Banks That Support Green Projects to Receive Financial Perks

Banks that back sustainable green projects may be granted several financial perks, according to the Bangko Sentral ng Pilipinas (BSP) as reported by Inquirer.

Benjamin Diokno, Governor of BSP, said in a statement that the agency is considering the provision of higher loan values and use of preferential rediscount rates to allow financial institutions to finance sustainable investments and grant green loans. 

He added that the inclusion of sustainable finance is a form of compliance with the mandatory credit to the agriculture sector or Republic Act No. 1000, also known as the Agri-Agra Reform Credit Act of 2009. The law requires banks to invest 15 percent of their total loanable funds to the agriculture sector.

Compliance with the law has been low, which has necessitated BSP’s push for amendments to incorporate different ways for financial institutions to comply. 

Last week, the government revealed the guidelines of its sustainable finance framework. Diokno said that the grant of regulatory incentives will be included under the framework’s third phase. 

BSP, together with the Department of Finance (DOF), hope that the push for mainstream sustainable financing will fill the funding gap for projects designed with the intention of promoting inclusive growth and fighting climate change.

Pushing for Sustainability 

These efforts are in line with the government’s efforts to encourage sustainability and mitigate the damage of climate change. 

Under the Sustainable Finance Framework, the government enumerated several ways to raise funds through green or sustainable loans, bonds, and other debt instruments, according to an article published by PhilStar.

As noted in an article by Manila Bulletin, the proceeds generated from the framework are intended to be used to fund social projects, in compliance with the ASEAN Green Bond Standards, the International Capital Market Association’s green bond principles, and the Loan Market Association’s Green Loan Principles.

Among the potential projects that will be funded are those that promote social intervention and environmental conservation, including food security, affordable basic infrastructure, and access to essential goods. These programs are intended to improve socioeconomic rights, create job opportunities, and provide affordable housing. 

Profits from sustainable financing instruments will also fund social programs such as healthcare and education for the unemployed, poor, and people with disabilities; food security for disadvantaged populations; finance low-cost and socialized housing; and support micro, small, and medium enterprises (MSMEs). 

Any program that aligns with the country’s 2030 commitments under the United Nations’ (UN) sustainable development goals (SDGs) will also be financed through this scheme. Under these goals is the Philippines’ commitment to reducing greenhouse gas emissions by 75 percent over the next ten years under the Paris Agreement. 

A Green Future 

These endeavors come at a time when the climate crisis is becoming a more pressing issue, and these concerns have trickled into the property market. As natural disasters intensify and increase, more people are seeking safe and dignified properties that can withstand the elements and adapt to change.

Based on data from a trend report published by Lamudi early last year, many property seekers are also on the lookout for properties in fringe cities that have a proven track record of good governance and a high quality of life because of how safe and secure these locations are, particularly in the event of a natural disaster.

The pandemic has also changed buyer behaviors as it triggered a rise in flexible work arrangements that require people to do most activities at home. This has led to a spike in energy consumption and higher electricity bills as a result. In light of this, buyers are looking for solar-powered properties that provide energy cost savings and financial incentives.

Commercial properties are also making the shift towards green building to not only comply with green ordinances, but also to take advantage of financial incentives, huge savings, and increased efficiency. 

Lamudi’s most recent roundtable also explored this phenomenon, with Kenneth Stern, CEO of Lamudi, noting that the Philippine Green Building Code, which was passed in 2015, has encouraged real estate developers to embrace sustainable practices and comply with green standards.

Among the efforts that commercial developers have been making that were mentioned during the talk included securing green building certifications such as BERDE (Building for Ecologically Responsive Design Excellence) and LEED (Leadership in Energy and Environmental Design).

Sources: Inquirer.net, PhilStar, Manila Bulletin

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