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Keisha Ta-Asan - The Philippine Star
May 4, 2025 | 12:00am
MANILA, Philippines — In a financial landscape where profit and purpose are increasingly intertwined, the banking sector is emerging as a critical enabler of sustainability.
For institutions like BDO Unibank and Bank of the Philippine Islands (BPI), sustainable finance is not just a target but a trajectory.
Sy-led BDO continues to take a more evolutionary path.Rather than set a fixed peso target, BDO president and CEO Nestor Tan said that the country’s largest lender is focused on increasing the share of sustainable loans over time. The goal is to guide more clients into aligning their businesses with environmental, social and governance (ESG) principles.
“We don’t have an absolute number. Our target is a time-series one where a higher percentage of our loans are part of the sustainable portfolio. Most of our borrowers qualify, but only if they take, as I call it, the healthier choice,” Tan said.
BDO funded a total of P1.04 trillion in sustainable finance as of end-2024, the largest of any Philippine bank to date. This is higher by 15.8 percent than the P898 billion loans disbursed in 2023.
The funds have been channeled into projects ranging from renewable energy and green infrastructure to water sanitation, micro-finance as well as gender-focused enterprise support.
One of the most impactful areas of this portfolio is BDO’s renewable energy lending. To date, the bank has financed 63 renewable energy projects, generating a combined installed capacity of 2,679 megawatts.
These projects are projected to avoid nearly 4.8 million tons of carbon dioxide emissions annually, equivalent to removing over one million cars from the road or growing 78.8 million tree seedlings over 10 years.
For its part, Ayala-led BPI has set its sights high: a P1 trillion sustainability-linked portfolio by the end of 2026.
But Eric Luchangco, BPI’s chief finance officer, said the bank may cross that milestone ahead of schedule.
“Last year, our sustainability-linked portfolio was close to P900 billion,” he said during a press briefing.
“I’m quite comfortable to say that we’ll probably meet that goal ahead of our target,” Luchangco added.
The bank’s strategy is rooted in broad-based sectoral growth. The renewable energy sector remains the cornerstone, especially solar and offshore wind. However, BPI is also seeing expansion in areas like energy efficiency, water treatment and inclusive social lending.
“We’ve seen growth across multiple sectors,” Luchangco said.
“On the social side, lending to businesses that support lower-income communities is also a source of growth,” he said.
BPI’s approach spans all pillars of ESG, with environmental and social initiatives leading the charge.
According to its 2024 sustainability report, BPI’s sustainability-linked loans reached P958 billion as of end-2024. It accounted for 55 percent of the bank’s total loan book, while its ESG-themed funds raised a record-high of P33.7 billion through public offerings.
BPI also launched eight new ESG-focused financial products for both individual and corporate clients last year. The bank’s pivot aligns with a broader push to democratize financial services and reach high-impact sectors of the economy.
Luchangco also said that BPI is ramping up its activity in the sustainability bonds space, seeing it as a natural complement to its broader finance strategy.
“I think you’ll continue to see us active in that space,” he said.
Last week, BPI announced its plan to issue P5 billion worth of peso-denominated fixed-rate bonds aimed at supporting sustainable initiatives, dubbed as the BPI Supporting Inclusion, Nature and Growth bonds.
The offering marks the first tranche under the bank’s recently approved P200-billion bond and commercial paper program. Net proceeds from the issuance will be used to finance or refinance eligible projects under BPI’s sustainable funding framework.
This shift toward sustainability marks a broader transformation in the banking industry, where impact is measured not just in margins, but in meaningful change.
