Centre for Sustainable Finance supports development of the Central Bank of the Philippines' sustainable central banking strategy
The Bangko Sentral ng Pilipinas (BSP), the central bank of the Philippines, launched its Sustainable Central Banking Strategy which embodies the BSP’s commitment to championing the sustainability agenda in the Philippine financial system. The Sustainable Central Banking Strategy provides eleven action points integrating sustainability principles in its key operations and functions.
The Sustainable Central Banking Strategy was developed with the support of the SOAS Centre of Sustainable Finance. Professor Ulrich Volz, an expert in sustainable finance and central banking who has advised many central on developing climate and sustainability policies, worked with different teams across the BSP to develop what he describes as “a comprehensive and ambitious strategy, addressing the whole spectrum of actions that are needed to make the Philippines’s financial system and economy more resilient and sustainable.”
In his speech at the launch event, BSP Governor Felipe M. Medalla said: “Climate change and other environmental hazards impact the prices of goods and change the risk profile of financial institutions. We are doing what we have to do in line with our mandates of promoting price and financial stability.”
In his keynote address at the launch event, Prof Volz highlighted: “The launch of the BSP’s Sustainable Central Banking strategy marks a very important milestone. It shows the dedication of the BSP to address the climate and other sustainability challenges that the economy and the financial system of the Philippines face. Over the last couple of years, the BSP has already been among the central banks in the world that have been most active in tackling climate challenges. The SCB Strategy takes this to a new level and reinforces the BSP’s roles as an enabler, mobilizer, and doer in advocating sustainability in the financial system, as it is put in the strategy document. And the BSP is very much needed as an enabler, mobilizer, and doer to make sure that climate and environmental risks are properly addressed by the financial sector and that the financial system stops financing activities that undermine climate and other environmental goals and instead scales up green and sustainable investment.”
Prof Volz also emphasised: “We have to be very clear: Central banks cannot be passive in the face of the climate and ecological crisis that we are facing today. The physical and transition risks and impacts associated with climate change, but also the consequences of nature loss, are threatening macroeconomic and financial stability and the development prospects of our economies. Climate and nature risks are therefore directly relevant for central banks as they try to achieve their core mandate. It is critical that central banks understand, assess and address climate- and nature-related risks and impacts in their prudential and monetary policy frameworks to adequately respond to these new challenges. Given their role at the heart of the financial system, the policies and actions of central banks can have a market-shaping impact. Through their convening power but also their monetary, prudential and other policies they can play a crucial role in aligning financial markets with sustainability goals.”
Under the SCB Strategy, the BSP will foster a policy environment conducive to the adoption and growth of sustainable finance. It also commits to adhere to the same standards set for supervised financial institutions in managing risks and in making environmentally and socially responsible investment decisions. The BSP has created a dedicated section on its website to communicate the various partnerships and accomplishments as well as ongoing and forthcoming initiatives in line with its sustainability agenda.
The SOAS Centre for Sustainable Finance has been working with many central banks around the world on addressing climate and nature risks and has been conducting numerous capacity building programmes in this area for central banks and financial supervisors. Currently, the SOAS Centre for Sustainable Finance is convening a large-scale capacity building programme for the ten ASEAN central banks – the ASEAN Core Curriculum on Climate Risk Resilience/Sustainable Finance – together with the South East Asian Central Banks (SEACEN) Research and Training Centre. In Southeast Asia, the SOAS Centre for Sustainable Finance has also delivered capacity building programmes for the Monetary Authority of Singapore and Bank Negara Malaysia, the Malaysian central bank.
More information on the BSP Sustainable Central Banking Strategy.
