THE BANGKO SENTRAL ng Pilipinas (BSP) is urging lenders to prioritize sustainable sectors and activities, especially amid the current crisis.

“For banks, it means that it must refocus its strategy towards sectors and activities that support sustainable recovery. By harmonizing sustainability with recovery efforts, banks can seize various opportunities,” BSP Governor Benjamin E. Diokno said in a keynote address on Tuesday at the World Wide Fund for Nature and Bankers Association of the Philippines CEO Forum on BSP’s Sustainable Finance Framework.

The BSP in May launched its sustainable finance framework and said banks will be given a three-year period to adopt its provisions.

The guidelines include banks’ adoption of sustainability principles through environmental and social risk management systems as well as Environmental, Social and Governance considerations in their governance frameworks, risk management systems, strategies and operations.

Part of this sustainability drive is launching financing instruments meant to help sectors affected by the crisis such as micro-, small- and medium-sized enterprises (MSMEs), health, education and food security.

“Channeling funds to support these sectors can help boost the country’s response to the pandemic and fast-track our recovery,” Mr. Diokno said.

Last week, the Bank of the Philippine Islands cut short the offer period for its COVID Action Response or CARE Bonds amid strong demand. The bank said subscriptions already went beyond the P3 billion it initially targeted to issue. The proceeds raised will be used to finance eligible MSMEs under the lender’s own Sustainable Funding Network.

Mr. Diokno added that boosting digital banking and financial inclusion can also affect sustainability as businesses and clients turn to online platforms and transactions amid the lockdown.

Moreover, he said banks will learn lessons from this health crisis to develop and strengthen their environmental and social risk management.

“The pandemic has features akin to climate and other environment-related risks. It requires science-based data and has underlying physical and transition risks,” Mr. Diokno said.

“Environmental and social risks arising from the health crisis offers a glimpse of how severe and long-lasting other potentially systemic risks such as climate change may drag the banks’ performance and long-term growth,” he added. — L.W.T. Noble