On BDO’s Energy Transition Finance Statement

Last September 8, BDO Unibank (BDO) published its ‘Energy Transition Finance Statement’,

which recognizes that the banking sector plays a ‘critical role’ in the country’s transition to

a low-carbon economy and in upscaling sustainable and affordable energy. Through it, BDO

provided more defined coal-divestment pronouncements on their loans, allowing its

stakeholders to understand where the Bank stands in aligning with climate and energy

sector transformation imperatives. Such policy disclosures from banks are critical, and

should have long been set as a norm in the sector.


In light of the climate crisis and sky-high electricity prices catapulted by our continued

dependence on fossil fuels, we welcome BDO Unibank’s move to divest from coal. Yet, while

this is a considerable development from the bank with the third highest exposure to coal

nationally, we are wary over policy gaps through which funding for the coal industry is

funneled and sustained.


We raise concern over the manner by which BDO defines its coal exposure, referring only

to term loans and failing to include securities. It is due to this that the Bank is able to claim

of not having no new coal lending since 2019, even as its wholly owned investment banking

arm, BDO Capital & Investment Corporation, acted as joint issue manager, joint

bookrunner, and joint lead underwriter for four of coal developer Aboitiz Power’s bonds

issued just the past year. BDO’s net proceeds from said bonds were used to finance two coal

projects: GNPower Dinginin (GNPD) and GNPower Mariveles (GNPM).


BDO’s coal exposure timeline must be informed by increasingly alarming climate

projections. Latest reports of the Intergovernmental Panel on Climate Change, for example,

warn of an overshoot from the 1.5 degree C global warming threshold in the next two

decades, with all remaining hope of getting this back down to less catastrophic levels

dwelling on radical reduction of fossil fuel dependence. By retaining half of its coal

exposure as far as a decade from now, the Bank’s alignment to climate imperatives is

questionable. In limiting the scope of exposure to only loans, which means that all other

forms of channeling financial support to coal developers and projects will stay untouched

by the bank’s policy, this ambition becomes even less stellar. We are at a point where we

cannot afford setbacks in climate targets.


We welcome BDO’s commitment to expand its renewable energy initiatives, yet ask for

clarification whether the Bank’s announcement that it “does not intend to finance any new

capacity that will increase harmful greenhouse gas (GhG) emissions in the environment”

also covers the threat of massive natural gas expansion in the Philippines. As renewable

energy systems become increasingly affordable, financing must be denied not only to the

coal industry, but to other fossil fuels such as natural gas which are falsely touted as clean

alternatives despite also producing massive amounts of detrimental GHGs such as methane.


At the same time, a comprehensive energy transition policy must take into account

opportunities to hasten the Bank’s exit from coal exposure. Material to this are emerging

financing programs to shorten the lifespan of currently operating coal-fired power projects

and incentivizing clients’ efforts at diversifying their mix towards a renewable energy

portfolio.


With the window for climate action closing in on us and burdens weighing on consumers

and communities from pollution and rising electricity rates, the role of banks in dictating

the viability of fossil fuel businesses becomes more apparent. Stricter and more

comprehensive policies that cut off coal, gas, and other fossil funding must become the

norm.


Gerry Arances

Co-Convenor, Withdraw From Coal

Executive Director, Center for Energy, Ecology, and Development (CEED)