Philippines banks slowly tap green financing

MANILA, Philippines — Philippine banks convened with other banks in Southeast Asia to look into green financing as the Asia Pacific region still lacks readiness and resiliency, while only a handful of countries have a firm environmental, social and governance (ESG) standards.

The Bankers Association of the Philippines (BAP), ASEAN Bankers Association (ABA) and the Association of Banks in Singapore (ABS), together with the World Wildlife Fund (WWF) discussed the role of financial institutions in pushing for green financing to combat the adverse effects of climate change.

“The evident gap at present in terms of ESG standards in the Philippines leaves us financial institutions, together with our regulators and other experts to develop and become more resilient and climate change-conscious,” BAP president Nestor Tan said.

Over the last two decades, the Philippines is among the countries that have been mostly affected by climate change, but investments in sustainable development in the country still fall behind its regional peers.

Green financing is a form of investment specifically dedicated to sustainable projects that could help mitigate the effects of climate change. It is estimated to be value around $3 trillion in Southeast Asia and spread around infrastructure, renewable energy, energy efficiency and food, agricultural and land use projects.

In the Philippines alone, green investment opportunity in infrastructure is estimated to be around $28 billion.

BAP said the meeting of industry leaders opens an opportunity for banks to assess sustainable financing and is a step in the right direction towards a green economy.

“Sustainable finance is slowly gathering speed. Regulators are assessing parameters in ESG; investors are now more curious about green funds; and now more banks acknowledge its feasibility and efficiency. Green lending and investment is slowly being tapped by Philippine banks,” Tan added.

There is now a rising trend among investors around the world expecting companies to invest more on sustainable projects, encouraging companies and financial institutions to review existing systems in place and report climate-related risks.

Like any other new investments, green financing has its own inherent risks, but BAP is optimistic that with steady awareness campaigns, appropriate capacity building and regulatory support, all stakeholders will soon realize its opportunities and long-term benefits. 

“We are on a journey to becoming more sustainable economies in the region. Dialogues are ongoing across banking industries to hopefully capture the full potential of sustainable financial markets in the region,” Tan said.