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China Banking Corporation issues $150m green bond

China Banking Corporation issues $150m green bond

China Banking Corporation (CBC) has confirmed it is launching a green finance bond that will help raise funds for several projects with the aim of being more climate-friendly, including renewable energies, green buildings, conserving water and making

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By Meili Chen 22.10.2018

China Banking Corporation (CBC) has confirmed it is launching a green finance bond that will help raise funds for several projects with the aim of being more climate-friendly, including renewable energies, green buildings, conserving water and making processes more energy efficient.

CBC, which is known for being the first privately owned bank in the Philippines, said late last week that the fund will be fully issued by the International Finance Corporation (IFC), part of the World Bank. This will be the second time that a green bond in the country has gone through the IFC.

The Philippines has a stringent target of reducing emissions by 70% before the start of 2030, and progress is already underway to help the island nation mitigate the worst effects of climate change before they become too much of a threat.

CBC President William Whang said: “This bond confirms our long-term commitment to sustainability.” The move will hopefully provide some consistency and encourage investors to believe that this is a stable market in which to operate.

The issuance needs to match the Green Bond Principles set by the IFC, which means that the Philippines has to invest in a certain number of projects of different types, concentrating on removing inefficiencies in energy processes, delivering clean sources of energy and finding ways to protect vital resources such as water.

This is not CBC’s first green bond, and it will bring its total portfolio up to $200m. The bank is adding to its burgeoning moves into the green finance market as it looks to establish itself as a market leader in the sector and maximize its sustainability credentials.

BDO Unibank, the largest lender in the country, has matched the CBC’s entry to the green market. At the end of 2017, it released its own $150m green bond initiative fully covered by the IFC. Its aim was to get more private finance into the sector.

The IFC has been busy making progress on climate finance in the Philippines, as it released a peso-denominated bond, the Mabuhay, which is worth around $90m. This bond focuses on local solutions to some of the problems facing the islands and hopefully will stimulate renewable energy growth through capital funding at a smaller level.

Set over 15 years, this green bond was able to break new ground as it delivered increased sustainability capabilities in the country. The bond was the first in the form of Philippine pesos that any multinational financing corporation released. All the funds generated from this process go back into the Energy Development Corporation, which is an investment vehicle that focuses on climate resilience and has a big push for geothermal energy in the works.

CBC and the IFC first connected back in 2012 over an advisory project on sustainable finance. CBC then went on to help mobilize $14.78bn worth of contributions to the UN Sustainable Development Goals, particularly through loans, bonds and securities.

The number of projects that the IFC is currently allocating has dramatically increased to 52 in 2018, up from 32 in 2017. These additional mechanisms should significantly reduce the amount of carbon emitted compared to last year’s efforts.

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