Advertisement

BSP eyes ‘enabling’ rules on sustainable finance

Font Size

BSP_Bangko_Sentral
BW FILE PHOTO

THE Bangko Sentral ng Pilipinas (BSP) will stick to “enabling” rather than prescriptive rules on sustainable finance, as the regulator eyes to promote “flexible” policies covering banks.

“We learned that the best regulatory approach remains to be one that is enabling, flexible and risk-based,” BSP Deputy Governor Chuchi G. Fonacier said in a speech during a forum on Environmental, Social and Governance (ESG) Practices for Philippine Banks yesterday.

“(We are) 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.”

Authorities want to spur increased lending to “sustainable” initiatives and projects, or those which minimize adverse impacts on the environment.

Ms. Fonacier, who heads the BSP’s bank supervision sector, said the policy thrust also responds to “industry preference” for a more progressive rather than mandatory regime.

“At present, we believe that BSP policies and regulations already enable sustainable finance to flourish,” the BSP official added.

The BSP and the International Finance Corp. (IFC) held the joint forum to engage bank boards and senior executives explore options for increased lending for climate-friendly and socially inclusive projects.

The IFC also signed a memorandum of understanding with the Bankers Institute of the Philippines and the Mongolian Bankers Association to push sustainable finance and green banking in the two countries. The World Bank unit will extend capacity-building and knowledge-sharing to industry players from these economies.

The Philippines is one of 20 countries considered most vulnerable to the impact of natural disasters and climate change. The Department of Finance earlier said that more than 1,000 deaths occur yearly in the Philippines due to natural calamities, with typhoons accounting for 74% of lives lost, 62% of damage to properties, and 70% of damage to agriculture.

The Sy-led BDO Unibank, Inc. pioneered a green bond issuance in the country last December. The bank raised $150 million from bonds issued to the IFC, which will fund renewable energy projects, green buildings, and energy-efficient equipment, to name a few.

BSP Governor Nestor A. Espenilla, Jr. previously said that regulators should fix physical and logistical barriers to make it easier for banks to lend “on a voluntary basis” rather than to rely on mandated lending. — Melissa Luz T. Lopez