The Intergovernmental Panel on Climate Change (IPCC) has projected that an increase in global temperature of 3-4°C above pre-industrial levels over the next 80 years, will result in a global economic cost of US$23 trillion per year [1].

Developing archipelagic countries, like the Philippines, are particularly vulnerable and are already experiencing the effects of climate change. In 2019, the Philippines experienced six severe weather events and incurred economic losses of US$3.35 million (nearly Php 170 million) per capita [2].


Key policies and governance approach

The Central Bank of the Philippines (BSP), in recognising the significant threat climate change poses to financial stability in the country, issued BSP Circular No. 1085 (Series of 2020) known as the Sustainable Finance Framework. The Framework requires banks to incorporate sustainability principles, including environmental and social risks, into their corporate governance frameworks, risk management systems, and strategic objectives appropriate to their size, risk profile, and complexity of operations [3].

In addition, the Philippines’ Sustainable Finance Roadmap was launched in 2021, which sets out a comprehensive approach that will serve as the foundation for effective strategies to facilitate the mainstreaming of sustainable finance in the Philippines [4]. The guidance takes a principles-based approach to identifying economic activities that contribute to supporting sustainable development and aims to encourage the flow of capital to these activities. The roadmap will focus on activities related to both the greening of the financial system and the financing of sustainable activities, with a focus on climate change as a critical contributor to the achievement of the Sustainable Development Goals [5].


Successes and remaining challenges 

The Philippines has been increasingly exploring the use of green debt as well as equity instruments and has been expanding credit enhancement mechanisms and risk sharing options [6]. Financial products such as green labelled bonds and loans, have become globally recognised as an effective means of directing investment capital towards climate change mitigation as well as climate change resilience and adaptation projects [7].

The country has been recognised by Climate Bonds Initiative as an ASEAN leader in the green bond market [6]. The Philippines was the first ASEAN country to enter the green bond market in 2016 with AP Renewables’ PHP10.7bn (USD226m) Certified Climate Bond, which financed geothermal assets [6], [7]. The growth of the green bond market in the Philippines is notably driven by the private sector. As of August 2020, Philippine entities had issued over USD2.6bn of green bonds. Most of the proceeds were allocated to renewable energy. In addition, leadership has also been shown in the country’s banking sector, including by the BSP [6].

The amount of funding needed from the private sector and blended finance in the country cannot currently be determined, due to a lack of available current data within the government on the costs to fund climate mitigation and adaptation projects, as well as costs to achieve the SDGs. However, this will be addressed in a later stage of the Sustainable Finance Roadmap [4].


Initiatives and Development Plans

The Access to Sustainable Energy Program (ASEP) is a joint undertaking of the European Union and the Philippine Department of Energy (DOE) [8]. As of October 26, 2020, the European Union (EU) had allotted PHP 3.76 billion in grant funding to the Philippines under the program. This grant will support sustainable recovery efforts in the Philippines, particularly within the energy sector [9].

The Association of Southeast Asian Nations (ASEAN) Catalytic Green Finance Facility (ACGF) Green Recovery Program aims to leverage the Green Climate Fund and the Asian Development Bank's (ADB) funds to catalyze financing from development partners and private capital sources to support more than $4 billion worth of green infrastructure projects across the region. All projects supported by the program will incorporate innovative green finance instruments and approaches. The program will help Southeast Asian countries design green stimulus packages and projects that will create climate-friendly jobs, boost economic growth, and help countries fulfil their pledges under the Paris Agreement to reduce greenhouse gas emissions [10].

Major Philippines banks with green initiatives include the Bank of the Philippine Islands with the Sustainable Energy Finance (SEF) Program, Banco De Oro Unibank’s own Sustainable Energy Finance Program (SEFP), and China Bank’s Sustainability Financing and Green Bond Program. The Development Bank of the Philippines, has four initiatives, namely, the Green Financing Program (GFP), Financing Utilities for Sustainable Energy Development (FUSED), the Program Assistance to Support Alternative Driving Approaches (PASADA), and the Energy Efficiency Savings (E2SAVE) Financing Program [6].


Goals and Ambitions

Banks and financial institutions in the Philippines are now required to incorporate environmental, social and governance (ESG) and sustainability principles into their corporate strategies, risk management and banking operations. Banks have been given three years (from 2020) to fully comply with the provisions and must submit a transition plan, including a specific implementation schedule approved by the Board of Directors, as required by the BSP [3].



  • Integrating sustainability considerations into macroeconomic policies and regulations.
  • Embedding sustainability into the risk management of the banking, insurance and asset management sectors.
  • Encouraging sustainability and climate-related disclosures.
  • Conducting Capacity Building.
  • Joining international initiatives on sustainable finance.
  • Promoting Sustainable Financial Products.
  • Improving Sustainable Finance definition and creation of Principles-based taxonomy.
  • Tracking Sustainable Finance flows.
  • Driving sustainable investments.
  • Financing low carbon energy and other SDGs.
  • Establishing a sustainable pipeline database, both for public and private sector projects.
  • Progress monitoring and regular updating, including linking sustainable pipeline to SDGs, PDP, and NDC targets.

[1] Gelzinis and Steele (2019). Climate Change Threatens the Stability of the Financial System. [Online]. Available:

[2] Anastassia Evlanova, ValueChampion (2020). Top 5 Countries in Asia Pacific Most Affected by Climate Change. [Online]. Available:

[3] BSP Office of the Governor (2020). Circular No. 1085, Series of 2020: Sustainable Finance Framework.

[4] Department of Finance (2021). The Philippine Sustainable Finance Roadmap.

[5] MOODY’S ANALYTICS (2021). BSP Publishes Roadmap and Guiding Principles on Sustainable Finance. [Online]. Available:

[6] Climate Bonds Initiative (2020). Green Infrastructure Investment Opportunities PHILIPPINES 2020 REPORT.

[7] Climate Bonds Initiative (2019). ASEAN Green Financial Instruments Guide.



[10] ADB (2021). $300 Million from Green Climate Fund to Support ADB’s First Green Recovery Program in Southeast Asia. [Online]. Available: