THE BANGKO SENTRAL ng Pilipinas (BSP) has pledged to facilitate sustainable regulations that will respond to climate change alongside other central banks.

The BSP said it joined the collective declaration of the Central Banks and Supervisors’ Network for Greening the Financial System (NGFS) in their commitment to the 26th United Nations Climate Change Conference of Parties (COP26).

“Central banks and financial institutions should recognize their important role in contributing to the transition to a low-carbon economy. As stewards of the financial sector, we should all commit to act with urgency in achieving the desired emissions reduction targets and in promoting the sustainability agenda,” Bangko Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno said in a statement.

The central bank said by committing to the declaration of its fellow NGFS members, it will push for initiatives under the Sustainable Central Banking Program to foster environmentally responsible and sustainable policies and work practices.

“The program embodies the essential roles of the BSP as an enabler, mobilizer, and doer in relation to advocating sustainability principles in the financial system,” the central bank said.

It also pledged to create a regulatory environment that will help banks in managing climate change, environmental, and social risks. At the same time, the BSP committed to equip banks to extend financing to economic activities contributing to sustainable development.

The BSP said it will facilitate climate stress-testing exercise and collect more data to assess the impact of climate, and environmental and social risks exposures in the banking industry.

It also vowed for a collaborative approach among stakeholders in the financial sector and align policies and initiatives with the objectives and strategies of the Philippine Sustainable Finance Roadmap and Guiding Principles.

Lastly, the central bank said it will boost partnerships for awareness and capacity-building of the financial sector.

“We need to take advantage of the momentum calling for action, and step up our response towards climate change,” Mr. Diokno said.

The BSP became a plenary member of the NGFS in July 2020. The group includes central banks and financial supervisors that voluntarily exchange experiences and best practices to enhance the financial sector’s environment and climate risk management and accelerate the transition towards a sustainable economy.

Earlier this month, the central bank released the second phase of its own sustainable finance framework through Circular 1128, which directs banks to monitor their environmental and social risks in their credit exposures and business operations. — L.W.T. Noble