The Philippine central bank will aggressively push for the adoption of sustainable finance principles in the local banking system as part of its commitment to fight environmental degradation as laid out in the 26th United Nations Climate Change Conference of Parties (COP26).

In a statement on Nov. 10, Bangko Sentral ng Pilipinas (BSP) Governor Benjamin Diokno said the regulator joins the Central Banks and Supervisors’ Network for Greening the Financial System (NGFS) and its members in conveying contribution to achieving the global climate goals under the Paris Climate Agreement.

“Central banks and financial institutions should recognize their important role in contributing to the transition to a low-carbon economy,” he said. “As stewards of the financial sector, we should all commit to act with urgency in achieving the desired emissions reduction targets and in promoting the sustainability agenda.”

For COP26, the BSP joined the collective declaration of NGFS members and committed to champion the sustainability agenda in the financial system through the rollout of initiatives under the Sustainable Central Banking (SCB) program to foster environmentally responsible and sustainable policies and work practices.

The SCB program embodies the essential roles of the BSP as an “enabler, mobilizer, and doer” in relation to advocating sustainability principles in the financial system.

The BSP will also provide an enabling regulatory environment to equip banks in managing climate change, environmental, and social risks, and at the same time, unlock financing to economic activities contributing to sustainable development.

Diokno added that the agency will facilitate climate stress-testing exercises and the collection of more data on climate, and environmental and social risks exposures in the banking industry.

It will promote a collaborative approach in the financial sector and harmonize policies and align initiatives with the objectives and strategies of the Philippine Sustainable Finance Roadmap and Guiding Principles and, finally, build partnerships to intensify awareness and capacity-building activities for the financial sector.

“We need to take advantage of the momentum calling for action, and step up our response towards climate change,” he said.

Last year, the BSP joined the NGFS, which is a group of central banks and financial supervisors that voluntarily exchange experiences and best practices to enhance the financial sector’s environment and climate risk management and accelerate the transition towards a sustainable economy.

In January 2022, months following the conclusion of COP26, the Department of Finance (DOF) established its sustainable finance framework, which sets how the country will raise green, social, or sustainability bonds, loans, and others in support of the discussed global climate goals.

“Proceeds raised under this framework will be used to support projects that reflect the Philippines’ commitment toward sustainable development and the United Nations Sustainable Development Goals, in line with the Philippine Development Plan 2017-2022 and Public Investment Program 2017-2022,” DOF stated.

Proceeds can be used to finance or refinance “eligible social expenditures” or “eligible green expenditures,” according to the published framework. Projects that fall under the following categories may be covered: access to essential health care and education services, affordable basic infrastructure, food security, socioeconomic advancement and empowerment as in 4Ps beneficiaries, affordable housing, and COVID-19 expenditures. Projects and investments that forward clean transportation, climate change adaptation, sustainable agriculture and forestry, and marine and coastal protection, as well as renewable energy generation and distribution, are also covered.

The framework also details the process of evaluating and selecting projects, as well as the contents of requisite reports.

Reference: https://business.inquirer.net/334154/bsp-to-push-for-sustainable-finance-as-part-of-cop26-deal
For more information and news on businesses and entrepreneurship, visit IFEXCONNECT.