Security Bank vows to stop funding coal plant projects decade from now

Security Bank announced that it will no longer extend financing to coal-fired power facilities in its bid to align its project funding strategy to the goals of the Paris Agreement and the climate change diplomacy based of the 26th Conference of the Parties (COP26) on abating climate change risks.

In a statement to the media, Security Bank noted that it will exit coal project financing by 2033 – or roughly a decade from now, so it can contribute to the global goal “to cut greenhouse gas emissions and limit global warming for a more sustainable future.”

Security Bank qualified that as it moves away from coal-fueled energy generation projects, “it will work with its clients in the energy sector who are committed to sustainable development by supporting the use of low carbon energy sources and financing new technologies to help in the transition to a low-carbon economy.”

It emphasized that “the bank will provide these clients with support, both from a lending and capital market perspective.”

According to Eduardo Olbes, chief finance officer and chairman of the Sustainability Committee of Security Bank, the plan on ceasing coal project funding had been anchored on its Environmental and Social Risk Management System (ESRMS) that was approved by the bank’s board last year.

“A key aspect of the ESRMS is our coal policy, which specifies our commitment to discontinue financing the construction of new coal-fueled power generation plants, with a view to exit funding coal generation by 2033,” he stressed.

The bank’s self-designed ESRMS casts “the policies and enhanced due diligence required for identifying, addressing, and mitigating environmental and social risks in (its) operations, lending and investing practices, and supply chain.”

Olbes reiterated that “Security Bank is committed to long-term sustainability by advocating lending, investment, and procurement activities that will help the country transition to a lower carbon economy and build resilience to climate change.”

Although the updated 2020-2040 Philippine Energy Plan (PEP) already targets investment shifts to renewable energy (RE), the realistic situation for the country is it might still need to rely on coal plants within the short- to medium-term due to recurring problems of power supply shortages.

Security Bank similarly cited market research undertaken by Statista that “the Philippines still relies heavily on coal as the main source of energy with 57-percent of the country’s energy needs coming from it,” while 21-percent of energy resources are provided by RE technologies that include hydro, wind, solar and geothermal.

Apart from scrapping coal financing in its lending portfolio, Security Bank indicated that it will also be pursuing other initiatives that are anchored on the United Nations Sustainable Development Goals.

These will include promoting “decent work and economic growth,” as well as industry, innovation and infrastructure buildup – that shall be integrated into its mission of “enriching lives, empowering businesses and building communities sustainably.”