Philippine thrift banks embrace sustainable finance | Inquirer Business

Philippine thrift banks embrace sustainable finance

/ 08:28 AM October 03, 2022

The umbrella organization of thrift banks in the Philippines has committed to support the sustainable finance road map pushed by the Bangko Sentral ng Pilipinas (BSP), as the regulator issued guidelines on the implementation of the Environmental and Social Risk Management (ESRM) System.

The sustainable finance road map covers green finance, which is designed to facilitate the flow of funds toward planet-friendly economic activities as well as climate change mitigation and adaptation projects.

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“Recent and current events such as the ongoing pandemic and natural calamities have triggered awareness about the importance of sustainability in various industries including banking,” Chamber of Thrift Banks (CTB) president Cecilio San Pedro said in a statement.

“We aim to jumpstart the members’ response to this urgent call of the Bangko Sentral for sustainable development,” San Pedro said.

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CTB and its members are drumming up commitment to sustainability as they gather for their yearly convention on Oct. 12-13.

The BSP defines sustainable finance as any form of financial product or service which integrates environmental, social and governance criteria into business decisions, that in turn support economic growth and provide lasting benefits for both clients and society, all while reducing pressures on the environment.

“The CTB pledges to continue serving and guiding our member-banks as we move forward toward digitalization and a focus on other growth sectors such as agriculture and tourism, green banking, digital payments, and MSME (micro, small and medium enterprise) financing,” San Pedro said.

Meanwhile, BSP memorandum No. M-2022-042 gives guidance on the initial steps or approaches that may be considered in developing an ESRM System, referring to policies, procedures, and tools to identify, assess, monitor, and mitigate exposures to environmental and social risks.

Such issues may include climate risk, environmental pollution, hazards to human health, safety and security; and threats to community, biodiversity and cultural heritage. These risks are inherent and can directly or indirectly affect banks.

BSP Deputy Governor Chuchi Fonacier said that consistent with the principle of proportionality, banks should adopt an ESRM System commensurate to their size, risk profile, and complexity of operations.

“Banks may employ other approaches which are considered more feasible considering their business model, risk appetite and operational capacity, provided that these are consistent with the BSP regulations and international standards,” Fonacier said.

“Banks are also encouraged to keep abreast with the local and global developments in the sustainability front and strengthen their awareness and capacity in response to the evolving climate and E&S risks,” she added.

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TAGS: Roadmap, sustainable finance, thrift banks
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