HSBC to focus on sustainable finance in PH

At a glance

  • HSBC expands green financing in the country.

  • More focus now on ASEAN, especially Philippines, Indonesia and Vietnam, in recognition of the region as a fast-growing trade bloc in the world.

  • Philippines has become a “hugely attractive market” in the RE space, infrastructure, manufacturing, services.

British banking giant HSBC is looking to finance more sustainability or green projects across sectors in the Philippines as a key development and growth driver.

HSBC Head of Commercial Banking for South and South East Asia, Amanda Murphy, said more attention in terms of investments and banking activities in ASEAN, particularly in the Philippines, Indonesia and Vietnam where economies are expanding faster post-pandemic, are given to green financing in the last couple of years.

“Sustainability has become more key as (we) transition to net zero,” she told a press briefing on Wednesday, May 24, adding that the Philippines has become a “hugely attractive market” with prospects for higher growth in the manufacturing, services and infrastructure segments.

“We look to strengthen development in the Philippines by bringing foreign investors and by bringing Philippine companies overseas to where they want to grow their business,” she also said.

Murphy, who is based in Singapore and in town to scout the market and meet clients, said there are a lot of opportunities in the country where digitalization has significantly improved over the last three years and where sustainability banking has become front and center.

HSBC clients here have grown, not just the top-end multinationals, the middle market corporates and the wealthy sector, but also small and medium enterprises. These local companies have been looking to deal with their counterparts in India, Bangladesh, US, UK, and Indonesia.

“(We can be) linking up potential companies for acquisition or partnership (which) is something we do on a regular basis,” said Murphy. She said their clients have growth plans for both domestic and international operations.

For her part, Mimi Concha, HSBC Philippines’ Head of Wholesale Banking said they are focused on the renewable energy or RE space and currently in discussion for solar, windfarm and new technology for RE with clients.

“The renewables space is the most obvious one when we’re talking about sustainability (in the Philippines),” said Concha, and that every company in the country are now in different stages of understanding as to how they can reduce their carbon emissions, she added.

Both Murphy and Concha said clients in the Philippines and across Asia are talking more increasingly about sustainability projects. This is to have more funding for climate change resilience, eco-friendly infrastructure and green buildings to reduce the carbon footprint.

“That has changed dramatically in the last 18 months and it features very prominently in the agenda for many of our clients (considering) the Philippines is probably one of the countries in Asia that is worst impact by climate change … so banks and corporates have to join in that conversation,” said Murphy.

HSBC since 2017 has phased out their lending operation to coal, in fact the first foreign bank to do so in the country.

Concha said the large Philippine conglomerates are already advanced in their sustainability programs and how they can manage their emissions because not to do so will affect their ability to tap offshore financing. Other corporates that are still into coal, liquified natural gas and plastics – “those are conversations we’re still having with some of our customers.”

“When we talk about sustainable financing it doesn’t really just focus on solar or even rail projects that promote more efficient transport system, etc. (but) it’s a mix of working capital, supply chain and even bonds,” she said. The bank is a leader in green bond issuance.

“We’ve committed up to a $1 trillion up to 2030 of a mixture of lending, investment and financing across sustainable finance,” said Murphy. This was announced earlier by the bank.

Murphy stressed that Asia as a growth region is becoming more important in their global business, more now than before. “We’ve been traditionally extremely strong in Hong Kong, its our home market, and strong in China, but perhaps we haven’t had much focus as we could have in some of the other countries in Asia. When we look at the growth in ASEAN, the economic growth is faster than in any other region in the world,” she said.

With the rising wealth in other markets in the region, HSBC is focusing more in the Philippines, Indonesia and Vietnam. “It’s a time of opportunity for the region. Metrics and people are aligned and that’s where our investment resources (should) go,” said Murphy.

At the moment, HSBC which has been here for 148 years, is running six branches in the Philippines.

Globally, the $3-trillion British bank is present in about 90 percent of trade and capital markets. The HSBC Group, which operates in 62 countries, is one of the largest wholesale bank in Asia.