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)