“Where you put your money, that is what your strategy is all about.” This is a well-worn cliché’ that frames an important public issue appropriately. When a country professes its advocacy of promoting environmental sustainability --- yet allows the setting up of new power plants that would increase greenhouse gas emissions --- it is perceived to be violating its own avowed commitment.
At the Asian Financial Forum (AFF) for “Navigating the Next Normal Towards a Sustainable Future,” Bangko Sentral ng Pilipinas (BSP) Governor Benjamin Diokno declared: “We are now looking at the potential use of preferential rediscount rates or provision of higher loan values to enable banks to extend “green” loans or finance sustainable investments.” The expected outcome is to increase the share of green financing in banks’ loan portfolios. One specific option that is being considered is to include sustainable finance as a form of compliance with the mandatory credit that banks are required to extend to the agriculture and agrarian sectors.
This marks a leveling up from policy to action and provides proof positive of the Philippine government’s strong determination to promote environmental sustainability. Recall that in 2020, the BSP issued a Sustainable Finance Framework “embedding sustainability principles in the corporate and risk governance frameworks, business strategies and operations of banks.” Then the BSP issued its Environmental and Social Risk Management Framework policies to direct the flow of capital toward green and sustainable projects.
In late 2021, the Philippines affirmed at the COP 26 climate summit in Glasgow, its commitment to reduce to reduce its carbon emissions by 75 percent by 2030 under the UN Framework Convention on Climate Change. It stands to reason, therefore, that specific incentives are being offered for industries and firms to align their expansion and growth blueprints with the country’s strategic posture on protecting the environment.
The government is working with other multilateral development agencies such as the Asian Development Bank, the World Bank’s International Finance Corp., and the United Nations Development Program, to direct the flow of funds to sustainable projects.
In the recent Pilipinas Conference 2021 organized by Stratbase ADR Institute for Strategic and International Studies, the BSP Governor rolled out its G.R.E.E.N roadmap: “G- guiding the financial system and promoting a conducive backdrop for sustainable finance to flourish; R- raising awareness and building capacity as a continuing task to mainstream sustainable finance and increase appreciation of sustainability principles; E- enabling a regulatory environment through policy issuances; E- engaging all stakeholders; and N- navigating the path toward post-COVID-19 economy and the Philippine financial system that is more stable, resilient, and inclusive.” With the BSP itself actively leading the drive toward a sustainable environment, expect business and industry to conceptualize and implement projects that will truly accelerate the country’s bid for mitigating climate change. This would also fortify efforts at building disaster resilience that will ensure long-term economic growth and progress.