December 26, 2021 | 00h00

MANILA, Philippines – Bangko Sentral ng PIlipinas (BSP) expects Philippine banks to issue more green, social and sustainable bonds to help finance environmentally friendly projects.

BSP Governor Benjamin Diokno said the country’s banks had issued $ 1.15 billion in foreign currency and Pesos 85.4 billion in local currency denominated green, social and sustainable bonds since 2017.

In late September, Diokno said Philippine banks had issued $ 701 million in green bonds, $ 300 million in durable bonds and $ 150 million in social bonds in the offshore debt market.

Diokno said local banks also raised 48.9 billion pesos through issuance of sustainable bonds, 21.5 billion pesos of social bonds and 15 billion pesos of green bonds in the debt market. onshore.

Amid the pandemic, two banks issued social bonds worth around 29 billion pesos to finance the needs of eligible micro, small and medium-sized businesses.

“Now, once we define the remaining policies, especially on taxonomy, we hope that these bond issuances will continue to increase and that lending to green sectors or sustainable assets will also pick up,” Diokno said.

Diokno said the central bank would publish subsequent phases of regulation covering areas of banks’ investment activities, weather stress testing, disclosure requirements, prudential reporting and potential regulatory incentives.

This follows the release of the Environmental and Social Risk Management (ESRM) framework last October, in line with its commitment to championing the sustainability agenda in the financial system.

The framework, he explained, provides granular expectations on the management of environmental and social risks versus credit and operational risks.

It also provides specific expectations on the management of environmental and social risks related to credit and operational risks, taking into account the size, risk profile and complexity of banks’ operations.

“We commit to publishing the remaining policy initiatives before the sustainable finance framework comes into effect in 2023,” Diokno said.