TIM eMagazine Volume 2 Issue 3 | Page 54

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 54 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.