The SEC and sustainable finance

By Kelvin Lester K. Lee, Commissioner, Securities and Exchange Commission

I had the honor to be part of a panel, representing the Securities and Exchange Commission (SEC), at the Session 2 fireside chat of the GRI-SM Asean Sustainability E-Summit last October 21 with the theme “Leaving No One Behind: Private Sector in Solidarity for Sustainable Covid-19 Recovery and Delivering the SDGs (Sustainable Development Goals).” The event was co-organized by the Global Reporting Initiative and SM Investments Corp.

I joined speakers representing regulators, financial institutions, and private sector, and we spoke on how financial markets were driving demand for more sustainable business practices. Panelists included a fellow regulator, Deputy Governor Chuchi Fonacier of the Bangko Sentral ng Pilipinas (BSP), and from the private sector were Walter Wassmer, senior executive vice president and head of institutional banking at BDO Unibank Inc.; Ayman Doukali, head of sukuk financing at HSBC Malaysia; Chng Bee Leng, senior vice president and risk policy group head at OCBC Bank; Venetia Bell, group chief sustainability officer and head of Strategy of GIB Asset Management; and Esther An, chief sustainability officer at City Developments Ltd. Cathy Yang of PLDT Inc. was the moderator.

The program started with a prerecorded keynote presentation from Yuki Yasui, Asia-Pacific coordination manager of the UN Environment Program Finance Initiative. Yasui mentioned, among others, the growing number of banks proactively engaging clients on sustainability issues and stimulating demand for sustainable finance, thereby recognizing banks as future makers.

As the representative of the SEC, I was able to elaborate on the commission’s ongoing and planned initiatives to develop a sustainable finance market, promote investments in environmental, social, and corporate governance (ESG) products, and encourage sustainable business practices in line with our SuperVision 2025.

SuperVision 2025 includes making our capital market among the best in the Southeast Asian region and part of that is developing a sustainable finance or capital market. We are making substantial headway and among the initiatives we have lined up to achieve that include:

– SEC Memorandum Circular 4, Series of 2019 or the Sustainability Reporting Guidelines (SR Guidelines) for publicly listed companies.

– The Green Bond Guidelines issued in August 2018 and the Sustainability and Social Bond Guidelines in April 2019. Under these guidelines, the SEC allows companies to issue Asean-labeled green, social and sustainability (Asean GSS) bonds. I’m proud to say the adoption of the Asean GSS bonds mobilized the capital market to finance initiatives for social development and environment protection, thereby catalyzing the shift to a more sustainable economy. Demand and interest have been overwhelming. Of the $16.47 billion in Asean-labeled GSS bonds issued as of Oct. 11, 2021, $4.77 billion or 29 percent was issued by Philippine companies, making the Philippines a leader when it comes to such issuances.

– SEC’s involvement in global development initiatives as an Asean Capital Markets Forum member.

– Active participation in the development of the Asean Taxonomy and support in the establishment of the Asean Taxonomy Board. The Asean Taxonomy will provide a common language for sustainable finance, complementing the national sustainability initiatives of the Asean member states.

– A sustainable finance roadmap and sustainable finance guiding principles as developed by the Inter-Agency Technical Working Group for Sustainable Finance, also known as the Green Force, comprised of the Department of Finance and the BSP with the help of the British Embassy.

– The SEC is currently working to develop a regulatory framework that will allow investment companies to launch new investment vehicles or funds that, in turn, will integrate ESG factors into the investment process. The rules are expected to be issued by the first quarter of 2022.

– The SEC is also in the process of developing the Philippine Stewardship/Responsible Investment Code for Institutional Investors, which will consider selected corporate governance practices as mandatory for institutional investors. This code is targeted to be released in 2022.

There were multiple viewpoints presented during the fireside chat and I believe it was successful as the importance of how financial markets were driving demand for more sustainable business practices, as well as reaching sustainable goals, was thoroughly discussed.

The bottomline takeaway for everyone at the program was that sustainability, as evidenced by strong interest in sustainable finance, should now be a primary focus for both the government and the private sector. At the end of the day, after all, sustainability is everyone’s responsibility. My warmest congratulations to the institutions that worked on the event for a job well done!

Kelvin Lester K. Lee is a commissioner of the Securities and Exchange Commission. The views and opinions stated herein are his own. You can email your comments and questions to oclee@sec.gov.ph.

Source: Manila Times