BSP eyes more investments in green bonds

MANILA, Philippines — The Bangko Sentral ng Philippines (BSP) is looking at investing more in green bond funds as it ramps up sustainable finance framework by encouraging banks to issue more green, social and sustainability bonds.

In a virtual press conference, BSP Governor Benjamin Diokno said the central bank invested an additional $200 million in green bonds early this year, on top of the $150 million made in October last year.

“The reason for that additional allocation was the growing significance of sustainability assets in the investment landscape. Green bonds offer institutional investors a means of accessing sustainable investments in the fixed income market, while providing greater transparency on how the funds are used by the issuer,” Diokno said.

Last October, the central bank earmarked $150 million for its participation in the green bond fund launched by the Bank for International Settlements (BIS) to provide diversification benefits.

“The BSP continues to monitor and assess developments in the financial markets and environment, social and governance or ESG landscape for future investment opportunities,” he said.

With its participation in the open-ended fund, the BSP takes a step further in recognizing the role of sustainable investing in reserve management as the country’s gross international reserves (GIR) hit an all-time high of $98 billion as of end-July.

The BSP has integrated sustainable central banking in its strategic map for 2020 to 2023 to foster environmentally responsible and sustainable policies and work practices.

The regulator is now working closely with banks toward their adoption of the sustainable finance framework amid the COVID-19 pandemic.

“The impact of COVID-19 certainly provides impetus for crafting a sustainable recovery plan. Thus, the BSP and the banking industry are working together to advance the sustainability agenda in the financial sector,” Diokno said.

The program is geared toward raising central bank’s capacity for climate and environmental risk management, as well as assessing the vulnerability of BSP offices and operations to such risks and developing a sustainable central banking roadmap to articulate strategies in mainstreaming green practices within the organization.