The Bangko Sentral ng Pilipinas (BSP) will rely more on expanded surveys, studies and industry consultations to identify potential regulatory incentives that banks prefer to increase green lending in the next two to three years.
In the analysis, “Integrating sustainability in the BSP’s loans and credit operations" part of the first BSP Sustainability Report released in July, the central bank said a survey it conducted revealed that local banks have a strong preference for incentives such as reduced rediscount rates and higher collateral and/or loan value as incentives to promote green lending among banks.
Meanwhile, other categories which gets the most of green financing include: promoting resource efficiency and circular economy; sustainable or zero-carbon transportation; promoting resilient food systems; pollution prevention and control; and transition activities. BSP in considering the physical risks, will do the following: mapping out properties used as collateral for outstanding and past due loans and determining the relative exposure or vulnerability to environmental or climate/physical risks of the location of each collateral property; and performing an in-depth assessment of potential impacts on collaterals through scenario analysis and/or stress-testing.
According to the survey, providing lower interest rates to banks to finance green or sustainable projects and activities at lesser cost is the most common incentive given by central banks.
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