Bangko Sentral ng Pilipinas (BSP), in partnership with International Finance Corporation (IFC), Bankers Institute of the Philippines (BaiPhil), and Asian Institute of Management (AIM), opened its halls to more than 80 risk officers and key staff from 39 different BSP-supervised banks and financial institutions on June 28-29, 2018 to conduct a training on Environmental and Social Risk Management (ESRM) for Philippine Banks. The main purpose of the program is to increase awareness and understanding of environmental and social (E&S) risks in the context of banking and enable them to develop ESRM systems that incorporate international best practices and standards.
Ms. Pia Roman Tayag, Managing Director for Inclusive Finance Advocacy Staff and Concurrent Head of Financial Consumer Protection Department at BSP, and Ms. Marinela Pascua, Operations Officer for Environmental and Social Risk Management at IFC, jointly opened the training with a quick introduction on the agenda and how it aligns with the United Nations’ Sustainable Development Goals (SDGs). They have both underlined the importance of taking account of Environmental and Social Risk into existing Risk Management Frameworks of Financial Institutions. They also put into context the capacity building that their partnership is doing to prepare Financial Institutions in adopting ESRM.
Dr. Felipe Calderon, Head of AIM-Washington Sycip Graduate School of Business and a staunch advocate of Sustainable Finance, facilitated the event. In his opening message, he emphasized the significance of the financial institutions’ role in promoting managing E&S risks – by using the power of debt to encourage borrowing firms to integrate the triple bottom line (people, planet, profit) in their operations. He cited the Boracay case to drive the point of our current financial system’s failure to assess and manage E&S risks while providing examples of banks that practiced sustainable finance which resulted to improved operations and higher return on investment (ROI).
Dr. Calderon presented a compelling business case for sustainable banking by highlighting the rewards of adopting the practice – better profits, customer viability and security value, decreased lender liability, and lower reputational risk.
Other speakers from institutions that have successfully adopted and are continually improving on their implementation of ESRM were invited to share their experiences. Mr. Shahril Azuar Jimi and Ms. Helena Ooi from Maybank Group shared about Maybank’s Environmental, Social and Governance (ESG) journey and their ongoing sustainability strategy. Mr. Paul Lazaro from Development Bank of the Philippines (DBP) followed suit by giving a talk on DBP’s sustainability initiatives, from 1989 to present. DBP is a state-owned development bank, hence its sustainability practices have been shaped primarily by Philippine environmental and social laws as well as national strategic frameworks.
Mr. Zhengfang Shi, an Environment Specialist at IFC, led the participants to be acquainted with basic elements and approaches to the development and implementation of E&S Management System (ESMS), which include E&S Policy and Due Diligence Process, Organizational Capacity and Staff Training, Monitoring Reporting and Review, and External Communications. Likewise, representatives from Department of Environment and Natural Resources (DENR) and Climate Change Commission (CCC) also graced the event to shed light into the national E&S regulations for borrowers as well as other environment initiatives by the government which are relevant to sustainable financing practices. Further, a representative from a consulting firm that assists in the integration of ESRM into existing systems were invited to speak about the trends and experiences of institutions adopting ESMS.
Finally, Dr. Alinettes Go Adigue of Global Reporting Initiative (GRI) also joined the list of speakers to explain the importance of Sustainability Reporting and how it could help Stakeholders appreciate better the efforts and the impact of the ESRM that Financial Institution are doing. She also facilitated a workshop on the use of Materiality Matrix as an essential part of the reporting standard of GRI.
Dr. Calderon concluded the training by challenging everyone to use the knowledge and tools gained from the event to define E&S priorities and develop next steps toward sustainability in their respective institutions. As for the BSP-IFC-AIM partnership, we can expect more similar initiatives as part of an ongoing project to promote sustainable banking in the country.
Photos by BSP-IFC Secretariat (with permission to use) and Barri Fernandez, MBA 2018