Katz Aquino
De La Salle University
Pia Manalastas
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A commitment emanates from the Top.
The first bank in Southeast Asia, the Bank of the Philippine Islands (BPI), has taken to its heart the integration of sustainability principles in its strategic business objectives and daily operations. Said was spearheaded by BPI Chairman Jaime Augusto Zobel de Ayala from 1980 up to the present. BPI, with its strong culture of embracing the three P's – People, Planet, and Profit is the pioneering sustainability leader in the Philippine Banking Industry.
Changing how we run our planet now will help ensure that future generations' needs will still be provided for because it means protecting our planet today from incurring irreparable damages tomorrow.
Realizing that the increasing concerns on the effects of climate change, pollution and biodiversity loss are both an environmental problem and a serious business issue, many companies are seeing the merit of making a move now to minimize the threats in the near future.
True to its culture of forward thinking, having brought in the first ATM in the Philippines, The Bank of the Philippine Islands (BPI) has seen early on the essence of integrating environmental, social, and governance (ESG) standards in its business practices.
Enabling the bank's sustainability strategy pillars are Corporate Governance and Environmental & social risk management systems (ESRMS).
Main Pillars of BPI's Sustainability Strategy:
1. Responsible Banking
This involves crafting products & services of the Bank, beneficial not only to clients but also to the society through supporting economic growth. The ESG criteria are integrated into business decisions.
2. Responsible Operations
This is managing the use of the Bank's environmental and social capital in the performance of daily operations.
Committed to taking sustainability effort a notch higher, BPI once again proved to be the leader in cutting-edge innovations, with the launch of the Environmental Risk Assessment (ERA) in the Philippines. It is the first of its kind, which involves mapping assets and evaluating risk exposure to natural hazards such as flooding/typhoons, earthquakes, and even volcanic eruptions.
The Bank helps its clients put risk-mitigating measures to avoid possible business interruption through this. And the tool (Hazard Hunter) behind the innovation is not only locally produced by the Philippine Institute of Volcanology and Seismology (PHIVOLCS), but it is also FREE!
As part of encouraging best sustainability practices among Philippine banks, the Banko Sentral ng Pilipinas (BSP) collaborated with BPI to share this new loan evaluation procedure with the rest of the banking industry. Via webinars, the bank highlighted the importance of climate and environmental risk management and encouraged the use of Hazard Hunter.
Sustainable Development Finance (SDF) Program
For the past 170 years and counting, the Bank has been a development champion in the country. In 2020, the UN Sustainability Development Goal (SDG) – related loan portfolio of BPI reached 47% (PhP538 Bn) of the consolidated corporate and SME loan portfolio.
This is a significant increase from the 31% (PhP229 Bn) in 2016. Amidst the pandemic, the Bank released another PhP199.9 Bn through its financial products, which aided 11 out of the 17 SDGs.
The value proposition of the SDF program is as follows:
1. Dedicated team consisting of experts and experienced sustainability officers and staff. Further complimented by IFC-trained and accredited technical consultants.
2. Free Technical consultation to firms who would like to engage in Energy Efficiency (EE), Renewable Energy (RE), Climate Resilience (CE), and Sustainable Agriculture (SA) projects which include energy consumption audits, verification of project proposals/feasibility studies, technical training, review of vendor track record, etc.
3. Each project's technical and Financial Evaluation (TFE) is shared with the clients to ensure project success, profitability, and regulatory compliance.
4. Access to local and international partners of BPI. e.g., Philippine Green Building Initiative (PGBI), Department of Public Works and Highway (DPWH), IFC – World Bank, among others.
5. Invitation to educational and insightful business events raising awareness of sustainable business practices. An example is the Green Building campaign which helped clients achieve 20% savings in electricity, water, and embodied energy in materials by redesigning their green buildings.
All of those mentioned above to aid the success of the client's project, as Ms. Anna Eugenio, SDF Deputy Head, said, "We want to make sure that the solutions that are recommended by suppliers/vendors to our clients were properly done. Basically, the role of BPI's Technical consultant is to make sure that the technology is correct. The consultants also give suggestions on how to further improve efficiency and output, as part of technical and financial evaluation proposed solution or project to our clients. A good example is the computation/validation of the project's payback which is commonly overestimated."
As for advice to aspiring firms who would like to launch their SDF programs, the officers gave two:
(1) The decision and commitment to adopt sustainability in your organization must be strongly supported by Top Management.
(2) Some organizations may have difficulty succeeding in sustainability projects independently. In this case, it is best to seek external support from technical experts who will help achieve project success.
It might look overwhelming at the start, but things will fall in their proper places if you have the heart and the passion for driving it.
On how they ensured that the program would continue to flourish, Ms. Mabi Garcia, one of the BPI SDF officers, said, “We had help from IFC in learning Sustainability Performance Standards, latest green technologies, and best practices. best sustainability practices through education and communication materials….”
As part of our loan package, we offer Technical consultations to ensure project success. This unique offering to clients is how we build SDF’s loan portfolio. Back in 2012, BPI won in the G20 SME Finance Challenge program. Using the prize money, we were able to fund three objectives: (1) building the bank’s technical capacity and launching incentive programs for lending officers; (2) developing ng tools for SDF, conducting technical training, and providing consulting support to clients to ensure project feasibility and viability; and (3) increase client awareness.
