Banks urged to finance climate-friendly projects

MANILA, Philippines — The Bangko Sentral ng Pilipinas (BSP) and the World Bank’s International Finance Corp. (IFC) urged Philippine banks to increase financing for climate-friendly and socially inclusive projects.

The central bank has been helping the local banking industry step up its game on sustainable finance to encourage banks to integrate environmental, social and governance (ESG) standards in their operations.

BSP Deputy Governor Chuchi Fonacier said in her keynote address the central bank works to ensure not only a safe and sound financial system, but also a responsive, responsible, and inclusive system to deliver a high quality of life for all Filipinos.

“From all these activities, we learned that the best regulatory approach remains to be one that is enabling — flexible and risk-based; providing guidelines rather than mandates; considering banks’ risk appetites and business models; and applying standards proportionate to the size, structure and complexity of their operations,” she said.

At present, Fonacier said BSP policies and regulations already enable sustainable finance to flourish.

In a statement, BSP Governor Nestor Espenilla Jr. said the central bank would continue to support capacity building initiatives in response to the needs articulated by the banks.

“With greater awareness and exposure to how ESG and environmental and social risk management (ESRM) can be integrated in the business practices, we believe Philippine banks will see positive effects on their bottom line, client retention and organizational reputation while contributing to sustainable growth and development,” he said.

The BSP and IFC hosted a forum that aims to help banks’ boards and senior executives with an in-depth understanding of ESG approaches and practices, and also offer them an insight into sustainable finance initiatives, opportunities, and resources.

“In bringing together leaders of the Philippine financial institutions and banking organizations for this forum, BSP is taking significant steps to promote sustainable finance in the country,” IFC director for East Asia and the Pacific Vivek Pathak said.

The event attended by local and international practitioners in sustainability, including foreign banking associations, development organizations, and financial institutions provided a platform to share thoughts about global developments in climate finance and ESG integration, and showcase local experiences in sustainable finance.