May 06, 2020 Wednesday
MANILA, 07 May 2020 — The Climate Change Commission (CCC) supports the Bangko Sentral ng Pilipinas (BSP) in its adoption of a Sustainable Financial Framework through Circular No. 1085 issued on April 29, 2020.
The Sustainable Financial Framework urges banks to embed sustainability principles, including those covering environmental and social risk areas, in their corporate governance framework, risk management systems, and strategic objectives consistent with their size, risk profile and complexity of operations, according to Monetary Board Resolution No. 415 dated 19 March 2020.
“Circular No. 1085 s. 2020 on the Sustainable Finance Framework is a landmark achievement by the BSP in supporting the green economy which is the way of the future. This policy framework is the most awaited signal by the banks to seriously consider embedding sustainability principles in their corporate DNA. As the “bank of banks”, the BSP is in the best position to take the lead in greening the financial sector by tracking the same path it did in strengthening the corporate governance of banks. Congratulations to the BSP for its proactive stance in including environmental and social initiatives in its sustainable development agenda,” the Association of Development Financing Institutions in Asia and the Pacific (ADFIAP) said in a statement.
Climate change and other environmental and social risks could pose a threat to financial stability considering their significant and protracted implications on the operations and financial interests of banks. These risks not only directly affect banks but also their clientele and stakeholders, such as households, businesses, and other financial institutions.
The BSP recognizes the critical role of the financial industry in pursuing sustainable and resilient growth by enabling environmentally and social responsible business decisions consistent with the aspirations set out for every Filipino community under the Philippine Development Plan.
The banks shall be given a period of three years to fully comply with the Transitory Provisions, adopting a transition plan with specific timelines to implement the board-approved strategies and policies integrating sustainability principles into their corporate governance and risk management frameworks, as well as in their strategic objectives and operations. Banks should provide their board-approved transition plan upon request of the BSP starting six months from the effectivity of the Circular.
The World Wild Fund for Nature-Philippines also expressed their support to the new framework. “This aligns the country’s regulatory framework with that of more advanced counties in ASEAN such as Singapore, Malaysia and Thailand. With growing investor interest in green and sustainability-linked bonds in the ASEAN, the country’s banking system is well positioned to tap into this growing segment and is a step forward to financing the country’s SDGs and climate risk mitigation and adaptation projects,” said Mr. Edgardo Tongson, Chief of Party for Sustainable Finance.
The CCC, in its continuing efforts to mainstream green financing within the banking sectors, lauds the Sustainable Finance Framework as a pathway toward increased mobilization of climate finance across the country.