HSBC phases out financing for local coal plants
MANILA -British banking giant HSBC has phased out all loan exposure to coal-fired power plants in the Philippines in line with its global commitment to move to a low-carbon future, as it sees strong investor interest in the local renewable energy space.
The global bank also sees overall business environment in the country—populated by more than 110 million mostly young and English-speaking people—opening up more opportunities for local and foreign investors.
“We see this market as full of opportunity. We see this as playing a key role in the Asean (Association of Southeast Asian Nations) region,” Amanda Murphy, Singapore-based HSBC head of commercial banking for South and Southeast Asia, said in a media roundtable on Wednesday.
“The Philippines is a hugely attractive market for us. It’s got a very skilled, well-trained, educated workforce that’s fluent in English, which is always very helpful on the international scale; great demographics, a young population that is growing in strength every day with the median age of 26; growing middle class, growing consumer confidence,” Murphy said.
She also cited the country’s favorable economic backdrop. It posted a 7.6-percent economic growth last year, the fastest pace seen in Asean, and the country sustained a 6.4-percent pace of expansion in the first quarter of this year.
“We look to strengthen the development of the Philippines both by bringing foreign investors into the Philippines and by bringing Philippine companies overseas to where they want to grow their business,” she said.
HSBC is making a big push for sustainable finance to support the United Nations road map to reduce carbon emissions by 50 percent by 2030 and attain the “net-zero” goal by 2050.
Mimi Concha, head of wholesale banking at HSBC Philippines, said the global bank was one of the first to start the phaseout of coal power plant exposure back in 2017. By this time, she said there were no more coal-related loans in the Philippines.
“What’s important for me is even those clients who have coal plants, we have conversations with them sharing what other countries are doing. We also share actually that we’re quite explicit about our own policy,” Concha said.
“To be honest, most of the larger conglomerates are way in advance in their thinking on sustainability. I think it’s because they know that if they don’t do anything about it, their ability to tap the offshore market for financing dries up,” she added.
Local banks like Bank of the Philippine Islands and Rizal Commercial Banking Corp. have likewise declared that they were cutting their loan pipeline for coal projects.
Concha said HSBC was also sharing best practices on how to curb “scope 3”, referring to carbon emissions across the supply chain of corporations. “I think that’s where the corporates in the Philippines need a little bit more education,” she said.
“A few years ago, perhaps it was clients in the US who are talking about it or in Europe, and Asia was still a little quiet on the subject … That has changed dramatically in the last 18 months, and it features very prominently on the agenda for many of our clients,” Murphy observed.
“We want to be part of a Just Energy Transition Program and the JTP (Just Transition Platform) that exists in Indonesia and Vietnam is really important to this,” Murphy said.
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