ING urges PHL firms to adopt sustainable finance
With the battle against climate change now being waged on a global scale, sustainable finance emerges as one of the ways to go forward.
At the recent Green Financing Forum organized by the Financial Executives Institute of the Philippines (FINEX), Dutch giant ING Bank urged financial institutions and corporations to issue more green and social bonds, and to consider other sustainable financing solutions such as green loans.
“Global efforts to address climate change are becoming more sophisticated. Sustainable strategy is no longer a ‘nice to have,’ but a necessity and competitive advantage,” said Herry Cho, head of Sustainable Finance for Asia Pacific.
Sustainable finance is a form of financial service that integrates environmental, social, and governance (ESG) considerations into business decisions. While investors traditionally focus on companies’ financial metrics, they now look at environmental and social issues that can affect communities and the world at large.
Green bonds remain a small proportion of the overall capital markets, but are fast growing and continue to diversify, said Ms. Cho. These financial instruments gained traction in emerging markets led by China only since 2016, with a 78% overall growth in 2017. But they are already well-positioned in funding eco-friendly projects in developed nations, such as renewable energy, sustainable buildings, and clean transportation, she added.
Hans B. Sicat, country manager of ING Bank in the Philippines, said banks have a major role in supporting sustainable development by facilitating and financing clients’ shift to sustainability. “Most Philippine corporates are not familiar with the framework of sustainable finance and the benefits it can bring. But through our conversations and engagement with our clients, we hope sustainable finance can become a mainstream model.”
Sustainable investment proves critical in meeting the United Nations’ Sustainable Development Goals (SDGs) for 2030, targeting better health and education, more liveable cities, and poverty and hunger alleviation. More and more global financial giants use the SDGs as their compass in financing climate-friendly investments, putting emphasis on responsible finance to bolster climate, social, and financial resilience.
In the Philippine private sector, an estimated $600 million in investments are needed to achieve Philippine energy efficiency targets for year 2020, as well as $34 billion to meet the country’s 2030 targets for renewable energy installation, according to the Department of Energy website. Green projects that banks can support are in diverse industries such as low-carbon energy, buildings, transport, water, waste and pollution, as well as land use and adaptation.
Since issuing its first green bond in 2015, ING has already achieved a record first quarter of 2018 by issuing eight sustainable bonds for its clients across the globe. These included: a €1 billion green bond to finance new and existing mortgages for energy-efficient homes in Norway; a €4.5-billion green bond to finance public transportation and energy-efficient renovations of public buildings in Belgium; and a €31.6-million green bond for utility-scale solar projects in India.
ING is a leader in sustainability among peers and is recognized by external parties for its environmental, social, and governance performance. The Dutch bank was among world leaders in the industry category named in the Dow Jones Sustainability Indices (DJSI), and was again included in the World Index and the Europe Index of this category. It was a leader in the banks industry group by Sustainalytics in 2017, and named to the Climate A-list in October 2017 by CDP, a global charity that runs the global disclosure system for investors, companies, cities, states and regions to manage their environmental impacts.
“Out of all the banks helping to make the world last, we want to be the first,” said Ms. Cho.