The Bangko Sentral ng Pilipinas (BSP) will again invest as much as $500 million in green bonds as part of the “greening” of the country’s foreign currency reserves.
BSP Governor Felipe M. Medalla said that if or when the opportunity presents itself, the BSP will add more green bonds to the country’s US dollar stock sometime this year.
“We will (invest) in green bonds,” he told Manila Bulletin, adding that it is
possible to invest up to $500 million.
Medalla said they could do this in 2023 but that will depend on market and other events, and how opportunities will materialize that will convince them the timing is right.
The BSP invests in green bonds as part of its sustainability efforts and its sustainable central banking agenda.
So far, the BSP has invested $550-million in the Bank for International Settlements’ (BIS) Green Bond Fund.
The BSP initially invested $150 million in 2019, then in 2020 and 2021, it placed another $200 million for each year, for a total of $550 million.
Last year, because of the Ukraine war with Russia, which led to higher global and local inflation, the BSP has had to sell its US dollar reserves to defend the peso vis-à-vis the strong US dollar amid rising US interest rates.
They did not invest in the green bonds in 2022. The BSP only started restocking the reserves in the last quarter of 2022 to bring it back to the $100-billion level as of end-February this year.
Still, before the Ukraine-Russia conflict, BSP was interested in investing in the BIS’ Asian Green Bond Fund when it was launched in February 2022. The fund is part of the BIS Investment Pool or BISIP and is called the BISIP G3.
Medalla said in December 2022 that in terms of reserve management, they also plan to be a signatory to the United Nation Principles for Responsible Investment in keeping with its Sustainable Central Banking strategy.
In addition, he said the BSP is developing a Responsible Investment Charter for
the integration of sustainability tests with financial assessments.
In January this year, the BSP introduced its 11-point sustainable central banking strategy or SCB for the overall sustainability agenda in the Philippine financial system.
When the SCB was launched, Medalla said climate change and other environmental hazards impact the prices of goods and change the risk profile of financial institutions.
But with the SCB, the BSP will adopt policies that are “conducive to the adoption and growth of sustainable finance” and also adheres to
“the same standards set for supervised financial institutions in managing risks
and in making environmentally and socially responsible investment decisions.”
"The BSP is an enabler, a mobilizer, and a doer in championing sustainable finance. But we also recognize that climate action is a whole-of-society undertaking. (We) must take a long-term view that the things that are consistent with a better planet are also good for everyday life,” said Medalla in January.