Manila, The Philippines, 26 May 2017 - The Bangko Sentral ng Pilipinas (BSP) and International Finance Corporation, a member of the World Bank Group, today signed a Memorandum of Understanding (MOU) to enhance capacities and raise environmental, social and corporate governance (ESG) standards among Philippine banks.
Under the agreement, IFC will support the BSP in improving its assessment tools to promote good governance and effective risk management in the banking system. IFC will contribute to the capacity building initiatives of the BSP particularly in applying the proportionate legal and regulatory framework.
“Good corporate governance (CG) and environmental and social governance (ESG) practices enable firms and markets to make better management decisions, enhance transparency, and proportionately address various financial and non-financial risks,” said BSP Governor Amando M. Tetangco, Jr. “CG has been a core requirement for financial institutions in the Philippines. ESG on the other hand is gaining traction among banks in emerging markets. It is time that the Philippines joins the early movers, particularly in light of our environmental and social challenges.”
The BSP-IFC partnership has produced the first comprehensive study on the financial sector’s perceptions and practices in sustainable finance. The study found that awareness remains low, but there is a growing understanding among banks of the business case for adopting good environmental and social risk management systems.
“IFC has over two decades of experience in applying environmental and social standards to all our investments,” said IFC Philippines Country Manager Yuan Xu. “We have helped our financial sector clients integrate these standards and corporate governance principles into their own lending systems. As a result, they have reduced their lending risks and uncovered profitable investment opportunities.”
The BSP is a member of the Sustainable Banking Network (SBN) established by IFC and 10 founding countries in 2012 as a knowledge and capacity building platform for financial regulators and banking associations. The BSP benefits from, and contributes its experiences to SBN, whose membership has grown to 31 countries representing over 85 percent of banking assets across emerging markets. To date, 15 SBN member countries, including China, Indonesia, and Vietnam, have launched sustainable finance policies, guidelines, and roadmaps, which provide a level playing field for banks to strengthen environmental and social risk management and promote innovative green investments.
In addition to its partnership with BSP, IFC has been working with the Philippine Securities and Exchange Commission to train 250 representatives of publicly listed companies on best practices in implementing a new CG code that took effect on January 1, 2017. The new code, which aims to increase board responsibilities, competence and commitment of company directors, is among the latest examples of IFC’s contribution to the development of CG policies and regulations in more than 30 countries worldwide.
IFC’s CG and E&S risk management programs in the Philippines are implemented in partnership with the State Secretariat for Economic Affairs of Switzerland. In addition to working with the Philippine government and regulatory bodies, IFC also supports the Institute of Corporate Directors and provides corporate governance advice to Philippine companies.
IFC, a member of the World Bank Group, is the largest global development institution focused on the private sector in emerging markets. Working with 2,000 businesses worldwide, we use our six decades of experience to create opportunity where it’s needed most. In FY16, our long-term investments in developing countries rose to nearly $19 billion, leveraging our capital, expertise and influence to help the private sector end extreme poverty and boost shared prosperity. For more information, visit: www.ifc.org
About IFC-supported Sustainable Banking Network
The Sustainable Banking Network is a knowledge and capacity-building platform of financial regulators, banking associations, and environmental regulators from emerging markets interested in developing sustainable finance frameworks based on national context and priorities, as well as international good practices. IFC acts as the Secretariat of the Network, playing the role of facilitator and technical adviser to SBN. SBN membership now consists of 31 member countries, which represent over 85 percent of the banking assets across emerging markets. For more information on the Sustainable Banking Network, visit www.ifc.org/sbn.
About Bangko Sentral ng Pilipinas
The Bangko Sentral ng Pilipinas (BSP) is the central monetary authority of the Republic of the Philippines. Its primary objective is to maintain price stability conducive to a balanced and sustainable economic growth. It aims to promote and preserve monetary stability and convertibility of the national currency. The BSP provides policy directions in the areas of money, banking and credit. It supervises operations of banks and exercises regulatory powers over non-bank financial institutions with quasi-banking functions. The BSP likewise takes lead in promoting an efficient payments and settlements system by providing the necessary infrastructure through the operation of the Philippines’ real time gross settlement system.
The vision of the BSP is to be a world-class monetary authority and a catalyst for a globally competitive economy and financial system that delivers a high quality of life for all Filipinos. To support the achievement of this vision, the BSP has committed to promoting financial inclusion as a means to achieve inclusive growth. The BSP initiatives cover four broad areas (a) policy and regulation, (b) financial education and consumer protection, (c) data and measurement, and (d) advocacy programs. www.bsp.gov.ph