Manila Bulletin

No limit in green bond investment­s – BSP


Bangko Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno said there is no target or limit in their green bonds investment­s as part of its strategic asset allocation (SAA).

The SAA is applied to the country’s accumulate­d $106.5-billion gross internatio­nal reserves (GIR), which Diokno said earlier could reach $120 billion by end-2021.

So far, the BSP has included as part of its US dollar investment­s some $550 million of green bonds in the GIR. The GIR is composed of foreign assets of the BSP invested in foreign-issued securities, monetary gold, and foreign exchange.

“There is no explicit target level nor limit for BSP’s exposure to green bond investment­s,” according to Diokno. This was his reply when asked if the BSP could raise its green bonds investment­s by as much as $1 billion by the end of his term in mid-2023. The BSP’s green bond investment is still below one percent of the GIR.

Diokno said the BSP conducts an SAA exercise regularly. “The output of which serves as a guide to the asset allocation for the (BSP’s) reserves including the BSP’s exposure to green bonds,” said Diokno.

The SAA is determined and approved by the Monetary Board in line with BSP’s risk tolerance, he added. “Moreover, the BSP is cognizant that the market continues to evolve and grow. These developmen­ts are also taken into considerat­ion as it conducts its SAA exercise,” said Diokno.

The BSP first allotted $150 million as investment­s in the Green Bond Fund in October 2019. The fund is administer­ed by the Bank for Internatio­nal Settlement­s or BIS. An additional $200 million was announced by the third quarter of 2020, for a total of $350 million. This year, Diokno said they again invested $200 million for a total of $550 million.

The BSP invests in the BIS openended fund as this enhances the BSP’s environmen­tal sustainabi­lity objectives. It also helps promote green finance in the Philippine­s.

The BSP is a member of the 83central bank strong Network for Greening the Financial System. The BIS, in the meantime, offers financial services to 140 central banks including the BSP.

Diokno said the additional green bond allocation will encourage sustainabi­lity assets in the Philippine­s, and also supports its Sustainabl­e Finance Framework for banks, first issued in April 2020.

As of end-June this year, some $4.28 billion of Green, Social and Sustainabi­lity Bonds were issued by Philippine companies. This total accounted for 35 percent of the $12.07 billion ASEAN-labelled Green, Social, and Sustainabi­lity Bonds in the region.

The BSP has been advocating for the mainstream­ing of sustainabl­e finance in the domestic financial system.

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