Government-owned Development Bank of the Philippines (DBP) will continue to craft financing programs that focuses on the development and growth of the country’s climate-friendly and sustainability efforts such as funding renewable energy (RE) projects and to promote green practices, according to its chief sustainability official.
During the 2024 Manila Bulletin Sustainability Forum at the University of the Philippines Diliman campus, DBP Executive Vice President and Head of the bank’s Development and Resiliency Sector, George S. Inocencio, said DBP and other banks are not just all about generating financial returns, but they can also bring about economic growth, social inclusion and advance sustainability efforts via green financing of the energy, infrastructure, agriculture, water, and sanitation sectors.
Inocencio said DBP is a known pioneer in sustainability financing in the banking industry. Before the Bangko Sentral ng Pilipinas (BSP) issued Circular No. 1085 in 2020 for the adoption of the Sustainable Finance Framework, the bank already have its own sustainability policy
“Even before the implementation of Circular 1085, we are already implementing (green funding),” he said, adding that as early as 1997, the bank has 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 is 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 the 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 the government.
Since they started earlier, Inocencio disclosed that the bank has released about P114.42 billion as of end-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 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 a 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 until today, 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 to 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 a mainstream in all business decisions, but to highlight that “climate finance and sustainable finance are more than just buzz words, for emerging services and products in banking.”
“For DBP it is a call to action to combat climate crisis,” he said.