These days, economic growth is not enough; industry professionals are now compelled to heed the call to protect our finite, natural resources.
Green Finance is a way to help achieve economic growth while adapting to the need for a more sustainable economy, as the world faces climate change and other environmental hurdles. Here’s a quick look at what Green Finance is.
What is Green Financing?
While there is actually no set definition for green or sustainable finance in the country, the Philippine Sustainable Finance Roadmap by the Department of Finance adapts the following international and national definitions as a point of reference:
- The ASEAN Sustainability Bond Standards developed the Sustainability Bond Guidelines based on the International Capital Market Association on what we can classify as “sustainable”.
- The United Kingdom included “Financing Green” and “Greening Finance” to refer to strategies to maintain environmental and climate factors as strategic and financial imperative and mobilize private finance for resilient and clean growth
- The European Commission’s definition of sustainable finance refers to taking due account environmental, social, and governance considerations when making investment decisions
In the Philippines, the Bangko Sentral ng Pilipinas recognizes that climate change and other environmental and social risks lead to financial stability concerns. It could cause risks that might affect the financial industry. The BSP also stresses the role of sustainable finance in achieving global Sustainable Development Goals set by the United Nations.
Banking entities in the Philippines look at Green Financing to assist industries, sectors, and local government units in adapting environment-friendly technologies and processes while incorporating climate change adaptation and mitigation. The initiative also looks into risk reduction measures. Green Finance helps with financing and technical help to these units.
Philippine Banks with Green Financing Initiatives
While Green Financing is still relatively new to the Philippines, there are a couple of banks that have already adapted to the initiative. Fortunately, most of the banks that have come out with Green Financing are larger banks in the country.
Here are some banks that have Green Financing in the Philippines:
- Banco De Oro – The company created Sustainable Finance Desks which serve as a point of contact when evaluating and monitoring sustainable energy projects.
- BPI – The company adopted the voluntary reporting of sustainability performance and developed a Green Finance Framework.
- RCBC – In June 2019, the bank launched the issuance of P8 billion sustainability bonds.
- Land Bank of the Philippines – The bank implemented the Climate Synergistic, Mitigation, Adaptation, Resiliency, and Transformation (SMART) Financing Program.
- Development Bank of the Philippines – The bank has a Green Financing Program that supports its thrust of environmental protection and the Philippines’ green growth strategy.
The Importance of Green Financing
Green Finance helps to build the capacity of local government units to assist them in formulating and implementing green projects. This is also important as green financing has the potential to eliminate pollution for a more sustainable environment by educating sectors, industries, and local government units about it. Further, green financing is also important because it can deepen the Philippines’ financial market – allowing it to flourish into a greener, stronger, and more sustainable economy.
Green finance is a great way for a country to step up its economic growth. It also helps them to deepen the country’s financial market by allowing sectors and industries to further invest in it. It benefits both the economy and the environment by allowing sectors, industries, and banks to do their part in helping to ease the burden of climate change.
Citations:
- Green Financing Program. (n.d.). Development Bank of the Philippines. Retrieved July 29, 2022, from https://www.dbp.ph/developmental-banking/environment-initiatives/green-financing-program/
- Department of Finance. (n.d.). Department of Finance. https://www.dof.gov.ph/
- Welcome to United Nations ESCAP | United Nations ESCAP. (2019). Unescap.org. https://www.unescap.org
- Environment, U. N. (2018, January 23). Green Financing. UNEP – UN Environment Programme. https://www.unep.org/regions/asia-and-pacific/regional-initiatives/supporting-resource-efficiency/green-financing#:~:text=Green%20financing%20is%20to%20increase
- Nicolas, J. (2018, July 19). Green financing. BusinessWorld Online. https://www.bworldonline.com/banking-finance/2018/07/20/174187/green-financing/
