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San Miguel Corp is lone Philippine company in ‘Dirty 30’ list of worst fossil companies

San Miguel Corporation (SMC), one of the the Philippines’ largest and most diversified conglomerates, was added to the Toxic Bonds Network’s Dirty 30, a list of the 30 worst fossil fuel companies worldwide funding their expansion through bonds. It is the only Philippine-based company on the list.

The latest “Dirty 30” update showed that SMC, through its power arm San Miguel Global Power Holdings Corp. (SMGPH), holds seven bonds amounting to USD 4.45 billion, with a heavy reliance on perpetual securities.

“Banks and financial institutions should know better than financing companies like SMC that are developing gas in critical biodiversity hotspots.

As much as it is shameful that the Philippines made it to a global list of the dirtiest fossil companies when the country was a pioneer in recognizing the potential and necessity of renewable energy, it is fitting that SMC is called out again for its counterintuitive and destructive business model.”
– Gerry Arances, Executive Director of the Center for Energy, Ecology, and Development (CEED)

SMC remains the biggest gas expansionist not only in the Philippines but also in Southeast Asia with over 15.4 GW in the pipeline. This is despite research showing high renewable energy (RE) potential in both the Philippines and the region.

Research showed that the Philippines has 1,211 GW of RE potential, and it not only can but also will benefit from urgently phasing out coal-fired power by 2035 and almost entirely phasing out gas-fired generation by 2040. Meanwhile, at least 328 GW of RE capacity have so far been planned in the region, according to a separate study.

A 1.75-GW liquefied natural gas (LNG) plant, a project by SMGPH subsidiary Excellent Energy Resources, Inc. (EERI), is undergoing construction in Batangas City despite overtly adverse impacts to the Verde Island Passage (VIP), a marine biodiversity hotspot known as the “Amazon of the oceans.”

Perpetual securities are bonds with no maturity date, obscuring exposure to greater financial risks to investors.

“San Miguel Corporation’s inclusion in the Dirty 30, a list of 30 of the worst fossil fuel bond issuers, is a direct consequence of its risky bets on ‘forever’ bonds and aggressive gas expansion in the Philippines. By playing fast and loose with its balance sheet, counting its more than $4 billion in outstanding perpetual securities as equity, not debt, San Miguel is risking default and jeopardizing investor trust. The Toxic Bonds Network is sounding the alarm: Banks and investors must urgently cut ties with San Miguel’s financially and environmentally reckless agenda,”
– Camilla Schramek, Communications Coordinator for the Toxic Bonds Network

In 2023, German asset management firm announced a full divestment from SMC due to environment, social, and governance (ESG) concerns, among others. Two of SMC’s largest bondholders — BlackRock and UBS — are also now members of the Glasgow Financial Alliance for Net Zero (GFANZ), signifying a shift toward decarbonization priorities.

Already, the financing trouble is unfolding for SMC as it stubbornly continues its fossil fuel expansion. The company will likely feel more constraints on access to capital, as financial institutions adjust their policies to climate risk investments.

“This is a warning to all other Philippine companies pushing for more coal and gas expansion and dependence. There is nothing to gain from fossil fuel expansion but dire consequences.”
– CEED’s Arances

SMGPH’s other securities holders are Allianz, ATR Kim Eng Asset Management, Goldman Sachs Group, JP Morgan Private Investments, Pictet Funds, Oversea Chinese Banking, BOCHK Asset Management, and GAM Holding, according to a report from the Institute for Energy Economics and Financial Analysis (IEEFA).

San Miguel Corporation