BSP looking to give incentives to banks extending sustainable loans

THE BANGKO SENTRAL ng Pilipinas (BSP) wants to offer incentives to banks for extending sustainable financing.

“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,” BSP Governor Benjamin E. Diokno said during a panel at the Asian Financial Forum.

The move, if implemented, is expected to help mobilize capital for global challenges brought about by climate change.

Mr. Diokno said they are still evaluating if they would offer these incentives to prevent any unintended consequences.

The central bank chief also noted they initially proposed including sustainable finance as alternative compliance for the Agri-Agra Credit Act of 2009.

In November, the BSP released the second phase of its sustainable finance framework, directing banks to monitor environmental and social risks in their credit exposures and business operations.

In 2020, the first phase of the framework gave banks a three-year transition period to adopt sustainability principles through environmental and social risk management systems, as well as in their governance frameworks, strategies and operations.

“Under this framework, we expect banks to progressively increase their loan allocations for green or sustainable projects as part of their set strategic environmental and social objectives,” Mr. Diokno said.

The government is working with the Asian Development Bank, the International Finance Corp. of the World Bank Group, and the United Nations Development Program for funding and technical assistance for sustainable projects.

Some 15 Philippine lenders, electric and water utilities, energy and property companies issued 29% or $4.8 billion of ASEAN-labeled green bonds as of end-September 2021, the central bank earlier said.

Last week, the Bureau of the Treasury unveiled the government’s sustainable finance framework which will be their guide in future green bond issuances. — L.W.T. Noble