More Philippine firms seen to tap sustainable finance to enhance resiliency

By Revin Mikhael D. Ochave, Reporter

PHILIPPINE companies are expected to integrate more sustainable financing into their capital-raising strategies as they pursue growth and build operational resilience amid economic and political uncertainties.

More banks, real estate, and utility firms are expected to issue sustainability-linked bonds, DragonFi Analyst Jarrod Leighton M. Tin said.

“These instruments are often linked to environmental, social, and governance (ESG) performance, with interest rates tied to the achievement of specific key performance indicators — falling short can trigger a rate penalty. For companies that prioritize ESG, sustainability-linked bonds offer both strategic alignment and competitive funding terms,” he said.

China Bank Capital Corp. Managing Director Juan Paolo E. Colet said sustainable finance will soon become a dominant form of fundraising for corporates.

“There is increasing issuer and investor demand for sustainable finance products, like green, social, and sustainability-linked bonds. So far, a lot of the funds raised from such issuances are flowing to support renewable energy and eligible real estate projects,” he said.

ING Philippines Country Manager Jun Palanca said the company is seeing strong client activity in the digital infrastructure and energy sectors, which are driven by long-term structural shifts.

“The energy transition is a major driver of investment activity. Despite broader market caution, renewable energy and transition-related mergers and acquisitions remain resilient across Australia, India, the Philippines, Japan, and South Korea,” he said.

“Digital infrastructure stands out as a key focus, with strong capital inflows into data centers, fiber networks, and connected ecosystems. Clients are increasingly focused on scalable, high-demand verticals — particularly artificial intelligence (AI)-enabled data platforms and regional connectivity solutions,” he added.

Mr. Palanca noted that ING is also intensifying its focus on Philippine clients in the food and agriculture sectors.

“The country presents significant untapped potential and is poised to play a leading role in building a more sustainable and resilient food system across Southeast Asia,” he said.

According to Mr. Palanca, the Philippines is entering a pivotal phase in its sustainable finance journey, underpinned by strong regulatory alignment and evolving investor expectations.

“The Philippine government’s sustainable finance roadmap, supported by financial regulators, offers clear guidance for market participants, catalyzing the development of green bonds, sustainability-linked loans, and ESG frameworks,” he said.

“This structured approach is prompting local institutions to broaden their funding strategies — embedding sustainability goals and accessing deeper pools of international capital,” he added.

Launched in 2021, the country’s sustainable finance roadmap and sustainable finance guiding principles seek to create an understanding among stakeholders of sustainable economic activities. These also aim to help make sustainable finance mainstream domestically.

In June, the Asian Development Bank (ADB) said in a report that the Philippines’ sustainable bond market only accounted for 2% of East Asia.

For the first quarter, the ADB said sustainability bonds took up 86.5% of the country’s total sustainable debt stock, followed by green bonds and sustainability-linked bonds with market shares of 11.7% and 1.8%, respectively.

ADB figures showed that the country’s outstanding local currency bonds rose by 4.1% to $235 billion in the first quarter.

For its part, the Securities and Exchange Commission (SEC) has been promoting the adoption of sustainable financing and practices in the local business sector.

In January, the SEC partnered with the International Finance Corp. (IFC) to support the 30by30 Zero Philippines Program that aims to raise the climate-related lending of financial institutions to 30% of total portfolio on average with near zero coal exposure by 2030.

The 30by30 Zero Philippines initiative was developed by the IFC and the World Bank.

SECTORS TO DRIVE CAPITAL SPENDING
With the projected increase in sustainable finance, more companies are seen to allot more capital in various sectors to support their growth.

Mr. Colet said that companies are expected to continue allotting massive capital expenditure (capex) in the energy and infrastructure sectors.

“Both sectors are attracting significant investor interest due to favorable macroeconomic fundamentals, government support, and ample financing,” he said.

“Given the long-term nature of capex investments in those sectors, sponsors and investors are looking beyond near-term uncertainties. They are willing to commit capital now because they remain optimistic about the growth prospects of the Philippines,” he added.

