Banks improve Agri-Agra compliance amid growing ESG adoption — BSP
MANILA — Philippine banks are showing better compliance with Agri-Agra lending requirements, supported in part by the increasing adoption of environmental, social, and governance (ESG) practices, a Bangko Sentral ng Pilipinas (BSP) official said.
Speaking on the sidelines of an event hosted by the Economic Journalists’ Association of the Philippines in Makati City, BSP Assistant Governor Pia Roman-Tayag noted that more financial institutions are meeting mandated lending targets while strengthening their governance and risk management systems through ESG integration.
She explained that large corporations in the country have been among the early adopters of ESG principles, prompting banks to follow suit. To support this transition, the BSP has been aligning its policies with international frameworks, including the Institutional Shareholder Services roadmap.
Roman-Tayag said the central bank began issuing ESG-related guidelines as early as 2020, giving banks time to build internal capacity and adapt to evolving standards. As a result, more institutions are now embedding sustainability considerations into their operations.
A 2023 BSP survey reflected growing awareness of sustainable finance, with 71.5 percent of respondent banks recognizing its importance, slightly higher than previous levels. The survey also showed that 90.3 percent of banks plan to expand financing for sustainable projects.
To encourage further adoption, the BSP has introduced incentives such as higher single borrower limits and a zero-percent reserve requirement for sustainable loans counted toward Agri-Agra compliance.
Under the Agri-Agra law, banks are required to allocate at least 25 percent of their loanable funds to agriculture and fisheries, including a minimum of 10 percent for agrarian reform beneficiaries, to support rural development.
Roman-Tayag added that the BSP’s sustainable finance taxonomy helps guide banks in making investment decisions aligned with ESG standards by providing clearer classifications.
Meanwhile, Philippine Stock Exchange Chief Operating Officer Roel Refran said the country’s carbon credit market requires stronger legislative support to fully develop.
He noted that in the absence of a dedicated law, regulators currently rely on global standards set by the International Sustainability Standards Board for sustainability reporting.
Refran emphasized the need for clearer incentives and high-quality disclosures to strengthen the country’s capital markets and sustainability initiatives.
NPO News Team | Philippine News Agency - PR
