ING races to turn firms ‘green’ in the Philippines

“Sustainability is ingrained in the way we do business at ING. We have been trying to engage our local clients in sustainable finance discussions for some years now. We are excited that these efforts are now finally bearing fruit and look forward to helping Philippine companies in their sustainability journey,” says Hans B. Sicat, country manager of ING Bank in Manila.

Economic losses around the world, particularly for developing countries, could reach billions of dollars if global temperatures keep rising above 1.5°C, according to experts *). With the clock ticking, companies and governments have started to invest in environment-friendly projects, such as renewable energy, sustainable buildings, and clean transportation, to reduce carbon emissions as well as create more liveable cities, improve health outcomes and the quality of education, among other sustainable development goals.

Dutch financial institution ING Bank is determined to lead the way, as it rallies clients towards financing the investments required for sustaining a ‘green’ world. The bank marked another milestone in sustainable finance when one of the Philippines’ largest universal banks, Rizal Commercial Banking Corporation (RCBC), became the “first bank to issue a Green Peso Bond, and only the fourth bank to issue bonds under BSP Circular 1010,” said Securities and Exchange Commission (SEC) Commissioner Ephyro Luis B. Amatong in his speech during the listing ceremony at the Philippine Dealing and Exchange Corporation last February 1. “Clearly, investors have responded positively to RCBC’s ASEAN Green Bond (as it) was 3x oversubscribed, and has achieved the lowest cost of borrowing of any bank so far, at 6.7315%, for its 1.5-year paper.”

He also noted that retail investors “came out in force” and comprised more than 60% of the issue, thus broadening the investor base and raising visibility to socially responsible investors. Net proceeds of the P15 billion ASEAN Green Bond issue will be used to finance and refinance RCBC’s loans to customers or its own operating activities in Green Eligible Categories, including renewable energy, green buildings, clean transportation, energy efficiency, and pollution prevention and control.

Commissioner Amatong also commended ING Bank for its role as the sole Green Structuring Advisor for RCBC’s green finance framework and joint bookrunner for the bond issuance. The landmark deal came just three months after ING announced it became the first global bank to use science-based scenarios to steer its business strategy. This innovative and accurate way to measure its portfolio is called the Terra approach, which looks at the technology shift needed across certain sectors to keep the rise of global temperatures to well below two degrees Celsius. Terra then measures that needed shift in technology against the actual technology ING clients use and plan on using in the future. The Terra approach will enable ING to estimate how much and by when financing will be needed and identify where ING can have an impact.

“Sustainable finance is a key pillar of the bank’s business strategy,” Mr. Sicat said. The Dutch bank has been setting records since issuing its first green bond in 2015. It has also been successful in bringing innovations to regions such as Asia’s first sustainability-linked club loan facility for global agri-business Olam International Limited, the inaugural social-covered bond in Asia for the Korea Housing Finance Corporation, as well as Southeast Asia’s first syndicated secured green loan for a wholly owned subsidiary of Frasers Property Limited.

 

*) Various sources

OECD (2012): http://www.oecd.org/fr/environnement/climate-change-consequences-of-inaction.htm

Oxfam International (2015): https://psmag.com/environment/the-cost-of-inaction-with-climate-change

The Economist Intelligence Unit (2015): https://eiuperspectives.economist.com/sites/default/files/The%20cost%20of%20inaction_0.pdf

 

Sustainability forms an integral part of ING’s strategy, evidenced by its ranking as a leader in the banks industry group by Sustainalytics. ING Group shares are included in the FTSE4Good index and in the Dow Jones Sustainability Index (Europe and World).