Ven Christian S. Guce, chief finance officer of listed holding company Filinvest Development Corp. (FDC), said the company’s capex in the near-to-medium term will be largely focused on digital transformation.

“These investments include group-wide upgrades and harmonization of enterprise resource planning systems, and enhancements in procurement, enterprise asset management, enterprise planning, and other operational systems to drive cost efficiencies,” he said.

“We continue to invest in people programs who are key drivers of the transformation. We have established centers of excellence such that we can leverage as a bigger cohesive group, to deepen expertise and sustain the transformation of the conglomerate to a high-performing organization,” he added.

Mr. Guce said FDC will remain focused on continuously improving and creating value for its customers.

“These may involve capex aimed at improving customer satisfaction, safety, health, and environmental outcomes. Digital investments are prioritized towards customer value creating systems and applications as well as for operating efficiencies,” he said.

“Within each of our business segments, capital allocation decisions are guided by internal hurdle rates and a constant review and anticipation of changing market dynamics and emerging economic cycles,” he added.

The Philippine Stock Exchange (PSE) is expecting capital raising to reach over P186 billion this year.

PSE President and Chief Executive Officer (CEO) Ramon S. Monzon said that capital raising at the local bourse reached about P62.6 billion for the first six months, with some P123.7 billion still expected to be raised in the latter half of 2025.

Andrian A. Perez, president of medical logistics firm PharmaServ Express, Inc., said the company is prioritizing investments in technology infrastructure, cold chain capacity, and last-mile delivery to help future-proof its operations.

“Our goal is to bridge the persistent gaps in healthcare logistics while staying agile amid shifting market conditions,” he said.

According to Mr. Perez, the company is actively exploring sustainability-linked debt instruments and blended financing, particularly for our cold chain expansion and digital health accessibility initiatives.

“With growing pressure to align business practices with ESG frameworks, many local corporations — including ours — are evaluating alternative capital sources that align with long-term sustainability goals. Financial instruments that reward good governance and environmental resilience are gaining traction in both the public and private sectors,” he said.

BUILDING RESILIENCY AMID UNCERTAINTIES
Amid political and economic uncertainties, corporates are faced with the challenge of making their operations more resilient to ensure continued growth.

AP Securities, Inc. Research Head Alfred Benjamin R. Garcia said companies should consider diversifying geographically or into other less regulated sectors to increase resiliency amid global uncertainties.

“Companies that are exposed to regulatory risk should consider diversifying into less regulated sectors… Another option would be to diversify geographically…,” he said.

Canon Marketing (Philippines), Inc. President and CEO Anuj Aggarwal said the company is strengthening its local ecosystem to ensure stability and responsiveness amid global uncertainties.

“At the same time, we’re building organizational resilience through workforce upskilling, process automation, and data-driven decision-making. Ultimately, our aim is to future-proof our business by ensuring that innovation, sustainability, and customer trust remain at the heart of our growth agenda, regardless of external challenges,” he said.

“Contingency plans must be proactive, not reactive. Our playbook includes business continuity frameworks, robust risk management systems, and digital transformation investments,” he added.

Mr. Tin said capital structure and financing strategy are ways that companies could protect themselves from political and economic uncertainties.

“Companies with strong reputations, transparent disclosures, healthy leverage ratios, and ample headroom on financial covenants are better positioned to raise capital — whether through preferred shares, stock rights offering (SRO), or bonds,” he said.

“If short-term external headwinds are expected to weigh on operations, these companies can still tap the markets to fund long-term growth,” he added.

Mr. Palanca said some of the approaches that Philippine corporates could implement on their contingency plans include building inventory and logistics buffers, boosting local sourcing, and integrating ESG and climate adaptation into planning efforts.

“Sustainability-driven contingency planning helps firms meet regulatory requirements while embedding long-term resilience. This includes climate risk assessments, resource efficiency measures, and alignment with national development goals,” he said.

“Leading firms are stockpiling critical inputs and partnering with logistics providers to enable rerouting and flexible delivery. This is especially vital in a country prone to typhoons and reliant on maritime trade,” he added.