Philippines doubles down on green finance, energy shift

MANILA, Philippines — As the Philippines races to transform its energy mix and green its supply chains, global financial institutions are ramping up their support for the country’s sustainability agenda, offering both capital and expertise to help meet ambitious climate targets.

MUFG Bank, one of the world’s largest financial groups, is among those deepening their sustainability footprint in the country. Through landmark financing deals and regional initiatives like its Net Zero World (MUFG N0W) platform, the Japanese bank has become a key partner in the Philippines’ transition to clean energy and climate-resilient industries.

At the recent MUFG N0W conference in Manila, government officials and banking leaders emphasized the urgency of accelerating renewable energy development and decarbonizing entire business ecosystems from large corporations down to their supply chains.

“For the Philippines, opportunities lie in our growing economy – game changing reforms, liberalizing policies and rich green energy sources. But above all, it is in the partnerships with organizations and business leaders, who share and invest in the mission of a better and more sustainable future,” said Undersecretary Ma. Angela Ignacio, speaking on behalf of Special Assistant to the President for Investment and Economic Affairs Frederick Go.

“The rise in renewable energy investments and projects backed by defined policy targets and key initiatives shows that we are not merely waiting for the world to change,” she said.

“MUFG N0W serves as a reminder that the road to net zero is not one that we take alone, it is a shared journey,” she added.

The Philippines now ranks second among the most attractive emerging markets for renewable energy investments, rising from fourth place in 2023 and from 20th in 2021, according to BloombergNEF’s Climatescope 2024 report.

Ignacio said this achievement reflects the strength of the Philippines’ renewable energy policies ranging from green energy auctions, net metering schemes and tax incentives.

She noted that the Philippines is the only emerging market in the Asia Pacific region with all these mechanisms in place, “making the Philippines not just a participant but a regional leader in sustainable energy.”

The government is targeting a renewable energy share of at least 35 percent by 2030 and over 50 percent by 2040. To date, renewable energy accounts for about 22 percent of the country’s power generation mix.

Meanwhile, Bangko Sentral ng Pilipinas Assistant Governor Pia Roman Tayag reaffirmed the regulator’s climate finance commitment during the event’s leadership dialogue.

“The country is extremely vulnerable to the impacts of climate change, regardless of geopolitical shifts,” Tayag said. “

As BSP Governor Eli Remolona Jr. has pointed out, a climate-resilient economy and financial stability are mutually reinforcing goals.”

Tayag cited the BSP’s sustainable finance taxonomy guidelines, launched in February last year, as a “key enabler” in channeling capital toward climate adaptation and mitigation priorities.

The taxonomy, she added, is a living document that will “be progressively enhanced to include other environmental objectives… such as circular economy and biodiversity,” with plans for a separate supplement on adaptation and resilience financing.

MUFG has also been instrumental in financing sustainability-linked projects in the Philippines. It helped launch Ayala Corp.’s first sustainability-linked loan in 2023, and through its partner Security Bank, supported Ayala Land’s inaugural sustainability-linked bond in 2024.

“While MUFG continues to innovate and pioneer tailored solutions for our clients, our true strength lies in our ability to leverage our global and regional franchises to connect the public and private sectors,” said Colin Chen, MUFG’s head of sustainability finance for Asia Pacific.

MUFG chief executive for Asia Pacific Nobuya Kawasaki highlighted the country’s challenge and potential as a net energy importer.

“The Philippines faces a critical dilemma: how to accelerate energy transition while meeting its growing energy needs as a fast developing nation?” he said.

“The numbers underscore this challenge. The country aims to achieve 35 percent renewable energy capacity by 2030, which involves doubling its solar capacity and tripling its wind generation, and 50 percent by 2040,” he said.

According to Kawasaki, as the country intensifies efforts to expand renewable capacity and achieve 100 percent electrification by 2028, businesses should also be encouraged to adopt energy efficiency measures across their supply chains.

“As a bank with a 72-year long history in the Philippines, MUFG is proud and honored to be a long-term partner in the country’s development,” Kawasaki said.