Saving our seas or rebranding an old development gap?

When Bank of the Philippine Islands (BPI) announced its intention to issue a blue bond, it did more than enter a rising frontier of sustainable finance. It opened a new debate: Can private capital genuinely protect the Philippine marine economy — or will “blue” merely rebrand old vulnerabilities in public infrastructure finance?

This is no ordinary issue about geography. The Philippines is a nation of coasts — 36,000 kilometers of shorelines, marine biodiversity that rivals the Coral Triangle, and a population clustered along fragile waters. Yet those same waters have long been collateral damage in the country’s most expensive and politically charged public spending category: coastal development, flood control, port expansion, and wastewater systems.

Through the years, billions of government funds have been allocated on these crucial concerns — billions that remain unaccounted for. Since public funding is generally used to benefit communities through health programs, environmental care, or infrastructure in high-need communities, one question naturally emerges when a private bank like BPI steps in with capital tied to oceans, wastewater, and coastal resilience: Are blue bonds a visionary tool or an admission that public funds tend to vanish before their job was done?

The caveats and risks — negative effects and concerns

1. Definition creep / “blue-washing” risk

Green, blue, and social bonds are all thematic bonds designed to finance projects that create a specific positive impact, but their focus areas differ. Green bonds are dedicated to environmental projects, and social bonds fund initiatives that promote social well-being. Blue bonds are a specialized category within green bonds, specifically targeting the financing of projects related to ocean and marine conservation. 

One of the largest risks in any green, blue, or social is the credibility of the Use-of-Proceeds and the risk of “green / blue-washing” (i.e., proceeds used for projects that claim sustainability credentials but in effect are only marginally so). For a blue bond especially, the boundaries can be fuzzy: what counts as “marine and ocean-based sustainability”? Does it include large commercial shipping that merely replaces one fuel with another? Does it include port expansion with increased traffic? Does it include coastal real-estate development labeled as “eco-tourism” but with heavy environmental impact? Without tight eligibility criteria and strong third-party verification, the risk is that the instrument becomes a mere marketing tool rather than a real effort with social impact.

Given that BPI’s framework only includes Blue as one category (rather than clearly evidencing many projects ready for deployment) one must ask: will BPI refrain from issuing until there are enough pipeline projects with concrete measurable outcomes, or will market pressure push them to issue first and then find projects later? BPI says it already “has some projects that would be eligible once it have the framework,” but that still leaves the door open for opportunistic use. 

2. Project risk / execution risk

Marine and ocean-based projects often carry higher execution risk: permitting (coastal zoning, environmental impact assessments), community opposition, logistics (offshore installations cost more than onshore), climate risk (storms, sea-level rise, typhoons), and technology risk (marine renewables are less mature). If BPI finances these projects via the blue bond, then there is higher risk of cost overruns, delays, and non-performance which may either undermine investor confidence or lead to reputational risk for the bank.

Also, if the projects generate revenue streams (fishing, tourism, port logistics) they may be subject to regulatory risk, biodiversity impact risk (if not done sensitively), or climate-shock risk, which raises questions for the bank about how it will mitigate such risk, and whether the bond documentation includes risk allocation, reserve funds, monitoring, etc.

3. Funding cost versus use-of-proceeds mismatch

In BPI’s previous issuance (the SINAG bonds), the bond was a short tenor (1.5 years) and a relatively high coupon (5.85% per annum) for domestic investors. If a blue bond is issued, the maturity, coupon, currency and investor base will matter greatly. If BPI issues in peso with short maturity, then longer-lived marine projects (which might have pay-back periods of 10-20 years) risk a mismatch: short-term funding for long-term assets. That creates refinancing risk. If investors expect shorter durations, then BPI will have to roll over, potentially at higher cost. If cost of funds is too high, then the bank may either limit the types of projects financed or accept lower internal rates of return — which may challenge economic viability.

4. Accountability and reporting — not a one-off marketing exercise

The value of thematic bonds lies not only in raising money but in linking capital to measurable outcomes. If BPI issues a blue bond and then fails to publish credible, audited impact reports (for instance: % of proceeds deployed, types of projects, socio-economic environmental outcomes, verification by independent third party) then the instrument risks being viewed cynically. For those interested in governance, the question they must ask is: will BPI publish disaggregated data on what portion of proceeds go to e.g., sustainable fisheries vs wastewater vs marine renewables? What are the Key Performance Indicators (KPIs) or jobs created in coastal communities, tons of plastics removed from Gulf of Manila, megawatts (MWs) of marine renewable energy installed? Will there be claw-back or penalty mechanisms if deliverables are not met? The Sustainable Funding Framework mentions reporting, but the devil will be in the details. 

