Support for Sustainable Finance Measures Grows Among Philippines Banks

The Bangko Sentral ng Pilipinas (BSP) has recently announced a series of regulatory changes aimed at promoting green and sustainable financing, and it appears that the country’s banks are showing strong support for these measures.

One of the most significant changes is the decision of the Monetary Board to gradually reduce the reserve requirement rate for sustainable bonds issued by banks to zero. This signifies a substantial shift in policy, with a 200-basis-point reduction to be implemented in the policy’s first year, followed by a further 100-basis-point reduction in the subsequent year. These sustainable bonds must adhere to the Securities and Exchange Commission (SEC) standards or other international standards, as well as the disclosure requirements under the Sustainable Finance Framework.

Furthermore, the Monetary Board has increased the single borrower limit by an additional 15% for loans intended for eligible green or sustainable projects. These projects must align with various principles and guidelines, including the 2022 Strategic Investment Priority Plan, the Republic of the Philippines Sustainable Finance Framework, and others. These measures are valid for two years from their effective date and are part of BSP’s broader agenda to foster a sustainable economy.

Governor Eli M. Remolona, Jr. emphasized the central bank’s commitment to this cause, noting their role in directing capital towards green investments and addressing transition and adaptation challenges. The recent survey conducted by the BSP revealed that universal and commercial banks have already extended substantial financial support for sustainable projects, with P830 million and $14 million financed or approved by the end of June 2022.

Remolona stated, “As a sustainable finance champion, the BSP will continue to play an active, enabling role in fostering the transition towards a sustainable economy. We will identify and create appropriate incentives that are within our mandates empowering the banking system to steer capital flows toward growing green or sustainable investments and accelerate the development of solutions addressing just transition and adaptation-related challenges.”

The news of Philippines’ efforts in sustainable finance is truly heartening to hear. It represents a significant step towards creating a more environmentally friendly and sustainable financial system. With the engagement and support from Philippines banks and financial institutions, these measures can have a lasting positive impact on the country’s economy and environment.

This initiative also demonstrates the country’s strong commitment to achieving its sustainable development goals. By encouraging greener and more sustainable financial practices, the BSP is setting an example for other central banks and financial regulators around the world.

As the global financial sector shifts towards a more sustainable future, it is crucial for countries to collaborate and implement policies that promote environmentally friendly and socially responsible investments. The BSP’s measures are in line with the international efforts to address climate change and environmental degradation.

It is encouraging to see the BSP and the Philippines banking sector leading the way in sustainable finance. Hopefully, this will inspire other countries to take similar steps and contribute to a more sustainable and environmentally conscious global economy. The support for these sustainable finance measures among Philippines banks is a positive sign of progress and an indication of a brighter, greener future for the country.