BSP sees more sustainability, green bond issuance by banks

MANILA, Philippines — The Bangko Sentral ng PIlipinas (BSP) expects Philippine banks to issue more green, social and sustainability bonds to help bankroll environment-friendly projects.

BSP Governor Benjamin Diokno said banks in the country have issued $1.15 billion in foreign currency denominated and P85.4 billion in local currency denominated green, social, and sustainability bonds since 2017.

As of end September, Diokno said Philippine banks had issued $701 million worth of green bonds, $300 million worth of sustainability bonds, and $150 million worth of social bonds in the offshore debt market.

Diokno said local banks had also raised P48.9 billion via the issuance of sustainability bonds, P21.5 billion from social bonds, and P15 billion from green bonds in the onshore debt market.

Amid the pandemic, two banks have issued social bonds worth approximately P29 billion to finance the needs of eligible micro, small and medium enterprises.

“Now once we lay down the remaining policies, particularly on the taxonomy, we hope that these bond issuances will continue to increase and that lending to green sectors or sustainable assets will likewise pick up,” Diokno said.

Diokno said the central bank would issue subsequent phases of regulations covering the areas of investment activities of banks, climate stress testing, disclosure requirements, prudential reporting and potential regulatory incentives.

This follows the issuance of the environmental and social risk management (ESRM) framework last October in line with its commitment to champion the sustainability agenda in the financial system.

The framework, he explained, provides granular expectations on the management of environmental and social risks in relation to credit and operational risks.

It also provides specific expectations on the management of environmental and social risks in relation to credit and operational risks, taking into account the size, risk profile and complexity of operations of banks.

“We are committed to issuing the remaining policy initiatives before the effectivity of the sustainable finance framework in 2023,” Diokno said.