SEC issues guidelines on blue bonds

The Securities and Exchange Commission (SEC) will issue guidelines on the issuance of blue bonds in the Philippines with the hope of attracting more investments that will address climate issues.

Blue projects and blue bonds are those whose proceeds will be used exclusively to fund oceanbased climate mitigation projects. They are a subset of green bonds where proceeds are used to finance or refinance environmental projects.

In a draft circular, the SEC said all proposed blue projects must provide clear benefits to ocean health and the blue economy and must contribute substantially to sustainability goals.

“Eligible blue projects aim to directly address sustainable water management and ocean protection and seek to contribute to the development of the blue economy,” the SEC said.

The projects include ecosystem management and natural resources restoration of coastal, marine and other ecosystems; sustainable fisheries management; sustainable aquaculture; sustainable tourism in the vicinity of marine conservation; solid waste management projects within 50 kilometers of the coast or a river that drains into the ocean; wastewater management; ports and shipping projects to increase environmental performance and sustainability of infrastructure and transport, and marine and offshore renewable energy.

Eligible blue activities include water supply, water sanitation and sustainable shipping.

Fossil fuel power generation projects are excluded from the eligible blue projects or activities, the SEC said.

Outstanding bonds issued by Philippine-based issuers where proceeds were used in the Philippines will be considered for eligibility under these guidelines, the SEC said.

The proposed guidelines will be based on the Blue Finance Guidance Framework developed by the International Finance Corp. and the Green and Blue Bond Framework of the Asian Development Bank.

The issuance of the guidelines for blue bonds is part of the SEC’s efforts to promote the use of capital markets in achieving the United Nations Sustainable Development Goals and the targets under the Paris Agreement to reduce greenhouse gas emissions by lowering the average global temperature to well below two degrees Celsius.

It has made public the draft guidelines for comments.