The Bangko Sentral ng Pilipinas (BSP) is looking at increasing its exposure to green bond investments to $1 billion by 2023, according to its highest-ranking official.
“(It’s) possible before the end of my term (mid-2023),” said BSP Governor Benjamin E. Diokno on Thursday, Nov. 4, when asked if the BSP, which leads the financial system’s “greening” efforts, will add more green bonds to the country’s reserves.
The BSP currently holds $550-million worth of green bonds, part of its gross international reserves (GIR). Green bond investments is still below one percent of total reserves which as of end-September amounted to $106.6 billion.
BSP Deputy Director Rhodora Brazil-De Vera of the Supervisory Policy and Research Department said the Philippines will continue to watch out for opportunities to expand its green bond investments.
“There may be chances to increase it further since the BSP has adopted a strategic allocation for green bonds that is subject to the approval of the Monetary Board,” she said during the BSP’s online press briefing.
Increasing its green bond holdings is part of the central bank’s strengthening of its sustainability agenda in the financial system, said Brazil-De Vera.
The BSP conducts regular strategic asset allocation (SAA) exercises to scout for possible foreign investments. The SAA is determined and approved by the Monetary Board in line with BSP’s risk tolerance.
The BSP first allotted $150 million as investments in the Green Bond Fund in October 2019. The fund is administered by the Bank for International Settlements or BIS. In 2020, it invested $200 million more and another $200 million in March this year, for a total of $550 million.
The BSP invests in the BIS open-ended fund as this enhances the BSP’s environmental sustainability objectives. It also helps promote green finance in the Philippines.
Diokno said the BSP will continue to play a lead role in adopting sustainable finance in the country through the inter-agency Green Force. The BSP and the Department of Finance are co-chairman.
Last month, the Green Force launched the “Philippine Sustainable Finance Roadmap” and “Guiding Principles” to expand sustainable finance in the country and address climate change and other environmental and social risks.
The Guiding Principles, in the meantime, will be used as reference in identifying activities that address the impact of climate change and contribute to sustainable development. Said principles also aim to usher the flow of capital to these activities.
Diokno said the roadmap and the Guiding Principles are the “springboard for the discussion and alignment of regulatory expectations across the financial sector.”
“Following the release of these two important documents, financial sector regulators are expected to establish common standards on sustainability. These cover governance, risk management and disclosure requirements,” he said.
Diokno also said that there could be a need to adopt harmonized expectations in implementing the principles-based taxonomy in the financial sector. “These initiatives and collaborative efforts will facilitate our transition to a low carbon economy in line with our thrust to promote inclusive and sustainable growth,” he said.
Source: Manila Bulletin (https://mb.com.ph/2021/11/04/bsp-eyes-up-to-1b-green-bonds/?utm_source=rss&utm_medium=rss&utm_campaign=bsp-eyes-up-to-1b-green-bonds)
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