Members of the Bankers Association of the Philippines (BAP), the Bangko Sentral ng Pilipinas (BSP), and the World Wide Fund for Nature (WWF) convened at an online CEO Forum to examine how to integrate sustainable finance into banks’ post-pandemic business activities. The event focused on the supervisory and regulatory expectations from the issuance of BSP Circular No 1085 or the Sustainable Finance Framework last April 2020.
The framework subscribes to high-level sustainability principles and places accountability on the banks’ board and senior management in adopting effective environmental and social (E&S) risk management systems.
“The Framework will bring new dimensions in compliance and an introduction of environmental and social risk management systems as duties and responsibilities are reprogrammed,” said Fabian Dee, First Vice President & Treasurer of BAP and President & CEO of Metrobank, when he introduced the Sustainable Finance Framework in his opening remarks. “The circular provides the banks a three-year roadmap to transition to a new framework that integrates sustainability, social and good governance elements.”
“The issuance of the Framework is timely as the impact of the pandemic covers a broad range of Environmental, Social and Governance issues that are rightly high on the country’s Sustainable Development Goals,” said BSP Governor Benjamin Diokno. “The Framework prioritizes similar issues as the 4-pillar strategy covered in the country’s Sustainable Development Goals. This is a sign the path to recovery is consistent with building a green and sustainable economy.”
BSP Deputy Governor Chuchi G. Fonacier emphasized that banks have an important role in sending a powerful signal to the business community and inspiring their clients and stakeholders in making similar responsible business decisions.
WWF Sustainable Finance Chief of Party Edgardo Tongson highlighted the need for alignment among standard-setters and report preparers, and the opportunity to meet increasingly sophisticated investor expectations on sustainability.
Meanwhile, BAP’s Risk Committee Chair and RCBC President and CEO Eugene Acevedo provided recommendations to optimize existing bank units and highlighted current practices to meet the requirements of the circular.
The membership understands that climate change is both a source of financial risk and instability. The forum encouraged banks to integrate environmental, social, and governance (ESG) principles in their corporate strategy, risk management, and overall operations framework.
Yuki Yasui, Coordination Manager at UN Environment’s Finance Initiative, invited local banks to join the Principles for Responsible Banking (PRB) Initiative. The initiative currently has 180 signatories collectively worth over USD47 trillion. The Development Bank of the Philippines (DBP), one of the 30 founding members, has signed the initiative.
The BAP and WWF are planning to work with the stakeholders of the finance sector to integrate sustainability into banks’ strategies, products, and corporate governance and risk management frameworks. A series of webinars will be launched in line with this to support banks in the endeavor of unlocking sustainable development opportunities and meeting supervisory expectations in a post-COVID-19 economy.
The BAP’s first step into sustainable finance with the WWF began in 2018 through a peer learning exchange with the Association of Banks in Singapore (ABS), WWF Singapore and Philippines, and the ASEAN Bankers Association (ABA). BAP is the Permanent Chair of the ABA Education Committee. It continues to partner with WWF for various initiatives, such as providing capacity building on sustainable finance for its member banks.