Banks scale up sustainable, green financing
Banks operating in the Philippines continue to ramp up efforts to finance the transition and to get clients to switch to more sustainable ways of doing business. The country’s green financing segment is seen growing strongly with businesses and individuals intensifying their adoption of sustainable practices in the business operations as well as lifestyle.
To boost up its lending portfolio for green projects, BDO Unibank Inc. recently raised a record P63.3 billion, as retail and institutional investors swarmed the bank’s second foray into the ASEAN sustainability bond market after almost two years.
This was the largest single bond issuance by BDO, surpassing its first ASEAN sustainability bonds issue in January 2022 that raised P52.7 billion.
The amount was almost 12.7 times the original size of P5 billion, as the offer period was shortened by a week amid the rapid build-up in orders from retail and institutional investors.
The country’s biggest lender said the net proceeds of the issuance are intended to diversify the bank’s funding sources, and finance or refinance eligible assets as defined in its Sustainable Finance Framework.
Through the bank’s sustainable finance desk, the Sy-led bank has funded P781 billion in sustainable finance and a total of 58 renewable energy projects with total installed capacity of over 2,000MW as of end 2022.
According to BDO, it has stopped financing new coal projects since 2019, and additionally committed to reduce coal exposure by 50 percent in 10 years, as disclosed in its Energy Transition Finance Statement in 2022.
For its part, Rizal Commercial Banking Corp. (RCBC) has issued close to P80 billion in sustainable financing instruments to refinance eligible green and social assets since it implemented its Sustainable Finance Framework.
The Yuchengco-led bank is finalizing a P20-billion loan facility for 10 renewable power plants as it aims to be “a leading proponent for pure renewable energy in the Philippines.”
“As RCBC continues to drive sustainable development and promote clean energy solutions, our collaboration with major renewable energy players reinforces our commitment to supporting the transition towards a greener and more sustainable future,” RCBC Trust and Investments group head Robert Ramos.
Recently, Ty-led Metropolitan Bank & Trust Co. (Metrobank) extended a P5-billion loan to Ayala’s ACEN Corp. to bankroll its renewable energy expansion plan nationwide.
According to Metrobank, the facility is key in paving the way in expanding secure, reliable and affordable electricity supply in the Philippines.
For ACEN, the loan facility will help the company in achieving its vision of 20 gigawatts by 2030.
“ACEN plays an important role in promoting renewable energy within the country and the Asia Pacific region. We are honored to be a partner of ACEN in pursuing their energy projects that are key to building a more sustainable future for our planet and the generations to come,” Metrobank institutional banking sector head Mary Mylene Caparas said.
ACEN is one of the largest renewable energy firms in the region with 4,500 megawatts of attributable capacity across the Philippines, Australia, Vietnam, Indonesia and India.
The International Finance Corp. (IFC), the investment arm of the World Bank, invested $250 million in a green bond to be issued by Bank of the Philippine Islands (BPI) in an effort to grow climate finance in the Philippines.
This is the biggest deal IFC has done with a financial institution in the country.
The proceeds will be used to finance eligible green assets in the Philippines, including renewable energy, energy efficiency, green buildings, electric vehicles, and climate-smart agriculture projects, among others.
While most of the proceeds will be used for local projects, part could also be used to invest in bonds with underlying green assets overseas.
IFC has also agreed to help BPI build its capacity to assess the eligibility and impact of its climate projects.
BPI first issued a green bond in 2018, which was more than four-times oversubscribed.
“IFC is pleased to continue its impactful partnership with BPI, a longtime client and partner in promoting climate finance in the Philippines,” IFC Country Manager for the Philippines Jean-Marc Arbogast said.
Latest data from the Securities and Exchange Commission showed there have been 28 sustainability bond issuances collectively valued at more than $10 billion since the first green bond was issued in 2016.
HSBC Philippines extended a P1 billion green loan facility to leading integrated telecommunications network PLDT Inc. to partially fund the ongoing nationwide modernization and expansion of its fiber network supporting internet delivery platforms such as fiber fixed broadband, mobile data services, and carrier-grade WiFi.
This is HSBC’s first green loan facility to a Philippine-based telecom company.
The intended use of loan proceeds aligns with the Green Loan Principles, specifically on achieving energy efficiency. Studies show that compared with previous technologies, fiber cables generate less heat and no longer require cooling systems, thus, very minimal energy is lost to the environment.
The upgrade of the network to fiber and the resultant efficient operations support the PLDT Group decarbonization roadmap that aims to reduce its Scope 1 and Scope 2 greenhouse gas emissions by 40 percent by 2030, coming from a 2019 baseline.
To support this ambitious target, the group is actively exploring integration of renewables, green technologies, and various energy optimization initiatives.
As of end 2023, PLDT has over 1.1 million cable kilometers of fiber infrastructure, consisting of over 0.2 million cable kilometers of international fiber and over 0.9 million cable kilometers of domestic fiber; further narrowing the digital divide; and enabling a fast and reliable internet experience for its customers.
The Bangko Sentral ng Pilipinas has expressed its intention to vigorously promote the adoption of sustainable finance principles within the domestic banking system as part of its advocacy against environmental degradation as established at the 26th United Nations Climate Change Conference of Parties (COP26).
As much as three quarters of the population of the Philippines is vulnerable to the impacts of natural hazards. The World Bank’s Country Climate Development Report estimates that the economic damage caused by climate change in the country could reach up to 7.6 percent of gross domestic product (GDP) by 2030.