Going green
News monitoring, either reading online or surfing the news channels, has been part of my daily routine, providing me a better perspective of what’s going here and around the globe.
Last week, though, my channel surfing habit stopped, temporarily, as I was practically glued to just one watching the 16-year-old Swedish schoolgirl Greta Thunberg addressing the crowd during the Extinction Rebellion (XR) rally in London calling for immediate government action over environmental destruction following predictions that humans are on the verge of “existential threat” should climate change and the loss of biodiversity continue.
Protests and rallies against environmental degradation have snowballed all over. Studies show that the value at risk of a six degrees Celsius global warming to the global economy is round $56.8 trillion, roughly
equivalent to more than 80 percent of the current market capitalization of the entire global stock market in 2018.
Thus, it is no wonder that social awareness for the preservation of Mother Nature has cascaded even in the banking sector.
Going green has become the buzzword with more banks and financial institutions raising funds through the issuance of green bonds, proceeds of which are earmarked for relending or support for environmental projects that can help mitigate climate change risks. They are alternatively known as climate bonds, which are asset-linked and backed by the issuer's balance sheet. To date, five banks have raised funds via the issuance of the green bonds – BDO Unibank Inc., Metropolitan Bank & Trust Co., Bank of Philippine Islands, Rizal Commercial Banking Corp., and Union Bank of the Philippines.
Promoting and upholding sustainability goals in the financial industry, specifically contributing one’s share, no matter how little, in preserving and protecting Mother Nature cannot be over-emphasized as Bangko Sentral ng Pilipinas (BSP) Deputy Governor for Financial Supervision Sector Chuchi Fonacier explained Tuesday at the Sustainable Finance Dialogue Forum organized by the Bankers Association of the Philippines, the World Wide Fund for Nature Philippines and the Association of Development Financing Institutions in Asia and the Pacific.
Though, much has been done since its sustainable finance journey started during the stewardship of Gov. Amando M. Tetangco in 2013, through capacity building and awareness campaign with the introduction of Environmental, Social, and Governance (ESG) principles, developments such as the recent earthquake that jolted the country make it even more compelling for the authorities to take the next step by “mainstreaming” ESG through the issuance of “enabling regulations.”
This will be altogether different from the usual mandatory regulations like the 25 percent Agri-Agra Law, compliance with which has always been below par with banks ending paying penalties. Instead, the objective is to entice financial institutions to lend and include in their lending portfolio, environmental projects. As Ms. Chuchi puts it, “The best regulatory approach remains one that is enabling.”
Still a work in progress, the enabling regulatory environment provides highlevel principles rather than mandatory requirements and considers the business model as well as the size, structure, and complexity of operations of a bank in defining expectations on sustainable finance. This approach aims to shift perspectives from a myopic compliance exercise to a forwardlooking stance that puts greater weight on the long-term financial interest and sustainability of the organization.
For Ms. Chuchi, going green is more than just a buzzword – it is a way of living, a way of learning, and a way of leading. It is path we have to take.
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