Philippines’ Banks Urged to Adhere to Sustainable Finance Roadmap

Lending to activities considered sustainable and environment-friendly will qualify FIs for incentives, such as preferential rediscount rates.

The Central Bank of Philippines (BSP) has asked banks to follow the government’s sustainable finance roadmap in their lending to “green” projects.

The roadmap, launched in October 2021, sets out a comprehensive approach that will serve as the foundation for effective strategies to facilitate the mainstreaming of sustainable finance in the country, BSP governor Benjamin Diokno said in a circular.

The roadmap listed activities that are considered sustainable and environment-friendly, lending to which may qualify financial institutions for incentives, such as preferential rediscount rates, though the exact nature of the incentives is still being considered.

Eligible climate change mitigation and adaptation projects include loans made to carbon sequestration measures – particularly the use of organic fertiliser, refrigeration projects that do not worsen global warming, renewable projects that will help strengthen the Philippines’ energy infrastructure, solid waste projects, and projects to expand sewerage and septage treatment facilities.

In addition, guiding principles released alongside the roadmap serve as a taxonomy for sustainable finance, establishing a common understanding among various stakeholders of the economic activities considered “sustainable.”

“All banks are encouraged to explore and consider, where applicable, the strategies, priorities, and principles outlined in the roadmap and guiding principles in developing their approach or actions towards adopting sustainable finance,” Diokno said.

The roadmap and guiding principles were developed by the Inter-Agency Technical Working Group on Sustainable Finance, known as the “Green Force”, which was launched in October 2021.

Separately, the government is issuing its maiden ESG bond offering in the coming week. Funds raised from the USD 500 million issuance will be used for climate mitigation and environmental projects.

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