First Gen gets upgraded environment, social and governance rating from MSCI

Jul 05, 2021

Clean energy leader First Gen Corporation has received an upgraded environmental, social and corporate governance (ESG) rating from a US-based global finance company, mainly because of the Lopez-led power company’s low carbon risk exposure and the bright prospects of its renewable energy platform.

New York-based MSCI Inc. said it raised First Gen’s ESG rating to “BBB” in March 2021 from “BB” in February 2020 under MSCI’s ESG Rating, a system that measures the resilience to ESG risks of thousands of companies around the world.

MSCI is a global provider of equity, fixed income, and stock market indexes, as well as multi-asset portfolio analysis tools. Its ESG Ratings “aim to measure a company’s resilience to long-term, financially relevant ESG risks.”

In assessing a company’s performance on key ESG issues, MSCI used a scoring system, where “0” was the lowest and “10” was the highest.  Under this rating system, First Gen earned an “8” -- or above the industry’s “7.7” average score -- on the issue of carbon emissions; and a “7.9” -- or above the industry’s “5.2” average score -- on the issue of RE opportunities.

“Power generation operations provide [First Gen] opportunities to profit in the renewable energy (RE) sector, particularly with the Philippine government’s target to increase its RE-based capacity to ~13,304

MW [megawatts] by 2030,” MSCI said in its ESG Ratings for First Gen.

“In FY [fiscal year] 2019, RE comprised 42.2% of the company’s total capacity, outperforming the industry average of 22%, as of February 2021. Further, First Gen plans to increase its renewable capacity through its subsidiaries’ projects. These factors drive the company’s upgrade,” MSCI pointed out.

First Gen is a subsidiary of First Philippine Holdings Corporation (FPH), one of the country’s oldest diversified conglomerates and an advocate of decarbonization. As part of its advocacy, FPH declared in 2016 that it will not build, develop nor invest in coal-fired power plants because of their harmful impact to the environment.

FPH’s advocacy has been influenced by studies that show the adverse impact of coal-fired power plants to the environment. These facilities release into the atmosphere massive amounts of carbon dioxide, one of the greenhouse gases responsible for adverse weather patterns, such as floods and droughts, related to climate change.

First Gen’s choice of fuel for its power plants reflects the FPH Group’s environmental advocacy. Thus, First Gen’s power plants run on geothermal, wind, hydro and solar, which are all RE sources; and natural gas, considered the cleanest form of fossil fuel. As of 2020, the installed capacity of these power plants totalled 3,495 MW.