The International Finance Corporation ( IFC ), the private investment arm of the World Bank Group, is investing US$100 million in the inaugural issuance of a sustainability bond by Union Bank of the Philippines ( UBP ), the proceeds of which will be used to provide loans to micro, small and medium-sized enterprises ( MSMEs ) in the country. They are also earmarked to support the growth and diversification of the bank’s sustainability assets, including renewable energy, energy efficiency or green buildings.

The IFC has been providing technical support through its 30 by 30 Zero programme to help UBP diversify its portfolio to include new eligible sectors or segments and identify sustainability-related financing opportunities.

The 30 by 30 Zero programme is a flagship climate initiative by the IFC and the World Bank, supported by International Climate Initiative of Germany. It aims to help financial institutions increase their climate-related lending to 30% of their total portfolios by 2030 while simultaneously reducing coal exposure to nearly zero.

“This landmark sustainability bond builds on our strong and continuing partnership with the IFC and reflects UBP’s commitment to advancing our sustainable finance agenda,” says Johnson L. Sia, the bank’s treasurer and head of global markets in a filing in the Philippine Stock Exchange on July 15. “Following our successful collaboration on UBP’s first social bond, this second partnership with the IFC strengthens our ability to support sustainable finance borrowers so they can grow their businesses, create jobs and contribute to inclusive growth in the Philippines.”

The latest investment is part of the IFC’s programmatic approach to deepening local capital markets in the Philippines. In 2021, the IFC invested US$150 million in UBP’s first social bond to finance over 3,000 loans to MSMEs, which have been disproportionately impacted by Covid-19.