EDC Green Bond Framework
EDC’s vision is to be the leading global geothermal energy company and key provider of clean, renewable, 24/7 energy. Its mission is “to forge collaborative pathways for a decarbonized and regenerative future.”
EDC is the largest pure renewable energy company in the Philippines, operating 1,186 MW of geothermal, 150 MW of wind, 132 MW of hydroelectric power, and 12 MW of solar— for a total of 1,480 MW of clean and renewable energy. Recognized as a world leader in wet steam field technology, the Company operates in various locations in the Philippines, including in Bicol, Leyte, Negros Island, and Mindanao. EDC, through its subsidiaries, also operates the biggest combined wind and solar farm in the region, located in Burgos, Ilocos Norte, and substantial hydropower assets located in Nueva Ecija. Through these investments, EDC can supply 100% naturally sourced power to the national grid and bolster the Philippines’ economic growth.
To support the Company’s objective of promoting a regenerative environment and society while contributing to a low carbon economy by increasing access to reliable renewable energy, EDC is planning to issue Green Bonds to finance or refinance, in whole or in part, the exploration, development, construction, rehabilitation, expansion or acquisition of new or existing renewable energy projects. Refinancing activities shall follow a 2- to 3-year look-back period.
This Framework is drafted in accordance with the four core components of the International Capital Market Association (ICMA) 2018 Green Bond Principles; namely: a) Use of Proceeds, b) Process for Project Evaluation and Selection, c) Management of Proceeds, and d) Reporting.
This Framework will govern all Green Bond issuances of EDC and, if applicable, its subsidiaries.
The net proceeds from the issuance of Green Bonds shall be used to finance or refinance, in whole or in part, the exploration, development, construction, rehabilitation, expansion or acquisition of new or existing renewable energy projects, including:
1. Geothermal energy projects (direct emissions < 100gCO2/kWh),
2. Wind energy projects,
3. Solar energy projects,
4. Hydropower projects, which are expected to have a
a. Life-cycle carbon intensity that is below 100gCO2e/kWh; or
b. Power density that is greater than 5W/m2,
5. Bioenergy projects,
a. For waste biomass to energy – waste from non-certified Roundtable on Sustainable Palm Oil (RSPO) operations shall be excluded.
b. For non-waste to energy:
i. life-cycle GHG emission intensity below 100gCO2e/kWh, or
ii. substantial reduction (at least 50%) of life-cycle emissions relative to fossil fuel baseline for biofuels
Additionally, regardless of emissions threshold, intended non-waste feedstock shall ensure that:
i. production of biofuel feedstock does not take place on land with high biodiversity (at least within last 10-15 years),
ii. land with a high amount of carbon has not been converted for biofuel feedstock production, and
iii. there is no competition with food (considerations for food security).
Non-waste biogas from peat, palm oil, and non-certified energy/oil crops shall be excluded.
6. Energy storage projects (Power-to-Hydrogen projects shall be through water electrolysis.)
Energy projects that meet the above criteria are known as “Eligible Green Projects”. For the avoidance of doubt, coal or any other fossil fuel-related technologies shall not be eligible for funding by the Green Bonds.
Eligible Green Projects are identified, evaluated and selected by EDC’s Business Development team, in collaboration with various support groups, including the Subsurface Geothermal Resource; Facilities Operations and Maintenance; Finance; Strategic Initiatives, Legal and Regulatory; Integrated Planning; Strategy and Long-Term Planning; and Corporate Support Functions. Short-listed projects are then reviewed and endorsed by the Company’s Operations Committee, and subsequently approved by the Board of Directors.
Projects are evaluated and selected based on, but not limited to: a) the Framework, b) EDC’s vision, mission, chosen path, strategy, and objectives, c) technical, financial, and commercial feasibility, and d) risks assessment.
Additional guidance may be provided by the Chief Sustainability Officer of EDC’s Parent company, First Philippine Holdings Corporation (FPH).
In keeping with EDC’s commitment to the IFC Performance Standards on Environment and Social Sustainability, the projects must undergo environmental and social impact assessment and implement environment management system in the assessment, prevention and mitigation of risks.
The projects must also comply with FPH’s sustainability policies on corporate sustainability; human rights, including labor and working conditions; environment, safety and health; gender equality and diversity; biodiversity conservation and sustainable natural resource management; cultural heritage and indigenous peoples; corporate social responsibility and responsible asset protection.
The net proceeds from the issued Green Bonds will be allocated to finance or refinance Eligible Green Projects of EDC and, if applicable, its subsidiaries, which projects are selected in accordance with the Use of Proceeds criteria and the Evaluation and Selection process presented above.
Over time, the Company aims to fully allocate the net proceeds from the Green Bonds issuance to a portfolio of Eligible Green Projects. EDC will regularly monitor the allocation through its internal information system. In the event an Eligible Green Project ceases to satisfy the eligibility criteria, EDC will remove the said project from the portfolio and replace it as soon as reasonably practicable.
Until fully allocated, the unallocated net proceeds from the Green Bonds issuance may be invested in cash or cash equivalents, or used to repay or prepay debts, or used in accordance with the Company’s internal liquidity management policies and strategies.
As long as there are outstanding Green Bonds issued under this Framework, EDC will provide information on the allocation of the net proceeds and balance of unallocated funds at least annually and starting one (1) year from the date of the Green Bond issuance until full allocation, on EDC’s official website (www.energy.com.ph) and/or in the Company’s Integrated Report.
Where relevant and possible, EDC will report on selected impact metrics (per project or in aggregate for all projects financed by the Green Bonds). The Company will aim to publish a brief description of the Eligible Green Projects and their expected impact, inclusive of, but not limited to, installed capacity, electricity generation, and GHG emissions reductions or avoidance.
Second Party Opinion
EDC has engaged Sustainalytics to review the Company’s Framework and Sustainalytics has issued a second party opinion confirming that EDC’s Green Bond Framework is in line with the 2018 Green Bond Principles.
The independent second party opinion will be published on EDC’s official website (www.energy.com.ph).
EDC will engage an external consultant to provide independent consultancy on its reporting and management of proceeds in accordance with this Framework, until all the net proceeds of the Green Bonds have been allocated.