The Bangko Sentral ng Pilipinas (BSP) is considering giving incentives to banks that adhere to sustainability standards, according to a top official.
“Part of our phased approach in issuing ESG (environmental, Social, and Governance) related regulations, is the possible grant of incentives to banks, which adhere to sustainability principles,” BSP Deputy Governor Chuchi Fonacier said at the GRI-SM Asean Sustainability E-Summit 2021 on Thursday, October 21, 2021.
She went on to say that the central bank is carefully considering whether to give potential regulatory incentives in order to avoid unexpected consequences. It will, of course, take into account developments from international standard-setting organizations.
“The first one is we are proposing, actually, that sustainable finance can be a form of compliance of the banks with the mandated agri-agra lending,” Fonacier explained.
Meanwhile, Fonacier said that the central bank recognized the strategic and operational changes that banks must make to achieve sustainable finance as part of its Sustainable Finance Framework.
As a result, she stressed, the framework gives banks three years to convert to sustainable standards.
“But from the issuance of the said Framework, the BSP has been actually engaging banks to discuss the actions taken, to meet the expectations set out by the BSP, and how the sustainability principles were considered in the strategy-resetting exercises given the impact of the pandemic to their business operations,” Fonacier noted.
She added that Philippine banks are in various phases of embracing sustainability principles. There are banks that are well advanced, but there are also banks, particularly smaller ones, that are only now beginning to incorporate the ideas into their plans and operations.
Fonacier said there is an increased appetite among banks to finance sustainable projects or operations over a two-year time horizon, citing Bangko Sentral’s semestral survey of the perspectives of bank presidents and chief executive officers.
“And so it is in this light that the BSP has been active in forging partnerships with multilateral development agencies to conduct capacity-building activities to level the understanding across the sector and enhance or develop skill sets necessary for the management of climate and ESG risks,” she emphasized.
Source: Manila Times