THE Securities and Exchange Commission (SEC) has approved the guidelines for the issuance of ASEAN (Association of Southeast Asian Nations) Green Bonds in the country, which will be used to specifically fund green and sustainable projects.
ASEAN Green Bonds are defined by the ASEAN Capital Markets Forum (ACMF) as bonds and sukuk (Islamic bonds) that comply with the ASEAN Green Bond Principles. These principles pertain to voluntary process guidelines issued by the International Capital Market Association.
The approved guidelines aim to raise awareness as well as improve appetite for green financing in the country.
“Compliance with the ASEAN GBS (Green Bond Standards) enable local issuers to tap into the global green bond market which has been experiencing rapid growth over the recent years,” the SEC said in an e-mailed statement to reporters.
Under the approved guidelines, eligible issuers are companies incorporated in any of the ASEAN member countries. Non-ASEAN countries may also use this fundraising method as long as the green projects are located in the ASEAN region.
Section 8 of the guidelines state that the following projects may be financed through green bonds:
• renewable energy;
• energy efficiency;
• pollution prevention and control;
• environmentally sustainable management of living natural resources and land use;
• terrestrial and aquatic biodiversity conservation;
• clean transportation;
• sustainable water and waste water management;
• climate change adaptation;
• eco-efficient and/or circular economy adapted, production technologies and processes; and, green buildings which meet regional, national or internationally recognized standards or certifications.
The approved green projects must also provide clear environmental benefits, which should be assessed and quantified by the issuer. To note, fossil fuel power generation projects are not covered by the ASEAN GBS.
Under Sections 11 and 12 of the guidelines, the issuer must disclose where it has allocated the funds raised for the green project. Should portions of the issuance be used for refinancing, the company must provide an estimate of how much the funds went to refinancing and for what investment or project portfolio they were made.
The net proceeds should also be continuously reported to investors, including how much has already been spent and their impact. Quantitative measures for a project’s impact include energy capacity, electricity generation, the greenhouse gas emissions reduced or avoided, the number of people provided with access to clean power, the decrease in water use, and reduction in the number of cars required, among others.
To ensure proper reporting of the use of proceeds, issuers must provide investors with annual reports and the external review on those reports.
The approved guidelines will supplement requirements under Sections 8 and 12 of the Securities Regulation Code, which details rules on the issuance of securities. — Arra B. Francia