Understanding Blue Bonds and Blue Projects in the Philippines

Investing in the Future of Our Ocean: What Foreign Companies Need to Know About Blue Bonds in the Philippines 

In its continued effort to promote sustainable development, the Securities and Exchanged Commission (SEC) of the Philippines issued Memorandum Circular No. 15, Series of 2023, setting forth the “Guidelines on Eligible Blue Projects and Activities for the Issuance of Blue Bonds”. This landmark circular aims to create a robust framework for mobilizing private capital to finance projects that contribute to the sustainable use and preservation of marine and water resources. For foreign companies exploring opportunities in the Philippines, understanding these guidelines is essential to ensure compliance and to harness the benefits of this innovative financial instrument. 

The Emergence of Blue Bonds in the Philippines: A Historical Perspective 

The introduction of blue bonds in the Philippines is rooted in the nation’s broader commitment to sustainable development and environmental stewardship. As an archipelagic country with over 7,600 islands and one of the world’s richest marine biodiversity hotspots, the Philippines has long recognized the critical importance of its marine and aquatic resources. These resources underpin livelihoods, food security, and economic stability for millions of Filipinos, particularly those in coastal communities. However, over the years, the country has faced mounting challenges such as overfishing, marine pollution, coral reef degradation, and the impacts of climate change. Recognizing the urgency of addressing these issues, the Philippine Government has actively sought innovative financial solutions to fund marine conservation and sustainable development initiatives. 

The concept of blue bonds gained prominence in the global financial landscape following the issuance of the first-ever sovereign blue bond by the Seychelles in 2018. Inspired by this success, the Philippines began exploring the potential blue bonds to address its own environmental challenges and to align with international sustainability framework such as the United Nations Sustainable Development Goals (SDGs).  

In 2022, the Philippines made its first significant step by participating in regional dialogues and capacity-building initiatives on sustainable finance. This development positions the Philippines as a leader in sustainable finance within the Southeast Asia and reflects its commitment to safeguarding marine ecosystems while fostering economic growth. 

Understanding Blue Bonds and Their Significance 

Blue bonds are specialized debt instruments designed to finance projects that directly address the conservation and sustainable use of aquatic and marine resources. They are aligned with broader global frameworks, such as the United Nations Sustainable Development Goals (SDGs), particularly SDG 6 “Clean Water Sanitation” and SDG 14 “Life Below Water”. The SEC’s initiative highlights the Philippines’ commitment to combating marine degradation, supporting sustainable fisheries, and advancing climate resilience in coastal communities. 

For foreign companies, blue bonds present a unique opportunity to combine financial returns with meaningful environmental and social impacts. The issuance of these bonds enables companies to demonstrate their commitment to Environmental, Social, and Governance (ESG) principles while participating in the dynamic and resource-rich maritime landscape of the Philippines. 

Key Provisions of SEC Memorandum Circular No. 15, Series of 2023 

The circular outlines specific guidelines and criteria for identifying eligible blue projects and activities, ensuring that proceeds from blue bonds are directed toward sustainable and impactful initiatives. The key provisions include: 

1.) Eligible projects must contribute to one or more of the following objectives: 

• Prevention and reduction of marine pollution, including plastic waste; 
• Promotion of sustainable fisheries and aquaculture practices; 
• Sustainable management of marine and freshwater resources; 
• Protection and restoration of marine and coastal ecosystems, including coral reefs and mangroves; and 
• Improvement of water quality and wastewater treatment infrastructure. 

2.) Issuers are required to adhere to internationally recognized frameworks, such as the International Capital Market Association (ICMA) Blue Bond Principles. This alignment ensures transparency, accountability, and credibility in the use of bond proceeds. 

3.) Companies intending to issue blue bonds must demonstrate a clear understanding of the blue economy’s dynamics, provide robust documentation outlining the environmental and social impacts of proposed projects, and establish mechanisms for the transparent allocation and monitoring of funds. 

4.) Issuers must engage independent third-party verifiers to validate eligibility of their projects and provide annual reports on the use of proceeds and project outcomes. This requirement promotes investor confidence and mitigates risks of greenwashing. 

5.) The Philippine government has introduced incentives to encourage investments in blue projects, including preferential tax treatment for certified issuances and streamlined regulatory processes. 

Opportunities for Foreign Companies 

The Philippines’ archipelagic nature and extensive marine resources offer immense potential for blue projects. Key areas of opportunity for foreign companies include: 

• Marine conservation initiatives 
  Supporting programs for coral reef restoration, mangrove restoration, and marine biodiversity conservation. 
• Sustainable Fisheries 
  Developing technologies and practices that enhance productivity while maintaining ecological balance. 
• Innovative Wastewater Management Solutions 
  Establishing wastewater treatment facilities and systems to improve access to clean water in urban and rural areas. 
• Marine Pollution Mitigation 
  Addressing the growing challenge of plastic pollution through advanced waste management systems and recycling technologies. 

Strategic Considerations for Compliance and Success 

Foreign companies seeking to engage in blue projects in the Philippines under this framework should consider the following: 

• Collaborate with Local Stakeholders 
  Establishing partnerships with Philippine government agencies, local governments, and community organizations can facilitate project implementation and compliance with local regulations. 
• Prioritize Capacity Building 
  Investing in training and technology transfer for local communities ensures long-term project sustainability and strengthens relationships with stakeholders.\ 
• Leverage Financial Expertise 
  Work with experienced financial advisors and legal counsel familiar with Philippine regulations to navigate the issuance process effectively. 
• Maintain Transparency 
  A robust reporting system and clear communication with investors and regulators are critical for building trust and ensuring regulatory compliance. 

SEC Memorandum Circular No. 15, Series of 2023, provides a clear and structured pathway for financing blue projects in the Philippines through blue bonds. For foreign companies, this framework represents not only a mechanism for contributing to global sustainability but also a strategic entry into one of the Southeast Asia’s most vibrant economies. 

The historical context underscores the Philippine’s deep-seated reliance on marine ecosystems and its proactive measures to address environmental challenges. By adhering to the SEC guidelines and aligning with the principles of the blue economy, foreign entities can effectively leverage the opportunities presented by this initiative. With the right partnerships, expertise and commitment, for foreign companies can play a pivotal role in safeguarding the Philippines’ aquatic resources while achieving sustainable growth. 

FORVIS MAZARS CORPORATE SECRETARIAL SERVICES 

Navigating the regulatory landscape of the Philippines can be complex, especially for foreign companies. Forvis Mazars offers comprehensive corporate secretarial services tailored to meet the needs of businesses operating within this evolving regulatory landscape.  

Forvis Mazars Corporate Secretarial Services include: 

• Compliance Management: Ensuring adherence to SEC regulations, including those outlined in Memorandum Circular No. 15 
• Documentation Support: Assisting in the preparation and submission of necessary documentation for blue bond applications.  
• Corporate Governance Advisory: Providing guidance on best practices in corporate governance related to sustainability initiatives. 
• Stakeholder Engagement: Facilitating communication between companies and regulatory bodies to enhance transparency and trust. 

By leveraging our expertise, organizations can focus on their core operations while ensuring compliance with regulatory requirements, ultimately contributing to a more sustainable future.  

For more inquiries, contact us for an initial call or follow the link below. today at to learn more about how we can empower your business to thrive in the Philippines’ dynamic and evolving sustainable finance ecosystem.