5. Potential crowding out / misallocation risk

While blue bonds direct funding toward sustainability, there is a governance angle: will they inadvertently crowd out other equally needed investments (e.g., in weaker rural banking, in community credit, in infrastructure in less glamorous sectors)? Also, given the potential “buzz” around blue finance, will some sub-optimal projects be elevated simply to qualify, even though their social or ecological returns are low? In other words: the existence of a labeled bond does not automatically guarantee optimal allocation of capital — there must be a strong governance overlay. Given the Philippines’ history of large-scale infrastructure procurement concerns (which you routinely track), one must watch for transparency regarding project selection, procurement, bidding, supplier oversight, contractor performance. Otherwise, “sustainability theatre” is the risk that arises.

6. Macro / interest-rate / liquidity risk

From an investor perspective, blue bonds are still niche, especially in the Philippines. If global interest rates rise, investor appetite may weaken, or yield premiums may widen. For BPI, issuing at the wrong time may mean paying a higher coupon or facing weaker investor demand. There’s also the potential of foreign-currency risk if the bond is issued offshore and repatriated back for domestic projects (unless hedged properly). These broader funding conditions may affect whether the blue bond becomes a cost-effective instrument — something BPI itself acknowledges as it watches market timing. 

What blue bonds are designed to finance — and why it matters

BPI’s sustainable funding framework outlines eligible uses:

1. Waste and wastewater systems near rivers and coasts
2. Marine renewable energy (offshore wind, tidal, floating solar)

• Pollution-control along waterways
• Port environmental upgrades & sustainable shipping
• Sustainable aquaculture & tourism near marine reserves
• Marine ecosystem protection

Crucially, traditional flood-control civil works do NOT fall under BPI’s eligibility list. That means no dredging contracts, no dikes, no embankments — the very contracts linked to some of the country’s most persistent procurement controversies.

Still, the overlap is unmistakable. Where there are wastewater systems, permits follow. Where ports modernize, government concessions and the Philippine Ports Authority (PPA) loom. Where coastal assets rise, local government unit (LGU) approvals and environmental compliance certificates unlock land and water.

Although the bond may not touch the flood-control budgets of the Department of Public Works and Highways (DPWH), it will stand at the shoreline of government influence.

And historically, that shoreline is where public funds have washed out to sea.

A good idea — if kept out of the wrong hands

Fairness demands this: blue bonds can do good. They can move capital faster than the bureaucracy. They can unlock long-term financing for offshore wind and modern sewage systems — both of which government has talked about for decades and still struggles to scale. They can force measurable environmental KPIs, annual reporting, and independent verification — standards government projects only dream of.

They can build wastewater treatment where fecal coliform still pollutes Manila Bay.

They can support ports that don’t spew untreated bilge into coastal waters. They can finally bring credible financing to fisheries certification — protecting livelihoods instead of merely announcing “livelihood projects.”

If executed with rigor, blue finance can leapfrog decades of bureaucratic neglect.

And the Philippines — battered by climate change, reliant on ports, dependent on coasts — desperately needs that.

But private capital in public terrain demands vigilance

For every promising headline, three hard questions follow:

1. IF THE GOVERNMENT ALREADY FUNDED COASTAL PROJECTS, WHY ARE BANKS NEEDED NOW? – Was public money wasted? Delayed? Diverted? Sustainable finance markets do not typically appear in countries where fiscal delivery works flawlessly. They emerge where public capacity is strained or compromised.

2. WHO DECIDES WHICH PROJECTS QUALIFY? – BPI screens internally and hires third-party verifiers. Government does not control the selection — and that is both a blessing and a risk.

• Blessing: fewer political hands.
• Risk: private-sector opacity could replace public opacity, unless project-level disclosure becomes mandatory.

3. COULD BLUE LABELS MASK OLD NETWORKS? – The framework bars generic flood-control projects, but wastewater and port environmental upgrades still intersect with traditional contractors and local fiefdoms. Without name-by-name disclosure, even verified funds could flow adjacent to power blocs with a history of shaping coastal budgets.

The transparency test

BPI promises:

• Annual reporting
• Allocation breakdowns
• Impact metrics
• External verification

Good — but not enough.

The Filipino public deserves project-level visibility, not just aggregated summaries.

If taxpayers spent years funding similar priorities, citizens have the right to know where gaps appeared — and who now fills them.

A bond marketing like “blue economy” cannot operate behind a blue curtain.

The verdict: Blue bonds are not the enemy — complacency is

We should welcome innovation. We should welcome private capital that aligns profit with stewardship. And we should welcome banks that finance sewage treatment and offshore wind instead of casinos and condos.

But we should never welcome with blind trust projects in sectors where billions in public money dissolved without trace.

If BPI’s blue bond brings rigor, transparency, and project-by-project accountability, it can become a milestone — a Philippine case study in sustainable finance that protects the sea instead of subsidizing those who polluted it.

If not?

It risks becoming the next sophisticated vessel through which public failure is laundered into private opportunity — a sustainability label wrapped around old inefficiencies and new invisibility.

What matters most now is whether BPI’s blue bonds will purify Philippine waters — or simply learn to swim in them. – Rappler.com