Philippine banks vow to accelerate sustainable, green financing

MANILA, Philippines — Philippine banks have committed to further ramp up sustainable and green financing for a better environmental, social and economic condition in the country.

In a statement, the Bankers Association of the Philippines (BAP) said it strongly supports the Philippine Sustainable Finance Roadmap launched by the Department of Finance (DOF) and the Bangko Sentral ng Pilipinas (BSP).

The BAP joins the national government on its strong resolve to promote sustainable finance as the Philippines has a high level of environmental vulnerability.

“Sustainable finance is a major keystone in our efforts to protect the environment and promote economic growth as long-term green investments will not just conserve our natural resources, but are envisioned to create jobs for the Filipino people,” the BAP said.

It said the Philippine banking system has proactively taken steps to promote sustainable finance over the past few years.

BSP Deputy Governor Chuchi Fonacier said during the GRI-SM ASEAN Sustainability E-Summit 2021 the central bank continues to champion sustainability agenda in the financial industry.

Fonacier cited the results of the study conducted by the Asian Development Bank (ADB) that showed that climate change risks pose significant negative impact to the Philippines as the country stands to lose six percent of its gross domestic product (GDP) annually by the year 2100 “if we will not act now.”

Fonacier said the regulator has launched the Sustainable Central Banking Framework that embodies the key roles of the BSP as an enabler, mobilizer, and doer in promoting sustainability.

As early as 2010, she revealed some of the country’s largest lenders have started aligning their actions and activities with the United Nations Sustainable Development Goals (UN SDGs).

She added Philippine banks have issued $1.15 billion and P85.4 billion worth of green, social, and sustainability bonds.

“So clearly, banks alongside the BSP are key enablers in moving towards a sustainable future,” Fonacier said.

According to Fonacier, banks should align their business strategies with both environmental and societal goals to create a more positive contribution to the country,” she said.

The regulator has taken a phased approach in implementing sustainability or environmental, social and governance guidelines, with the first part being the release of the Sustainable Finance Framework in April last year.

This provides broad expectations on the integration of sustainability principles in the corporate governance, risk management systems, business strategies and operations of banks.

The second phase focuses on specific expectations on the integration of climate change as well as environmental and social risks in the credit and operational risk management frameworks of banks, while the third pertains to the grant of potential regulatory incentives to help accelerate the adoption of sustainable principles.

For one, Fonacier said the central bank has proposed the inclusion of sustainable finance, including lending to green projects as among allowable modes of compliance with the mandatory credit to the agriculture and agrarian reform sectors as part of the amendments to Republic Act 10000 or the Agri-Agra Law.

“So the first one is proposing to Congress that the sustainable finance be made as an alternative compliance with the agri-agra mandated lending,” she said.

She added the BSP is carefully calibrating and balancing other incentives so as not to result in unintended consequences.