The Bangko Sentral ng Pilipinas (BSP) is looking at the possibility of extending regulatory incentives to banks that embrace sustainability principles in its efforts to mainstream sustainable finance and mobilize capital to address urgent global challenges.
“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 on the Asian Financial Forum (AFF) themed “Navigating the Next Normal towards a Sustainable Future.
“The BSP is carefully evaluating these potential incentives so as not to create any unintended consequences,” he added. “Nevertheless, we have initially proposed the inclusion of sustainable finance as a form of compliance with the mandatory credit to the agriculture sector.”
The extension of regulatory incentives falls under the third phase of the Sustainable Finance Framework. The first phase was issued in April 2020 and second phase in October 2021.
“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.” the Governor added.
Through the “Green Force” or the Inter-Agency Technical Working Group on Sustainable Finance, chaired by the BSP and the Department of Finance, the Philippines is taking a whole-of-government approach and well-coordinated policy formulation in mainstreaming sustainable finance.
The government also engages multilateral development agencies, such as the Asian Development Bank, the International Finance Corporation of the World Bank Group, and the United Nations Development Program, to mobilize the needed funding and technical assistance for sustainable projects.
