THE Bangko Sentral ng Pilipinas (BSP) believes there is a need for more “climate change-related” disclosures among banks and other local firms in order to move forward the country’s fight against global warming forward.
In a recent report on financial stability, the Central Bank said there is little understanding of the country’s actual exposure to climate change agents because there is limited data disclosure involved.
“There is an urgent need for better climate change-related disclosures. The lack of granular data limits our appreciation of the financial costs of climate change and the shift to greener energy sources,” the BSP said in the report.
Among the examples of granular data the BSP cited include numbers such as physical risk metrics per firm or household, or the exposure of banks to carbon- vs. renewables-based energy producers.
“The cooperation of the private sector is necessary, especially on transparency and the quality of ESG reporting to have better data-driven frameworks,” the BSP said, referring to the new metric for sustainability reporting now required of private business.
The Central Bank also said the Securities and Exchange Commission’s (SEC) work on sustainability reporting of publicly listed companies is a “promising start” to getting more climate change-related information and enhancing our understanding of risks.
Various studies put the Philippines as among the riskiest, if not the riskiest, in terms of severe weather occurrence.
“While there is no doubt that climate change is global in nature, the expectation remains that lower-income countries are more vulnerable to losing a larger share of their economic output due to climate change,” the BSP said.
The BSP said urgent attention is needed for the country to push its climate change agenda, as gains against sustainability usually take time before its effects are felt by the masses.
“As long-term as climate-related risks are, they need more immediate action as well. This is because any gain is also ‘slow-burn’ in nature,” the BSP said.
In December 2021, BSP Governor Benjamin Diokno urged banks to support the country’s energy transition and shift to mainstream sustainable finance in an effort to “climate-proof” the local financial system.