ENVIRONMENTAL, social and governance (ESG) adoption is expanding across the banking sector, a senior Bangko Sentral ng Pilipinas (BSP) official said, with more institutions embedding sustainability into governance and risk management frameworks.
“I could say that more banks are now integrating ESG in their governance and their risk management system,” central bank Assistant Governor Pia Tayag told reporters on Monday.
“For our bigger banks, also from the banking outlook survey, 70 percent of our banks are saying they're now integrating sustainability in their strategies,” she added.
BSP data show that 90.3 percent of banks plan to finance sustainable projects, particularly in key areas such as agriculture, renewable energy, energy efficiency, and sustainable water and wastewater management.
“[T]here are signs that it's being integrated,” Tayag said.
“And then if we look at our smaller banks, rural and cooperative banks, they recognize now climate risk as a top three risk,” she added.
“So because of that, we can expect they're putting in place systems to make sure they manage those risks.”
However, 9.7 percent of banks said they were not planning to finance sustainable projects in the next two years.
Reasons given include sustainable finance not being a current priority and that they lacked the data and resources needed to develop programs or manage credit risks.
“Adaptation is hard to finance,” Tayag noted. “So this is where we really need more clarity on the taxonomy, blended finance, and innovative financing to support adaptation.”
She said the BSP and stakeholders were developing an adaptation and resilience catalog to complement the existing taxonomy, which is currently principles-based and aligned with Asean standards.
More granular, science-based criteria aligned with national plans will provide greater credibility and clarity for sustainable investments, she added.
“The adaptation is really important for the Philippines. Climate change is here, it's a lived reality, it's not a distant occurrence, it's something that is already urgent,” Tayag said.
“And adaptation is what we need to make our economy, our firms, our households, our individuals more resilient. We also want that financing goes to sound adaptation activities that can reduce the risks of climate change.”
