THE BANGKO SENTRAL ng Pilipinas (BSP) is gradually shifting to sustainable investments, its chief said on Thursday.

“As part of grading the BSP’s investment process, we are gradually incorporating sustainability considerations in our portfolio management,” BSP Governor Benjamin E. Diokno said at a virtual forum organized by PCM Asia. “We are also reviewing the strategic allocation investments towards those that espouse environmental, social and governance principles.”

Mr. Diokno said they are eyeing to invest more in the Asian green bond fund, which will be launched this year by the Bank of International Settlements (BIS).

The central bank has already invested $550 million in the green bond fund of the BIS as of 2021. While Mr. Diokno earlier said they do not have a particular target for the central bank’s sustainable investments, he said the BSP’s green bond contributions could hit $1 billion by 2023.

“Through these actions, we lead by example and trust that banks will follow suit. Our initiatives are guided by our active participation in global and local conversations in sustainable finance,” he said.

The BSP launched a sustainable finance framework for the banking industry in 2020. It directed banks to adopt sustainability principles through environmental and social risk management systems as well as in their governance frameworks, strategies and operations

Last year, the second phase of the framework directed banks to monitor environmental and social risks in their credit exposures and business operations. The BSP expects banks to fully adopt the framework by 2023.

“We have witnessed how the health crisis and severe weather events like Typhoon Odette disrupted the operation of banks. This has highlighted the importance of integrating environmental and social risk in the banks’ operational risk management system and in turn, building the operational resilience,” Mr. Diokno said.

The BSP chief earlier said they are looking at granting incentives for banks extending sustainable financing. — L.W.T. Noble