BDO commits to reduce coal liability to 50%

By Alena Mae S. Flores

BDO Unibank Inc., the country’s largest lender, announced Thursday its commitment to reduce its coal exposure by 50 percent by 2033 as part of its energy transition program.

“BDO commits to reduce its coal exposure by 50 percent by 2033, while ensuring that its coal exposure does not exceed 2 percent of its total loan portfolio by 2033,” said BDO senior vice president and head of compliance group Federico Tancongco in a speech during the Eco-Business Philippines forum.

Tancongco said the commitment forms part of the BDO Energy Transition Finance Statement approved by the board on Aug. 26.

The BDO Energy Transition Finance Statement is the bank’s holistic and realistic approach to the energy transition that considers the bank’s economic, environmental and social impact, anchored on good governance.

“BDO recognizes that the banking industry plays a critical role in the Philippines’ committed transition to a low-carbon economy, a transition that will require providing access to affordable, reliable, sustainable and clean energy,” Tancongco said.

He said BDO believes that the transition would require adopting a balanced approach that acknowledge the difficult trade-offs between national economic development that depends on affordable and reliable energy and climate sustainability.

“We want to be specific in defining new coal exposure as exposure to new capacity, while coal exposure refers to the term loans that will naturally run their course in 2033 and does not include short-term working capital that companies will need to transition out of the coal business,” he said.

Tancongco said the bank also supports the Paris Agreement of 2015 and the Philippines’ Nationally Determined Contribution, while declaring its approach to energy transition finance.

The Paris Accord of 2015 was an agreement among the world’s governments towards limiting global temperature increase to below 2 degrees Celsius while pursuing efforts to limit the rise to 1.5 degrees.

The agreement includes the goal that all coal-fired power plants should be closed by 2030 in Organization for Economic Cooperation and Development and European Union countries and elsewhere by 2040.

Tancongco said BDO’s declaration has four critical components, including coal-related financing and divestment.

“BDO will continue its current practice of not lending to new coal-fired power plant capacity, a practice in place since 2019. It has always been the Bank’s way to do things quietly and efficiently. But we recognize that as the largest bank in the country, we have a responsibility to publicly articulate our commitments to our stakeholders and disclose actions that we have taken towards coal divestment in our loan portfolio,” he said.

He said BDO funded renewable energy and energy efficiency projects and the country’s first green buildings long before sustainable finance became the byword and the mandate today.

“Ultimately, BDO does not intend to finance any new capacity that will increase harmful greenhouse gas emissions in the environment,” Tancongco said.