BSP joins global central banking group promoting ‘green’ finance

MANILA, Philippines – The Bangko Sentral ng Pilipinas has joined the ranks of monetary authorities around the world working toward managing climate- and environment-related risks in a bid to mobilize capital toward a sustainable economy.

In a statement, BSP Governor Benjamin Diokno said the regulator’s move is part of its initiative of promoting a “sustainability agenda” in the Philippine financial system, which includes encouraging and incentivizing local banks to include these themes in their lending frameworks.

The international body called the Network for Greening the Financial System is a group of central banks and supervisors organized to enhance the role of the financial sector in managing climate and environmental issues.

“The NGFS membership will strengthen BSP’s collaboration with counterpart regulators in building awareness and contributing to the effective management and mitigation of the impact of climate and other environment-related risks in the financial sector,” Diokno said.

The group is presently comprised of 69 member institutions and 13 observers.

“The Philippines has a lot to share with respect to our country’s experience in coping with calamities and natural disasters,” he added.

The BSP has been actively involved in building awareness and highlighting the shared accountability of regulators and financial institutions in pursuing the sustainable finance agenda in the industry.

As a recognized institution in this field, the BSP has adopted “sustainable central banking” as one of its strategic objectives, committing to embed sustainability principles in key areas of its operations to the extent possible.

In April 2020, the BSP issued Circular No. 1085 or the Sustainable Finance Framework which provides high-level expectations on the integration of sustainability principles in the corporate governance, risk management systems, business objectives and operations of banks.

Adhering to the NGFS reflects a political commitment from an institution and also implies the will and capacity to actively contribute to the work. As such, any supervisory authority or central bank committed to actively contribute to the objectives and work of the NGFS is eligible to be a member.

The NGFS membership aims to achieve a diverse representation of institutions in terms of geographic areas as well as between developed and emerging countries.

It aims to help to strengthen the global response required to meet the goals of the 2017 Paris climate agreement and to enhance the role of the financial system to manage risks and to mobilize capital for green and low-carbon investments in the broader context of environmentally sustainable development. [ac]