THE Bangko Sentral ng Pilipinas (BSP) announced it will be issuing the second-phase regulation to allow the banking industry to be more responsive to risks arising from the transition to a low-carbon economy.
This second-phase regulation follows the BSP’s issuance in April 2020 of the “Sustainable Finance Framework,” which encourages the offering of green and sustainable finance instruments.
“This issuance will provide granular expectations on the integration of climate change and other environmental and social risks in banks’ credit and operational risk management frameworks,” BSP Governor Benjamin E. Diokno said.
In their April 2020 issuance, the BSP said it expects local banks to embed sustainability principles in their corporate governance framework, risk management systems and strategic objectives including those covering environmental and social risk areas in their corporate.
“The framework safeguards the stability of the financial system against potentially significant and protracted impact of climate change and other environment related risks,” the governor said.
“Central to the climate change mitigation goal is the need to reduce greenhouse gas concentrations by shifting fossil fuels to renewable sources. We should note, however, that a successful transition is not just a matter of isolated changes in the energy sector. We must also consider the potential risks associated with this transition given the interplay among economic activities,” Diokno added.
Further details to the second-phase regulation, as well as the timeline of issuance, were not bared.
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