BSP to FIS: Go into sustainable finance

BANGKO Sentral ng Pilipinas (BSP) Governor Benjamin Diokno has urged local financial institutions to go into sustainable finance as part of broader efforts to promote a resilient, inclusive, and lowcarbon economy.

Diokno said in a recent speaking engagement that mainstreaming sustainable finance in the country is crucial to protect the economy and the financial system from potential shocks related to climate change

“The BSP and financial institutions play a crucial part in mobilizing funds to finance green and sustainable projects, and at the same time, in safeguarding financial stability from shocks coming from climate and other environment-related factors,” Diokno told the recent Climate Defenders meeting organized by the British Embassy.

More than $1 billion and P85.4 billion worth of green, social, and sustainability bonds have already been issued by “first mover” banks since 2017, Diokno said.

“We expect more banks to follow suit as enabling regulations had been laid down complemented by continued capacity-building activities for the industry,” he added.

In February, International credit watcher Moody’s Investors Service assigned a “moderately negative” ESG credit impact score for the country.

ESG stands for environmental, social and governance. Under the credit watcher’s framework, the Philippines’s ESG Credit Impact Score is moderately negative (CIS-3), reflecting high exposure to environmental risks and social risks, contained by institutional and economic resilience.

“The Philippines’s overall issuer profile score is highly negative (E-4), given the high incidence of climaterelated shocks, including typhoons and extreme precipitation leading to flooding. In addition, the relatively large, albeit declining, share of the labor force employed by the agricultural sector heightens the country’s susceptibility to heat stress given the periodic episodes of drought,” Moody’s said.

The credit watcher also said the inadequate and intermittent access to clean water and issues of waste and pollution add to the Philippines exposure to environmental risks.