HSBC ramps up financing shift to clean energy

MANILA, Philippines — British banking giant HSBC is bullish about the economic growth prospects of the Philippines as it ramps up the shift in financing to clean and renewable energy projects.

Amanda Murphy, general manager and head of commercial banking for South and Southeast Asia at HSBC, said the bank continues to help clients, including multinational companies, conglomerates, family-owned businesses, mid-market companies, among others, that are looking to expand their businesses.

“We’re investing in our businesses here, strengthening the capability of our people and our proposition, the digital proposition, etc. The Philippines is a hugely attractive market for us. And it’s got a very skilled, well trained, educated workforce, fluent in English, which is always very helpful on the international scale. Great demographics, you know, a young population that is growing in strength every day. I think the median age 26,” Murphy said.

After exiting the pandemic-induced recession with a gross domestic product (GDP) growth of 5.7 percent in 2021, the Philippines was able to sustain the strong rebound as the expansion accelerated to 7.6 percent last year.

The country slipped into recession with a GDP contraction of 9.6 percent in 2020 as the economy stalled after the government imposed one of the longest and strictest lockdowns in the world.

Amid headwinds brought about by elevated inflation and aggressive rate hikes delivered by global central banks led by the US Federal Reserve, the GDP growth slowed to 6.4 percent in the first quarter from 7.1 percent in the fourth quarter and eight percent in the first quarter last year.

The Cabinet-level Development Budget Coordination Committee (DBCC) has penned a GDP growth target of six to seven percent this year.

“So very positive economics as well,” Murphy said.

According to Murphy, HSBC has committed $1 trillion up to 2030 for a mixture of lending, investments  and financing.

“And I think our book has more than doubled in the last 18 months in this space (sustainable financing) as it becomes more important for customers,” Murphy said.

HSBC wholesale banking head Mimi Concha said the bank continues to ramp up efforts to shift financing to renewable energy to 50 percent by 2030 from the current level of 27 percent.

Concha said HSBC provided guarantee facilities for   onshore wind farm with a capacity of 160 megawatts and is now in discussion with solar portfolio companies.

She said companies in the Philippines are also in different changes of understanding on how to reduce their carbon emissions coming mostly from the supply chain.

To keep global warming to no more than 1.5°C  – as called for in the Paris Agreement – emissions need to be reduced by 45 percent by 2030 and reach net zero by 2050.

As early as 2017, HSBC became one of the first international banks to phase out lending for coal-fired power projects.

“We have zero exposure in the Philippines because we started really early,” Concha said.

Aside from clean energy projects, Concha said sustainable financing also covers rail projects that promote more efficient transport systems.