Philippine banks urged to shift to sustainable and responsible business practice
October 2018
Paul Gwee, Secretary-General, ASEAN Bankers Association, Mrs Ong-Ang Ai Boon, Director, The Associations of Banks in Singapore, Nestor Tan, President, Bankers Association of the Philippines and President and CEO, BDO UniBank, Chuchi Fonacier, Deputy Governor, Banko Sentral ng Pilipinas and Benjamin Castillo, Managing Director, Bankers Association of the Philippines, exchange greetings at the start of the workshop.
MAKATI, PHILIPPINES – In keeping with the 1.5°C global warming cap and achieving the targets of the United Nations Sustainable Development Goals (SDG), banks and private investors are pressed to shift from business-as-usual to sustainable practices to ensure business continuity. There is financial relevance to responsible investments beyond the do-good motivation of philanthropic causes; such is the overall message of the “Responsible Finance Workshop” co-organized by the ASEAN Bankers Association Permanent Committee for Cooperation in Finance, Investment, Trade, and Technology (ABA-COFITT), in partnership with the Bankers Association of the Philippines (BAP), WWF Singapore, and WWF Philippines, held on 16 October, which gathered over a hundred banking and finance industry players from the ASEAN region.
Aditi Joshi, Vice President for Risk Policy, OCBC Bank, Dr Felipe O. Calderon, Professor, Asian Institute of Management and Edgardo Tongson, Chief of Party, WWF Philippines Sustainable Finance, discuss how banks respond to changing expectations of investors.
World Wide Fund (WWF) works closely with ABA-COFITT in organizing regional workshops to help ASEAN banks make progress on their Environmental, Social, and Governance (ESG) journey. In its third run, the workshop objective is to help banks better appreciate the integration of ESG factors in their investment and risk analysis and overall portfolio construction that would yield potential long-term performance benefits and manage environmental and social (E&S) risks.
Nestor Tan, President, Bankers Association of the Philippines and President and CEO, BDO UniBank and Chuchi Fonacier, Deputy Governor, Banko Sentral ng Pilipinas (BSP) addressed the participants at the opening ceremony, highlighting climate risks and vulnerabilities in the region and how banks can channel sustainable finance responsive to sustainable development. Deputy Governor Fonacier articulated that while banks can serve as conduits for private sector finance to facilitate flows towards green economy, regulators and industry associations play a role in regulation that sets the roadmap for sustainable finance in the Philippines. Deputy Governor Fonacier further emphasized that the best regulatory approach for BSP remains to be enabling, flexible, yet risk and principle-based, respectful of the banks’ business risk appetite and business decision, respective of the size and proportionate to their internal capacity.
Rafael Senga, Climate and Energy Practice Expert, WWF Philippines, Jo Ann B. Eala, Vice President for Sustainable Energy Finance, Bank of the Philippine Islands, Frankie Phua, Managing Director and Head of Risk Management, UOB Bank, and Cora Conde, Group Head, Association of Development Financing Institutions in Asia and the Pacific (ADFIAP), exchange ideas on how banks are managing climate related risks in their portfolios.
Following the opening session were presentations and panel discussion by key experts in responsible finance and ESG-related topics. Joseph Eijansantos, Sustainable Finance Policy Manager, WWF Philippines and Kate Philp, Sustainable Finance Engagement Manager, WWF Singapore set the tone by presenting the global and regional drivers for responsible finance, underscoring how such can lead to portfolio creation resilient to climate and ESG risks and financial opportunities. At the opening of the panel session, Meeting Changing Investors Expectations, Rosalind Keller-Liang, Asia-Pacific Manager, Carbon Disclosure Project, notes that companies are now exposed to direct and indirect climate risks. Disclosure and reporting requirements should therefore include not just materiality but also key risks of ESG factors as “we are now in an era of adopting non-financial risks… investors are no longer looking solely at PE ratios”, says Ms. Keller-Liang.
WWF Philippines Head of Climate and Energy Programme Atty. Angela Consuelo S. Ibay, International Finance Corporation Philippines Senior Investment Officer Aileen Zarate Ruiz, Securities and Exchange Commissioner Ephyro Luis B. Amatong, and DBS Bank Vice President Tan Chee Wee discuss opportunities and types of financing products such as green bonds that can influence the future of the Philippine energy sector.
At the session, Banking Sector Response to Investors Expectations, Tieza Mica Santos, Sustainable Finance Director, WWF Philippines presented an overview of the ASEAN Sustainable Banking Report 2018, which benchmarks 34 banks across the region in mainstreaming ESG considerations in their disclosure and sustainability reporting as part of their core business. At the panel discussion facilitated by Edgardo Tongson, Chief of Party, WWF Sustainable Finance, issues on sector-specific guidelines among banks and standardization on financing framework were raised. Among the panelists, Dr. Felipe Calderon of the Asian Institute of Management identified three roadblocks to mainstreaming ESG in the country, which are “establishing an equal-level playing field where regulators have to make ESG standards mandatory, capacity-building, and absence of lender liability for environmental damages.”
Key sector experts and top executives from the banking and finance sectors also led the afternoon sessions, giving particular attention on climate and energy risks and opportunities, the progress in responsible finance, and how Philippine banks is responding to address ESG issues. Local and regional banks such as Bank of the Philippine Island, Banco de Oro, Landbank, Development Bank of the Philippines, UOB, ING, OCBC and DBS, lend their expertise and experience from their sector. In these sessions, a deep dive into the topics looked into how banks manage material risks and develop a process for sustainable finance practice, explore and adopt new opportunities arising from ESG-aligned investments and benchmarks such as energy efficiency finance and green bonds, and respond to growth in sustainable investing and greater push to mainstream ESG factors among institutional and retail investors, which in turn drives increased demand for ESG ratings on companies and portfolios. Ephyro Luis B. Amatong, Commissioner, Philippines Securities and Exchange, mentioned that while only 22% of the publicly listed companies (PLCs) in the country has a sustainability report, the SEC implements a “comply-or-explain policy” to make the disclosure and reporting process more facilitative and encouraging for PLC’s.
Paul Gwee, Secretary-General, ASEAN Bankers Association, Jose Angelito Palma, President and CEO, WWF Philippines, Ephyro Luis B. Amatong, Commissioner, Securities and Exchange Commission, Anna Green, CEO, ANZ Bank and Jo Ann B. Eala, Vice President for Sustainable Energy Finance, Bank of the Philippine Islands, pose for a group photo during the session break of the workshop.
Highlighting the key takeaways at the end of the workshop, Benjamin P. Castillo, Managing Director, BAP reiterated BSP Deputy Governor Fonacier’s message on regulatory measures for ESG mainstreaming. Paul Gwee, Secretary-General, ASEAN Bankers Association also underscored the importance of constructive advocacy as demonstrated in their engagement with banks, investors, regulators, and stock exchanges to help them understand and manage E&S risks and opportunities.
The "Taking Deforestation out of Banking Portfolios in Emerging Markets" Project is part of the International Climate Initiative (IKI). The Federal Ministry for the Environment, Nature Conservation, and Nuclear Safety (BMU) supports this initiative on the basis of a decision adopted by the German Bundestag.
For more information, please contact Director of Sustainable Finance Miss Tieza Santos (tsantos@wwf.org.ph).
For arrangements with the media, please contact Communications & Media Manager Mr. Dan Ramirez (dramirez@wwf.org.ph).
