The Bangko Sentral ng Pilipinas (BSP) is giving banks 3 years to adopt sustainable finance initiatives as part of efforts to green the banking sector.
Within that period, BSP Governor Benjamin E. Diokno said banks are expected to identify and execute specific actions on the implementation of board-approved strategies and policies on the integration of sustainability principles into their strategic objectives, corporate governance, risk management systems, and operations.
“We recognize that the tone at the top is of vital importance in materializing a bank’s sustainability initiatives,” he said.
Under the BSP Circular No. 1085 on Sustainable Finance Framework, banks will be required to establish an Environmental and Social Risk Management System and disclose their sustainability initiatives in their annual reports. For its part, the BSP is leading by example through the launch in 2019 of the Sustainable Central Banking Program as part of its strategic programs for 2020–2023. “This program aims to foster environmentally responsible and sustainable policies and work practices as well as integrate social governance in its key functions and operations,” said Diokno.
The BSP currently conducts a vulnerability assessment to assess the potential impact of climate change and other environmental risks in BSP offices and branches. It also collaborates with development partners and interest groups in conducting capacity-building activities to help banks better manage environmental and social risks.
The BSP is also working closely with the Department of Finance and other government agencies to embark on the development of a principles-based taxonomy to facilitate the mobilization of funds toward green or sustainable projects. Meanwhile, the industry associations, in collaboration with the World Wide Fund for Nature Philippines, are developing an analytical framework to assess the impact of climate physical risks on banks’ loan portfolios.
This article was first published by the Bangko Sentral ng Pilipinas on 28 May 2021.
