The Philippines is one of 38 emerging market economies that have initiated banking reforms to fight climate change, according to World Bank’s private-sector arm, the International Finance Corp. (IFC).
In its second Global Progress Report of the Sustainable Banking Network (SBN), IFC said the Philippines is now on the formulating stage of its efforts to create a framework for green bond markets and lending portfolios.
Emerging market economies that are on the same boat as the Philippines include Thailand, India, Ghana, Fiji and Egypt. Other Asean countries, such as Cambodia and Vietnam are in the implementation phase, while Indonesia is considered a first mover.
“SBN members have demonstrated that transforming financial markets toward sustainability is possible,” said Georgina Baker, vice president of IFC, World Bank Group. “Emerging markets are on the forefront of this shift—and SBN’s tools and guidance have laid the groundwork for more countries to follow suit.”
In a news statement, IFC said in the last few years, a broad range of initiatives linked to environmental and social risk management and green finance have been undertaken by the country.
IFC said this showed that efforts are being made by the banking regulators and banking associations to raise awareness, build capacity and encourage stakeholder engagement.
The Bangko Sentral ng Pilipinas (BSP) is currently drafting a policy framework for sustainable finance in response to growing market awareness and appetite for green and sustainable financing. The policy is targeted for completion by the end 2019.
“The capacity building and sustainable finance policy initiatives of the Bangko Sentral ng Pilipinas were enriched by the knowledge resources, information and peer learning activities accessed through our membership in the Sustainable Banking Network. We are grateful to the International Finance Corp. for the continued support as we ramp up our efforts to implement our sustainable finance agenda,” BSP Governor Benjamin E. Diokno said.
The reforms, IFC said, require banks to assess, manage and report on environmental, social and governance risks in their lending operations and put market incentives in place for banks to lend to green projects.
Of the 38 countries, 22 have adopted national sustainable finance policies and voluntary principles, seven of which were launched in 2019 alone.
The report also captures the progress made by 14 countries to actively grow their green bond markets; and data shows increasing innovation by financial institutions to green their lending portfolios.
“Ultimately, SBN is about collaboration,” said Ye Yanfei, deputy director general of China Banking and Insurance Regulatory Commission and cochairman of SBN Measurement Working Group. “By bringing together regulators, policy-makers, trade associations and development institutions, SBN has been able to not only turn sustainable finance policies into action, but also strengthen measurement to capture market impact.”
Established in 2012, SBN now represents 53 financial regulators and banking associations from 38 emerging countries committed to sustainable finance. SBN’s member- countries represent $43 trillion—or 85 percent—of emerging market banking assets.