THE Bangko Sentral ng Pilipinas (BSP) is not keen on implementing penalties for banks that are lending to activities that emit greenhouse gases.
Speaking in an economic forum hosted by the Economic Journalists Association of the Philippines (EJAP) and San Miguel Corp. (SMC), BSP Governor Felipe Medalla said the Philippines will not likely follow the footsteps of central banks in other jurisdictions that penalize lending to economically harmful companies or activities. Medalla said this is because overall, the Philippines is deemed to have a minute contribution to global greenhouse gas emissions.
“In other countries the banks are being forced to reduce lending to activities that emit greenhouse gases. We are not doing that because we are a ‘rounding error’ in the production of those gases,” Medalla said.
The governor, nonetheless, urged banks to continue pricing in the effects of climate change in their overall risk assessment.
“We are telling the banks: include climate change in your calculation of risks. I used to think this was not important until EV [a senior BSP official] told me she was not able to leave the BSP and she had to wait there for a few hours because the BSP became a little island surrounded by water,” Medalla said.
Earlier this year, the BSP said 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.
In a 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 are numbers such as physical risk metrics per firm or household, or the exposure of banks to carbon vs. renewables-based energy producers.