarters in Makati City.

“Blue bonds, as a specialized class of debt securities, are emerging as a powerful tool globally to promote environmental sustainability, not only in the corporate sector but also at the sovereign level. These bonds provide a unique opportunity for us to channel investments into projects that support marine conservation, sustainable fisheries, and responsible aquaculture,” he added.

ADB Finance Sector Director Xiaoqin Fan expressed support for the Commission’s promotion of blue bonds, noting that ADB’s objectives are “strongly aligned” with the aspirations of the SEC.

“These guidelines will boost investors’ confidence by fostering transparency and systemization…ADB is delighted to support this important step in partnership with the SEC and the British government,” Ms. Fan said.

The issuance of blue bonds in the country is governed by SEC Memorandum Circular No. 15, Series of 2023 (MC 15), providing Guidelines on Eligible Blue Projects and Activities for the Issuance of Blue Bonds in the Philippines, released last September.

Several issuers have since expressed their interest to take advantage of the new investment product.

Blue bonds refer to a subset of green bonds and sukuk whose proceeds will exclusively be used to finance or refinance new and/or existing eligible blue projects and activities.

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.

They must also 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.

Quantifiable performance measures include 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 guidelines must be read and applied in conjunction with SEC Memorandum Circular No. 12, Series of 2018 (MC 12), or the Guidelines for the Issuance of ASEAN Green Bonds under the ASEAN Green Bonds Standards in the Philippines. As such, issuers of blue bonds must also comply with MC 12.

The issuance of blue bonds must also comply with Sections 8 and 12 of Republic Act No. 8799, or the Securities Regulation Code (SRC), on the registration of securities, unless the blue bond issuance would fall under an available exemption under Sections 9 and 10 of the SRC.