From there, the lean but dedicated SDF Team, composing of less than ten members, created and increased sustainability awareness by working with partners – consultants from the International Finance Corp. of the World Bank Group, WWF, and other external organizations promoting ESG or Environmental, Social and Governance goals in the conduct of business. SDF also ensures tight coordination with the BPI’s central Sustainability Office (SO) to ensure (1) alignment with BPI’s Sustainability Agenda, (2) regular sustainability training of the BPI’s Relationship Managers (RMs), (3) proper evaluation and screening of green loans that need to meet specific sustainability criteria based on IFC standards to qualify in the bank’s Green Bond Portfolio, and (4) timely crafting of sustainability policies. This further increased the SDF portfolio to what it is now. Moreover, this placed BPI at the forefront of sustainability initiatives of the banking sector. Note that BPI already made its Sustainability Course mandatory for all employees, another first in the banking industry.
BPI’s Sustainable Development Finance was given birth last 2008 and rebranded as such recently (Nov. 2019). It is a platform utilized to help finance green and climate projects of the private sector. As BPI continues to reinforce sustainable business growth in the Philippines, it enables both SME and large businesses to help mitigate degradation of the environment via reduced greenhouse gas emissions and climate-proofing their businesses, with the end goal of contributing to the UN’s SDGs (Sustainable Development Goals).
As of 2020, BPI has financed a total of 354 projects: (45%) Energy Efficiency Projects, (30%) Climate Resilience Projects, and (25%) Renewable Energy Projects. And these efforts have reduced GHG emissions from 2008 – 2020 by: (1) 28.6 Mn tons of CO2 per annum from EE, RE, and Green Building Projects and (2) 169.6 thousand tons of CO2 from embodied energy in construction materials for Green Building Projects.
Major SDGs Supported by BPI (Outstanding balances in 2020):
BPI Contributions to the SDGs (Loan Disbursements in 2020):
Something to look forward to
In the next 5 yrs. the team hopes to expand the scope of SDF, believing that
there are a lot of sustainability initiatives that the bank can explore, such as waste management and recycling, water purification, etc.
On the table is also tapping the retail banking segment to add up to the
current corporate banking portfolio. BPI will continue to help the Banko Sentral ng Pilipinas advocate sustainability in the financial industry.
In the end, BPI advocates sustainability not only to achieve ESG or Environment, Social and Governance goals:
1) E: protection of the Environment and our preparedness for Environmental risks
2) S: achieving positive social impact via more decent and productive employment, boosting local economies through the projects (private and public) we finance
3) G: helping project proponents comply with regulations and best business practices We in BPI advocate a second E called “E2” which stands for Economic goals.
As we pursue sustainability initiatives, we need to ensure the project we finance is successful and is making money or achieving economic gains. As explained by Ms. Jo Ann Eala, BPI Sustainability Head, “This E2, which also means profitability, is important in achieving sustainability in business. Business decision-makers will naturally pursue and even expand the sustainability endeavor when the project is successful and makes money. This is, nevertheless, profitability with a clear ESG purpose”.
In conclusion, we in BPI advocate a unique formula: ESG+ E2. We believe that through this formula, we can truly achieve sustainability.
Success stories to tell…
1. SUWECO Tablas Energy Corp. (STEC), Romblon Province.
Project Type: Renewable Energy.
Project Description: Tumingad Solar Power Plant, a 7.5 MW ground-mounted off-grid solar farm, augments the diesel power generation plant and provides clean energy to 43,400 households.
Applicable UN SDG: #11 Sustainable Cities & Communities & # 13 Climate Action.
Client testimonial: “SUWECO and BPI have the same vision in terms of clean and green energy and renewable power. BPI helped us ensure that the project is technically feasible, sustainable, and profitable” (Mylene Co, CFO, 2020).
2 . IFC Excellence in Design for Greater Efficiencies (EDGE) Certified condominium building, Cagayan De Oro City.
Applicable UN SDG: #11 Sustainable Cities & Communities & # 13 Climate
Action.
Estimated GHG emission reduction from energy: 383 tCO2/yr.
3. El Camino Developers Cebu/Cebu Landmasters Inc. (CLI), Cebu City.
Project Type: Climate Resilient building; EDGE compliant.
Project Description: 38-story mixed-used condominium, targets to be first
EDGE-certified green building: 38 Park Avenue
Applicable UN SDG: #11 Sustainable Cities and Communities, #13 Climate Action.
Estimated GHG emission reduction from energy: 411 tCO2/yr.
Estimated GHG emission reduction from materials: 2,574 tCo2/yr.
Electricity Savings: 854,028 MWh/yr.
Client testimonial: “Through BPI’s free technical assistance for green projects, we were introduced to IDC-World Bank’s EDGE tool, which helped us in our pursuit to be the first Cebu-based Green Building to be EDGECertified” (Jose Franco Soberano, Director, 2020).
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Ms. Jo Ann Eala, Vice President, Head of BPI Sustainability Office
BPI aims to build a better Philippines through nurturing every Filipino's future with a trusted approach to managing money and innovation that makes life easier everyday. The bank has embraced sustainability in the conduct of its business since 1980s, BPI has a strong culture of commitment to the ESG +E (Environment, Sustainability, Governance, and Economic) and is the pioneering leader in sustainability in the Philippine banking industry. (BPI, 2021).