A lone Philippine bank is part of the founding signatories to a landmark global agreement outlining guidelines for sustainability in the financial sector.
The Development Bank of the Philippines (DBP) is one of 130 banks worldwide who have signed to the United Nations (UN) Principles for Responsible Banking, launched on the eve of the UN Climate Action Summit in New York on September 23.
The principles commit the financial institutions to strategically align their business with the objectives of the Paris Agreement on climate change, as well as the UN Sustainable Development Goals (SDG). The 130 banks collectively hold USD 47 trillion in assets, comprising a third of the global banking sector.
“The UN Principles for Responsible Banking are a guide for the global banking industry to respond to, drive and benefit from a sustainable development economy. The principles create the accountability that can realize responsibility, and the ambition that can drive action,” said UN Secretary-General Antonio Guterres in a statement.
DBP’s commitment to the seminal UN agreement has been lauded by environmentalist groups in the Philippines. “We welcome this development as a signal that the Philippine business sector, particularly the banking and finance industry, is finally taking the issue of climate change seriously,” stated Rodne Galicha, lead convenor of the Catholic climate advocacy group Living Laudato Si Philippines.
Living Laudato Si is a movement acting on the pronouncements of Pope Francis in his encyclical of the same name, urging the faithful to take concrete steps against climate change by supporting sustainable business development and divesting from destructive enterprises such as those involved in fossil fuels and mining.
However, Galicha bared that DBP acted as co-lead arranger and senior lender to the GNPower Dinginin Limited Company’s supercritical coal-fired power plant with twin 668-megawatt (MW) units. According to data from the World Bank, DBP financed at least USD 138.4 million of the coal plant project.
“While the bank’s commitment toward sustainability is commendable, it remains to be seen how it will strategically move forward in attaining the sustainability goals of the UN that the principles espouse,” he said.
The call comes on the heels of a similar challenge made by the Bangko Sentral ng Pilipinas (BSP) for Philippine banks to go for “green” investments at the recent The Asian Banker’s Finance Philippines 2019 forum in Taguig City.
BSP Governor Benjamin Diokno bared a two-pronged approach to promoting sustainable finance—through capacity-building and awareness campaigns, and enabling regulations. As part of the latter, the BSP has already developed a proposed policy framework for sustainable finance for local institutions. Banks will also be mandated to disclose their sustainability agenda as part of their annual reports.
“We laud the in its initiatives for promoting sustainable innovations in green banking. This comes at an opportune time when climate action needs to be amplified, amidst warnings of projected more extreme impacts by 2050 and beyond. We hope that this move would help usher in a new era of ecologically responsible banking, where investments are not made solely for profit, but also for the development of peoples and the protection of the planet,” added Galicha.
Photo credit: Panoramio