Leading Philippine Lender BDO Unibank Imposes Tougher Conditions for Coal-Related Financing | News | Eco-Enterprise

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Making the announcement at the Unlocking Capital for Sustainability (UCFS) Philippines dialogue organized by Eco-Business on the topic of sustainable finance, the bank’s senior vice president and chief compliance officer, Federico P. Tancongco, said that the bank once thought it was better to just ‘do things quietly and efficiently’, but has now offered a public statement in recognition of the role it plays as the country’s largest bank, after months of in-depth discussions .

“We have a responsibility to publicly express our commitments to our stakeholders and to disclose the actions we have taken for our portfolio investments,” he said.

UCFS Philippines moderators and speakers include (from top left, clockwise) Eco-Business Southeast Asia Partnerships Manager and National Philippines, Ping Manongdo; IFC Philippines Country Director Jean-Marc Arbogast; Vice President and Head of BDO’s Office of Sustainability, Marla Garin-Alvarez; Federico P. Tancongco, Senior Vice President and Chief Compliance Officer of BDO; WWF-Philippines Sustainable Finance Party Leader Edgardo Tongsen; Finance Undersecretary Cielo Magno; and Director of Eco-Business Partnerships and Head of Events and Engagement Meaghan See. Image: Eco-business

Tancongco called BDO’s approach to energy transition “realistic,” adding that in a situation where the Philippine government implements interim emergency measures to deal with an energy crisis, or to the extent that resources The country’s energy companies can no longer meet its energy needs, BDO may reconsider extending capital for coal projects, “in the interest of advancing the country’s social goals”.

“The balanced approach must recognize the difficult trade-offs that must be made along the way between national economic development that depends on affordable and reliable energy, and the relentless pursuit of the broader goal of climate sustainability,” he said. he declared.

When asked if the bank’s stance was too cautious given the multiple caveats it added to the updated statement, Tancongco said qualifications had not been added to allow it to go back on its promises when it wishes.

“We understand that this has happened in many countries in Europe, where companies and banks that felt the effects of the Russian-Ukrainian war continue to support coal production,” he said. “Ultimately, BDO does not intend to fund new capacity that will increase emissions of harmful greenhouse gases into the environment.”

BDO’s decision comes on the heels of the Glasgow Financial Alliance for Net Zero, led by former Bank of England Governor Mark Carney, announcing tougher criteria for ending coal funding for financial institutions, with special emphasis on the end of new coal financing activities. Companies that initially joined the alliance risk being kicked out for failing to meet new goals. According to the UN group Race to Zero, tougher checks on financial groups could be launched during the COP27 climate talks to be held in Egypt in November.

TCFD Aligned Disclosures

With its new commitment, BDO joins just a handful of Philippine banks that have pledged to divest their assets of dirty fuel, the main source of greenhouse gas emissions that trigger climate change induced by the man. Civil society groups such as the Withdraw from Coal (WFC) network have consistently criticized Philippine financial institutions for being slow to finance coal.

In its four-part statement, BDO pledges to be transparent and accountable to its goals and commitments, ensuring that reporting on climate change actions, risk mitigation, measures and targets are aligned on the recommendations of the Task Force for Climate-related Financial Disclosures. (TCFD), a reporting framework currently widely accepted across industries and jurisdictions.

It will also continue to expand financing for its pipeline of renewable energy projects. BDO currently finances 54 renewable energy projects across the country.

During the roundtable, BDO vice president and head of the sustainability office, Marla Garin-Alvarez, said this renewable energy financing effort has been underway since 2010. So that’s where the money would go,” she said.

Other speakers, including Undersecretary for Finance and Economist Cielo Magno, Philippines Country Director for the International Finance Corporation (IFC), the investment arm of the World Bank Group, Jean-Marc Arbogast, as well as CEO and co-founder of green data startup MioTech Jason Tu, also called for a more robust reporting and monitoring framework to monitor companies.

“We need a clear taxonomy, so investors know what they’re investing in,” Arbogast said.

On Thursday, Finance Secretary Benjamin Diokno told a separate forum that the Philippines plans to step up its fight against climate change by pushing for sustainable financing and investments in climate resilience. Part of the initiatives include the country issuing its first-ever global sustainability bonds earlier this year.

Diokno also said the administration led by President Ferdinand “Bongbong” Marcos Jr., fresh from a hotly contested election, is committed to including environmental sustainability in its legislative priorities.

Transparency in the governance of natural resources

There have been criticisms, however, of the new administration’s plans to harness mining as a means of ensuring the sustainable recovery of the Philippine economy from pandemic disruptions.

Responding to a question about how the government will ensure mining companies adhere to responsible and sustainable practices while giving the industry a boost, Magno referenced the current administration’s plans to join the Extractive Industries Transparency Initiative (EITI), a global standard for mineral resource governance, months after the previous administration pulled out. The administration had submitted its letter of intent to this effect this week.

“We hope that its implementation can complement and strengthen the regulation of the mining sector in the Philippines. We have a strong policy towards the extractive sector. What is needed is for it to be properly implemented,” she said.

Magno added that the Philippines is a country rich in mineral resources, and that they want to benefit “not in the sense that we are going to extract all the minerals”, but that they will review their tax policy and ensure that ” prices that the minerals will fetch reflect the environmental and social costs of extracting these minerals”.

Themed “The Role of Sustainable Finance in a Disrupted World”, this year’s Unleashing Capital for Sustainability forum features four regional virtual dialogues spanning Malaysia, India, Indonesia and the Philippines, and ends by a two-day hybrid event held in Singapore on September 20. The next dialogue on India will take place on Thursday 15 September. Registration for virtual access to events is free.

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