BPI completes 2nd year of 'going green'

MANILA, Philippines - The Bank of the Philippines Islands (BPI) has completed its second year as the first domestic commercial bank to “go green” in a very serious way. In fact, it is the first in Southeast Asia in that regard.

In 2008, BPI started the sustainable energy finance (SEF) program in partnership with the International Finance Corp. (IFC), encouraging investments geared toward sustainable energy. That meant investments towards energy efficiency as well as providing loans for businesses shifting towards energy-efficient products for their operations, such as compact fluorescent lighting (CFL) or light emitting device (LED) lighting and energy-efficient chillers that are less ozone-depleting.

The IFC is the private investment arm of the World Bank.

With the Phili2ext to Japan, it makes sense for companies to upgrade their existing equipment and invest in newer and more energy-efficient technologies

BPI assistant vice president and head of Specialized Lending Unit & Sustainable Energy Finance Nanette A. Biason said that the bank developed business models that companies can implement when they do financing.

“Energy cost savings resulting from these energy-efficiency projects bring in additional cash flow that can be tied into the payment of the loan,” Biason said in a report.

The following year, the program expanded to include renewable energy projects, which encompasses power sources from solar, wind, hydro, biomass, and geothermal.

In that same year, BPI put up a P5-billion loan facility for investments “green” ideas and technologies that will greatly improve the way they generate, distribute, and use energy. Such investments will not only help the companies cut costs in the long run, these will also reduce companies’ carbon footprint by as much as 20 to 30 percent.

At the same time, the Renewable Energy Act was signed into law. It is the first piece of legislation in Southeast Asia that institutionalizes the application of renewable energy, while offering government incentives, such as tax holidays and tax-free equipment importation.

The SEF program already helped a number of companies reap the benefits of going green – improving cash flow from energy savings, increasing their competitiveness, and improving the reliability and effectiveness of their plant amenities. Of course, the shift to sustainability also helps companies build their social responsibility portfolio.

From the same report, BPI said one of its SEF clients was a corrugated box manufacturer that availed of a P60-million loan for the upgrade and installation of new equipment, resulting in energy savings of up to over P11 million.

Then an agriculture-based borrower that availed of SEF’s loan facility for the construction of a P750-million, post-harvest facility for corn, realized an improved productivity by at least 10 percent, while reducing carbon emissions of at least 18,000 metric tons per year.

In fact, Corfarm, one of BPI’s SEF clients, was featured in the IFC 2009 annual report for its P50-million biogas/methane-capture and electricity-production facility that resulted in energy savings of up to 80 percent.

Several companies have also benefitted from BPI and IFC’s 50-50 risk-sharing agreement, which makes it possible for investors and small and medium enterprises (SMEs) to try and get loans for their energy projects. Although the interest rate of each company may vary depending on its credit risk, it would have an IFC guarantee that will cover the risk of one half of the loan. 

BPI also undertook measures to replace its old lighting with more energy-efficient bulbs and to implement an energy conservation system in the workplace.

It also changed its 30-year-old centralized chillers in its head office in Makati City, even outsourcing an energy service company to complete the project. Although the initial outlay was substantial, the move to energy-efficient chillers is estimated to produce energy savings of around $133,000 annually or a 28-percent cut from the building’s air-conditioning budget. This move would also trim down the building’s carbon emissions by approximately 300 tons of carbon dioxide every year.

Biason said that sustainable energy would give a lot of opportunities for financial institutions, as the new “green” market are not only direct business entrepreneurs but also for the technology providers.

“The challenge is an invitation for innovations, financial solutions that can have impact on SME growth,” the BPI executive said in the report.