GIVEN the sharp uptake in the amount of green bonds issued worldwide, a ranking official of the Philippine securities regulator encouraged more of its issuers in the country to take advantage of the situation, especially with the upcoming local implementation of the standards set by the ten member-states of the Association of Southeast Asian Nations (Asean) next month.
“We are not a stranger to the issuance of [green bonds]. We are already doing it. We just need to introduce ourselves or reintroduce ourselves to the international financial community once again under a set of guidelines that are internationally accepted in order to tap that $36-trillion market,” said Securities and Exchange Commission Commissioner Ephyro Luis Amatong in his speech during the Green Financing Forum held at a hotel in Makati City on Wednesday.
According to Amatong, investors not only in Europe and North America, but also in Asia, mainly in Japan and China, are mandating investment in green bonds.
He cited Amundi and International Finance Corp.’s initiative to put up a fund of $2 billion to invest in green and emerging markets, including the Philippines.
“So the point I’m trying to make is that investors are putting their money behind green,” he emphasized. “The money is very, very real. And the demand coming from the Asean is also very real.”
Economic prospects in the region is upbeat. Based on the estimates of the World Bank, the Asian Development Bank and the International Renewable Energy Agency, economies in Southeast Asia are expected to grow at 5.2 percent between 2016 and 2020.
Infrastructure investment needs for the whole Asean, on the other hand, are approximated at $470 billion.
On the energy segment, there is a requirement of an additional $290 billion between 2016 and 2025. In the Philippines alone, around $30-billion fundings are needed over that time frame.
“Because we have a ‘Build, Build, Build’ program, infrastructure is something that we want to promote and something that we need to drive the economy going forward. And that infrastructure could easily be green [and] should be green. Mass transport, green housing, green buildings, renewable energy and a host of other investments could be green,” Amatong said.
Regionally, it is fortunate that there is a concerted effort to match the demand and supply of investment opportunities through the Asean Green Bond Standards (AGBS). It came into being so as to provide guidance to issuers, fund the projects and give assurance to investors that the projects are green.
The newest economic block had partnered with the International Capital Market Association to come up with this one set of common standards and assurance of consistency for both investors and issuers. The AGBS demonstrates Asean’s commitment to globally recognized Green Bond Principles created by ICMA.
“The Asean Green Bond Standards are intended to enhance transparency, consistency and uniformity throughout the 10 countries, and highlight the potential of the Asean region. We want to attract that capital into the region, and for my purpose, specifically to the Philippine,” the SEC commissioner said.
“We want it to make sure that the guidance we are putting out in the Asean is closely aligned with international expectations of what constitutes a green bond,” he added.
In this regional strategy, Amatong said the standards are also aimed at making investors think of the “Asean Green” as a specific investment asset class.
To qualify in the AGBS, there needs to be an Asean connection. The issuers from the region or the use of proceeds are for a project in the Asean, he explained.
What makes the AGBS different is that instead of coming up with a very definitive list, or what Europe is embarking on now which is a taxonomy of acceptable green projects, they have a negative list in order to keep things open and flexible.