As investors are becoming more aware of the impact of climate change and its related challenges to their portfolios, the Bank of the Philippines Islands (BPI) noted that ESG or Environmental, Social, and Governance-focused issuances are increasingly becoming popular in capital markets.
According to Reinier Llige, head of debt capital markets of BPI Capital Corporation, Filipino companies considering issuing green bonds to finance and achieve their sustainability goals should have a clear sustainability policy and plan when setting up a roadmap for a cleaner, sustainable future.
“We need to understand the commitment of the company toward their sustainability goals. At the end of the day, the commitment of the company towards this goal should be able to outweigh the costs related to the issuance of green bonds,” said Llige.
Llige said it is also important that companies find the right partners that can offer the best advice and solutions to help them in structuring their deal.
“It is critical to choose a bank that shares the same commitment towards sustainability, so they understand the same commitment you have and help you structure and identify what’s best for the deal,” he said.
As many banks reaffirmed their commitment to gradually transition to renewable energy, Llige said he is seeing the trend attract more attention from institutional and some retail investors in the onshore market.
“Albeit the ESG consciousness among retail investors is still in early stage, with education, we are hoping more investors will be conscious with their investment decisions. It is a good way for companies to be able to tap this kind of investors and grow this awareness,” he said.
Boosting policies on green bonds
Llige counts on the role of regulators in developing policies to advance the growing market for green bonds in the country.
Citing the effort of Singapore’s monetary authority in providing grants to help companies manage the cost of setting up a sustainability framework, Llige said the program can also be useful in compelling Filipino companies to tap this financial solution.
“If there will be incentives for innovative ESG-related initiatives, that will help encourage others to follow suit and look at this solution for them,” he added.
Aside from companies, Llige said instituting incentives for investors would help “create pricing differentiation and attract more interest from investors to be more conscious about their investment decisions.”