Business
BSP, IFC strengthen
corporate, environmental
and Social Governance in
the banking sector
M
anila, 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.
This agreement calls for IFC to 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
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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 towards
the training of 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 is among the latest
examples of IFC’s contribution to the development of CG policies
and regulations in more than 30 countries worldwide; it aims to
increase board responsibilities, competence and commitment of
company directors.
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.