Central banks & regulators

Philippines central bank reveals plans to join the PRI

Separately, work on a national framework for blue bonds is nearing completion.

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The Central Bank of the Philippines (BSP) is readying an application to become a signatory of the Principles for Responsible Investment (PRI), which it hopes to submit by the end of the year.

This would make the supervisor the first central bank PRI signatory from the ASEAN region and the second from an emerging market.

There are currently only a handful of central banks within the PRI’s membership base of more than 5,000 financial sector institutions and other stakeholders. These are Banque de France, the Hong Kong Monetary Authority, Bank of Finland and the Dutch De Nederlandsche Bank.

Staff from the Philippine central bank said work will start on an institutional responsible investment policy once the application is accepted but did not specify whether this will apply to monetary policy operations, in addition to foreign reserve holdings.

The central bank started investing its reserves in green bonds via a fund managed by the Bank for International Settlements (BIS) in 2019, and added the BIS’s Asian Green Bond Fund last year. It is now considering whether to conduct climate scenario analysis across its reserves.

The bank’s foreign reserve fund was valued at $100 billion in March.

PRI signatories commit to a charter of six principles relating to the integration of ESG factors into their investment management process, and the promotion of sustainability internally and across portfolio companies. Signatories are required to participate in an annual assessment on ESG integration and are scored on their progress.

The PRI declined to comment on the BSP’s pending application.

Separately, the Philippines Securities and Exchange Commission is expected to publish national guidelines for blue bonds in the coming weeks.

The market regulator launched a consultation on the proposed guidelines, which closed in March. It is based on green bonds standards compiled by ICMA and ASEAN governments.

The country’s first blue bond was issued by local bank BDO Unibank last year with support from the International Finance Corporation. Proceeds will be channeled to critical projects in areas such as water conservation, wastewater treatment, plastic recycling, sustainable tourism, fisheries and sustainable seafood processing.