BSP to issue new bank-disclosure rules

THE Bangko Sentral ng Pilipinas (BSP) would soon release new guidelines that would expand key banking indicators and measures, including loans that worsen the climate crisis, a high-ranking official said.

BSP Deputy Governor Chuchi G. Fonacier said the central bank would roll-out its report on taxonomy either in the last week of January or in February.

“The one on the taxonomy is actually to be rolled out. It’s done, parang refinements na lang. So, if not in the last week of this month, maybe in January; it’s likely in February,” Fonacier told reporters recently.

The report on taxonomy includes the disclosures by banks regarding their climate-related loans and assets. The report would indicate which loans and assets of banks are good, bad or worse for the climate.

The taxonomy report is part of the BSP’s thrust of strengthening its research capabilities in its quest to deepen capital markets to make the financial sector sustainable. (Related story: https://businessmirror.com.ph/2023/08/11/bsp-to-boost-research-capability-for-sustainable-financial-sector/)

Fonacier added that the BSP’s report on digital banks would be out within the first quarter. She explained that the BSP is still collating pertinent information about the digital banking industry since the banks only made full operations in 2022.

“That is why we are still gathering data to really serve as well to have a full analysis of what’s been happening,” she said.

“But, initially the onboarding was not a problem. Meaning, the deposit generation ang bilis makakuha. But in the deployment of the funds, that’s where the challenge is for them,” she added. The report that is being drafted by the BSP seeks to evaluate the country’s current digital banking industry.

Last year, BSP Governor Eli M. Remolona Jr. emphasized the BSP’s commitment to contribute to the country’s efforts to achieve “net zero” through its 11 sustainability strategies. The United Nations defines “net zero” as “cutting greenhouse gas emissions to as close to zero as possible, with any remaining emissions re-absorbed from the atmosphere, by oceans and forests for instance.”

One of the 11 strategies is to mandate banks to make climate-related disclosures. He explained that banks would be tasked to report which of their loans and assets is good, bad, or worse for the climate.

The taxonomy to be used for this disclosure system, Remolona said, is being crafted together with climate scientists. Some of the questions that will be asked include whether bank’s loans or assets slow down or accelerate climate change and promote carbon emissions or absorb carbon emissions.

Each metric, Remolona explained, will be weighted, allowing the BSP to give each bank an overall rating in terms of its role in climate change.