BSP Upholds Sustainable Investment Rules

The Bangko Sentral ng Pilipinas (BSP) has given its go-signal on the guidelines of banks’ sustainable investments for the effective management of risks associated with green financing.

BSP Governor Felipe M. Medalla signed “Guidelines on the Integration of Sustainability Principles in Investment Activities of Banks” or Circular No. 1149 last August 23 which contains new rules that tackle the essentials of sustainable finance such as soundness and safety. This is also considered the third phase of sustainable finance regulations.

Gov Medalla has mentioned that the BSP  recognizes the possible contribution of bank investment activities in the pursuit of resilient and sustainable growth in the Philippines.

“These guidelines set expectations on the prudent conduct of investment activities and the minimum practices that a bank should establish for the management and control of risks associated with investments,” Medalla says in the memo.

The circular laid out expectations regarding incorporating sustainability principles when it comes to the investment processes of banks. This tackles bank investments in banking books and trading.

The rules, however, do not apply to the following areas such as transactions in derivatives involving stand-alone contracts, receivables arising from repurchase agreements, and transactions in derivatives involving stand-alone contracts and receivables coming from repurchase agreements.

With the risk management framework of BSP, the procedures and policies of banks, including limits, should adopt a combination of screening, integration, and thematic approach.

The circular also shed light on a misleading practice called “greenwashing” which they called to be “deceptive marketing” that convinces the public that an organization’s products, policies, and aims are environmentally safe.

Source: Business Mirror