February 4, 2023

Filipino Guardian

Sentinels of Filipino Free Press

BSP Launches Sustainability Agenda – BusinessWorld Online

The Bangko Sentral ng Pilipinas (BSP) facade can be seen on Roxas Boulevard in Malate, Manila. — FILIPINO STAR/ MIGUEL DE GUZMAN

THE BANGKO Sentral ng Pilipinas (BSP) on Thursday unveiled its 11-point Sustainable Central Banking (SCB) Agenda, which aims to mitigate climate risks by advocating green policies and practices.

“Clearly, climate change would affect food supplies, and as we know from our own history of inflation, that could lead to large supply shocks,” GSP Governor Felipe M. Medalla said at Thursday’s launch event, adding that it was important to do so prevent supply shock inflation from becoming “permanent inflation”.

Headline inflation rose to 8% in November, bringing the full year average to 5.6%. This is lower than full-year GNP forecast of 5.8% but well above their target of 2-4%.

Mr Medalla also said climate change will also have an impact on how BSP regulates banks, as capital requirements should be sufficient to support ever-changing climate risks.

The BSP boss also called for action to be taken against climate change.

“We are an enabler, we are a mobilizer, we are a doer. We are proud of that. Climate action is a societal endeavor and BSP could only do so much, but it will do what it can,” said Mr Medalla. “Therefore, we are calling on everyone to support the implementation of the sustainable central bank program.”

As part of its 11-point strategy, the central bank will launch a vulnerability assessment to environmental risks in the economy.

It will also improve disclosure requirements on social and environmental risks in annual reports and expand existing stress testing guidelines by adding climate risks and scenarios.

The BSP will align regulations with global standards, particularly in the banks’ capital framework. It will also issue guidelines consistent with a sustainable financial taxonomy.

The central bank will also incorporate the macroeconomic implications of climate change into monetary policy analysis by developing a model appropriate for the Philippine context.

The BSP will also explore the green credit window to help finance sustainable economic activity.

“Building on ongoing research on how banks are promoting green lending, the BSP will mobilize improvements and innovations in its lending operations, where appropriate, to support the financing of sustainable economic activities,” the central bank said.

The BSP is also examining the incorporation of sustainability goals into its reserve management and is examining the expansion of suitable sustainable financial instruments such as green bonds for the reserves of the BSP.

In relation to financial inclusion, BSP will continue to develop policies for the underserved and unserved segments of society, building on existing sustainable finance initiatives.

“As part of the SCB strategy, BSP will promote environmentally responsible and sustainable policies and labor practices, as well as integrate environmental, social and governance or ESG principles into its key functions and operations,” said BSP Deputy Governor Chuchi G. Fonacier .

She called on stakeholders to put sustainability at the heart of their service transactions and risk management.

“The country’s transition to a sustainable and low-carbon economy is a collective responsibility. Let’s strive to make sustainability principles the norm, not the exception,” said Ms. Fonacier.

The Philippines is considered one of the countries most exposed to the risks of climate change.

Climate-related hazards have caused P506.1 billion in losses and damages in the Philippines over the past decade, the Treasury Department said last year.

The World Bank previously said the impacts of climate change are likely to reduce the Philippines’ gross domestic product by up to 13.6% by 2040 if the government and private sector do nothing. — Keisha B. Ta-asan