The Bangko Sentral ng Pilipinas (BSP) has outlined its sustainable finance initiatives as part of its drive to boost the so-called green financing in the country.
The BSP said local banks and financial institutions need to further understand and manage climate change risks to fully maximize opportunities behind lending or investing in green or sustainable projects.
“For instance, banks can be innovative in designing sustainable finance instruments in mobilizing funds for sectors supporting pandemic response and recovery, and other economic activities that contribute to sustainable development,” BSP Governor Benjamin Diokno said.
To align with the national government’s approach toward sustainable finance, the BSP co-chaired an Inter-Agency Technical Working Group on Sustainable Finance or the “Green Force.”
The inter-agency council is co-chaired by the Department of Finance (DOF) together with 16 financial sector authorities and critical government agencies. It aims to harmonize government policies on green and sustainable projects, establish an action plan to institutionalize and accelerate the growth of sustainable finance, and develop a pipeline of sustainable investments.
The BSP also joined the Network for Greening the Financial System in July 2020. This is a group of central banks and financial supervisors that discusses best practices in developing environmental and climate risk management guidelines in the financial sector.
“As we advance sustainability initiatives and continue to collaborate with relevant government agencies and other multilateral development partners, we hope that the sustainability agenda will have a big leap for the next five years,” Diokno said.
According to Diokno, adopting green or sustainable finance principles and practices can unlock various opportunities for the BSP and the banking sector.
“For instance, the BSP’s investment of a total of $550 million in the Bank for International Settlements’ green bond fund allows the diversification of the Gross International Reserves as it offers adequate returns compared to other fixed-income assets,” the BSP chief said.
“Sustainability, as a principle, is embedded in the charter of the BSP. We are committed to remain responsive and proactive in our stance towards these risks to maintain price and financial stability,” he added.
In April 2020, the BSP issued the Sustainable Finance Framework for banks and the launch of the Sustainable Central Banking Program.