The Philippine banking system is joining the global fight against climate change, Bangko Sentral ng Pilipinas Governor Eli Remolona Jr. said during the Philippine economic briefing held in Toronto, Canada on July 13, 2023.
Remolona said in a presentation the BSP plays a vital role in slowing climate change and proposed 11 strategies, including encouraging banks to disclose the environmental, social and governance impacts of specific assets.
He said that under the Reporting Climate-Related Disclosure, banks would be asked to report specific assets that are “good, not so good, bad and very bad for climate.”
“The BSP will work with scientists to develop a taxonomy of bank assets and examine whether these are beneficial or harmful to the environment,” Remolona said.
The 11 sustainability strategies proposed by the BSP are vulnerability assessment, enhanced disclosure, climate stress testing, E&S risk in prudential policy, climate change in monetary policy, incentives for green lending, sustainability in BSP’s portfolio and risk management, task force for inclusive green finance, reporting climate-related disclosure, sustainability in BSP’s operations and capacity building.
Remolona attributed the Philippines’ outstanding recovery from the pandemic to the resiliency of the banking system that maintained around 16 percent capital adequacy ratio.
He said Philippine banks maintained an impressive 188-percent liquidity coverage ratio, exceeding the global standard of 100 percent.
The BSP reported that the domestic banking industry remained resilient in 2022, marked by the sustained growth momentum in assets, deposits and profit.
The banks’ asset growth, funded mainly by deposits, enabled the banking system to continue to support the economy’s recovery through improved credit activity, the BSP said.
Total assets of the banking system last year grew by 10.7 percent to P23.04 trillion, faster than the 7.0 percent recorded in 2021.