Security Bank commits to stop financing new coal projects by 2033

Banking tycoon Frederick Dy’s Security Bank Corp. pledged to halt financing for new coal projects by 2033 to support the government’s international commitments to dramatically reduce greenhouse gas emissions.

Security Bank joins other major lenders such as Ayala Group’s Bank of the Philippine Islands and Helen Y. Dee-led Rizal Commercial Banking Corp. in turning off the money tap to new coal power plants over the next decade.

“As the bank begins its move 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,” Security Bank said in a statement on Friday.

The lender added this would also align with the Philippine government’s commitments via the Paris Climate Agreement and the 2021 United Nations Climate Change Conference of the Parties or COP26.

President Duterte signed the Paris climate pact in 2017. The country later pledged to reduce emissions by 75 percent by 2030.

Energy mix

Coal power plants supply more than half of the country’s energy needs, with the rest coming from renewable energy and gas. Thus, it would take years before alternative sources could be developed to replace supply and support future demand.

Security Bank said its board, in 2020, approved its sustainability framework, outlining steps to address issues related to environment, social and governance (ESG)—a critical metric monitored by many large funds.

Last year, its board approved a so-called environmental and social risk management system, or ESRMS.

Climate risks

“A focus of our ESRMS is to specifically address sustainability and climate risk, as well as health and safety risk in our operations, investment practices, and supply chain,” Eduardo Olbes, chief financial officer of Security Bank, said in the statement.

“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,” added Olbes, who is chair of the lender’s sustainability committee.

Security Bank said it would pursue other programs under the United Nations Sustainable Development Goals.