Years before "green financing" became a buzzword, the Development Bank of the Philippines (DBP) was already pioneering sustainable lending practices. Now, it's leading the charge for a more sustainable Philippines.
DBP has invested over P114 billion in a greener Philippines – and it's just getting started. This commitment to sustainable financing is bringing clean energy to communities, creating jobs, and protecting the environment.
This commitment was reinforced by DBP Executive Vice President George S. Inocencio during the recent 2024 Manila Bulletin Sustainability Forum at the University of the Philippines-Diliman.
Inocencio, who leads DBP’s development and resiliency sector, stated that the state-owned bank will continue to craft financing programs that focus on the development and growth of the country’s climate-friendly and sustainability efforts. These programs include funding renewable energy (RE) projects and promoting green practices, according to its chief sustainability official.
At the forum, which gathered major companies in the country, Inocencio said that DBP and other banks are not just about generating financial returns, but also about bringing economic growth, social inclusion, and advancing sustainability efforts through green financing in the energy, infrastructure, agriculture, water, and sanitation sectors.
Inocencio highlighted that DBP is a known pioneer in sustainability financing in the banking industry. Even before the Bangko Sentral ng Pilipinas (BSP) issued Circular No. 1085 in 2020 for the adoption of the Sustainable Finance Framework, the bank already had its own sustainability policy.
“Even before the implementation of Circular 1085, we were already implementing (green funding),” he said, adding that as early as 1997, the bank had adopted its DBP environmental policy followed by the establishment of an Environmental Management System in 1998, and a social policy statement in 2016. It then became one of the founding signatories of UNEP Principles for Responsible Banking in 2019, as the sole representative from the Philippines.
By 2022, DBP was implementing a sustainability policy agenda in response to the BSP’s Social Risk Management Framework or Circular No. 1128 released in 2021.
While the BSP frameworks provide banks a three-year transition period to incorporate sustainability principles in their strategic objectives, Inocencio said that DBP, the 10th biggest bank in the Philippines, is way ahead of most banks.
DBP has this advantage because, as a state-controlled financial institution, its sustainability agenda is naturally aligned with that of the government.
Since they started earlier, Inocencio disclosed that the bank has released about P114.42 billion as of the end of July this year in combined financing for the RE sector, water, and the environment.
Of the P114.42 billion, the largest at P83 billion was released under the Financing Utilities for Sustainable Energy Development, or FUSED Program, aimed at increasing countryside electricity services. The program has benefited 95 borrowers.
Other sustainability programs DBP operates include Water for Every Resident to improve the country’s water supply and sanitation until the year 2030. The bank has approved about P25 billion worth of projects under this program, according to Inocencio.
DBP has also approved P3.5 billion for its Sustainable Waste Management for Enhanced Environmental Protection program and P1.9 billion for its Energy Efficiency Savings Financing program.
The bank likewise released P520 million for its Solar Merchant Power Plant Financing program and another P500 million for its LINIS project, which is a lending initiative for the sanitation sector.
“DBP crafted a roadmap that will ensure that sustainability is incorporated in the way we do things,” said Inocencio. “So, we are committing to net zero in lending operations by 2040, and net zero in our internal operations also by 2040,” he added.
DBP has committed to several measures to achieve its sustainability targets by 2040. Its actions are close to what the government wants. The bank has aligned its policy agenda with that of the United Nations (UN) Sustainable Development Goals (SDGs), the Paris Agreement, the UN Environment Programme Finance Initiative Principles for Responsible Banking, the Philippine Development Plan (PDP), and the BSP’s sustainable financing roadmap.
Internally and as part of the bank’s strategic agenda, it has committed to net-zero emissions for lending and internal operations, such as in sectors they focus on or “where DBP has significant negative environmental and social (E&S) impact as well as in its operational carbon footprint.”
Inocencio said DBP’s developmental financing programs are all aimed at doubling its contributions to the attainment of SDGs and the government’s PDP. “We aim to double our UN SDG contribution (by 2040) and in financial inclusion,” he added.
He also said the bank will continue to provide credit support to four strategic sectors of the economy: infrastructure and logistics; micro, small, and medium enterprises; environment; social services and community development.
Since the 1990s, DBP has a long track record of financing sustainable projects in these key sectors.
Inocencio said that “if financial institutions incorporate climate financing and sustainable financing into their business model, firms who are borrowers are encouraged and influenced to adopt climate-friendly and sustainable practices in doing their business.”
“Consumers will also take part in supporting businesses that are climate-conscious and responsible … (These) will allow a sustainable flow of resources to benefit future generations,” he said.
Inocencio added that they do not just aim to make green financing mainstream in all business decisions but to highlight that “climate finance and sustainable finance are more than just buzzwords for emerging services and products in banking.”
“For DBP, it is a call to action to combat the climate crisis,” he said.